Broker Charged With Defrauding Investors by SEC Sentenced to More Than Five Years in Prison in Parallel Criminal Case

Litigation Release No. 24133 / May 4, 2018

Securities and Exchange Commission v. Paul W. Smith, No. 17-CV-5480 (E.D. Pa. filed Dec. 7, 2017)

United States v. Paul W. Smith, No. 17-CR-626 (E.D. Pa. filed Dec. 7, 2017)

A registered representative in Pennsylvania whom the Securities and Exchange Commission charged with operating a long-running offering and investment advisory fraud has been sentenced in a parallel criminal case to 63 months imprisonment, followed by one year of supervised release, and ordered to pay $886,214.37 in restitution.

According to the SEC's complaint, filed in December 2017, Paul W. Smith raised approximately $2.35 million from approximately 30 investors by representing that he would invest their money in publicly traded securities through The Haverford Group. However, Smith made very few securities investments and instead largely used investors' money to repay other investors and for his own personal use. The same day that the SEC charged Smith, the U.S. Attorney's Office for the Eastern District of Pennsylvania announced criminal charges against Smith that arose from the same conduct alleged in the SEC's complaint.

On December 20, 2017, a federal district court permanently enjoined Smith from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8, and deemed Smith's liability for disgorgement and interest satisfied by the restitution to be ordered in the parallel criminal case.

The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation.