Oakes & Fosher is currently investigating the possible negligence or misconduct of former securities broker Paul W. Smith. According to his publicly available FINRA BrokerCheck report, Paul W. Smith has been the subject of numerous customer disputes received during and after his career. All the complaints revolved around Paul W. Smith’s connection to a company called the Haverford Group
Paul W. Smith most recently operated as a Pennsylvania based securities broker. He worked in the securities industry for thirty-four years. During his career, he was registered with seven different securities firms. He is no longer working as a registered securities broker in any fashion.
His Registrations
- Prudential-Bache Securities (1982-1987)
- E.F. Hutton & Company (1987-1988)
- Shearson Lehman Hutton (1988-1990)
- Janney Montgomery Scott (1990-2000)
- Tucker Anthony Incorporated (2000-2002)
- Philadelphia Brokerage Corporation (2002-2007)
- Bolton Global Capital (2007-2017)
The Allegations
According to a report by the United States Securities and Exchange Commission, from 1991 to October 2016, Paul W. Smith raised approximately $2.35 million from approximately thirty investors. He allegedly presented to these customers that he would invest their money in publicly traded securities through the Haverford Group. In reality, this was a private, unapproved investment vehicle that Paul W. Smith was using to defraud customers. Smith primarily solicited funds from elderly or retired customers. Instead of investing their funds in publicly traded securities as he allegedly presented he would, Smith funneled funds into this investment vehicle and used the funds to repay earlier investors. He also allegedly used large amounts of the “invested” money for his own personal use. Paul W. Smith also allegedly went to great lengths to cover up his involvement in the scheme. He created fictitious account statements to convince the investors that there was actual growth taking place. He also kept the Haverford Group a secret from his member firm. It was through this deceit that Smith was able to operate this fraudulent scheme unnoticed for twenty-five years.
What is a Ponzi Scheme?
A scheme like this is what’s known as a Ponzi scheme. An individual, or group of individuals, operating a Ponzi scheme fabricates investment growth to investors. This is done to hide the fact that they have not invested the funds in the manner they presented they would. Rather these perpetrators often used solicited funds for their own personal use, often funding an overly luxurious life style. In order to keep the scheme going, the individual, or group, pays promised dividends to earlier investors with new money coming in from later rounds of investors. This continues until the entire thing collapses–as it did for Paul W. Smith.
Criminal Charges
Paul W. Smith’s Ponzi scheme finally collapsed in October 2016, after an investor he failed to repay complained to the police. In January 2018, Paul W. Smith pled guilty to one count of mail fraud and one count of securities fraud. He was sentenced to serve over five years in prison to be followed by one year of supervised release. He was forced to pay $318,024 in disgorgement and $886,214 in restitution. He was also barred from acting as a securities broker in any fashion by both FINRA and the Securities and Exchange Commission.
Oakes & Fosher Can Help
Many investors are unaware of the legal recourse available to them after losing money due to securities broker negligence and/or misconduct. Investors who have experienced losses due to securities broker negligence or fraud may be entitled to damages.
Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing with Paul W. Smith, please contact Oakes & Fosher for a free and private consultation. We handle cases on a contingency basis, which means there are no fees charged unless we collect for you.
