Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor
The SEC's headquarters in Washington. Credit: Diego M. Radzinschi/ALM

Regulation and Compliance > Federal Regulation > SEC

SEC Bars Advisor for 20-Year, $24M Ponzi Scheme

By Melanie Waddell

X
Your article was successfully shared with the contacts you provided.

The Securities and Exchange Commission has barred a California advisor, saying he ran a $24 million Ponzi scheme against elderly and retired investors that purported to invest in an annuity and real estate.

From at least July 2000 through May 2020, Paul Horton Smith engaged in a Ponzi scheme that cost 100 of his elderly clients $13 million, according to the SEC’s order, released Monday.

Smith pleaded guilty in January to a federal criminal charge for running the Ponzi scheme that, according to the Justice Department, lasted nearly 20 years and fraudulently obtained more than $24 million from at least 200 investors.

Smith, of Moreno Valley, California, also pleaded guilty to one count of wire fraud.

According to his plea agreement, Smith operated Riverside-based companies named Northstar Communications LLC, Planning Services Inc., and eGate LLC. From July 2000 to May 2020, Smith obtained money from investors by soliciting individuals — who often were elderly or retired —to invest in something Smith called “Northstar.”

Some of the investors previously were Planning Services clients.

Smith communicated with the victim investors regarding Northstar in person, over the telephone, and via email and text messages, according to the orders.

“Knowing that his statements were false, Smith told these clients that Northstar was an annuity or something similar to an annuity, or that Northstar invested in real estate or the stock market,” the SEC complaint states.

Smith also falsely told clients that the Northstar investments had a minimum rate of return and would be a safe investment, the SEC said.

“In fact, Smith never made any legitimate investments with the $24 million he received from his clients,” the SEC said. “Instead, he used the funds to repay earlier Northstar investors in an attempt to prevent the discovery of his ongoing Ponzi scheme. As a result of this scheme, over 100 of Smith’s clients lost more than $13 million.”

The SEC said that Horton failed to answer the SEC’s order instituting proceedings, respond to a renewed order to show cause why he should not be found in default, or respond to a motion for default and sanctions.

Credit: Diego M. Radzinschi/ALM

Melanie Waddell

@Think_MelanieW

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.