Investors were promised 10.5% in guaranteed ‘private annuity contracts’
A former investment advisor and his companies have been ordered to pay close to $9 million for running a Ponzi-like scheme, according to reports.
The U.S. Securities and Exchange Commission has obtained a final judgment against the California-registered advisor, according to financialadvisoriq.com.
In a complaint filed in May, the regulator accused Paul Horton Smith, Sr, his firms Northstar Communications and Planning Services, and investment advisory company eGate, of conning at least 35 investors out of more than $5.6 million.
The SEC charged that Smith and Northstar promised investors up to 10.5% in guaranteed annual payments in what they described as “private annuity contracts”, but the more than $5.6 million raised was actually used to pay investor returns in a Ponzi-like manner.
The final judgment last week ordered Smith and his companies to pay $4,238,400 in disgorgement of ill-gotten gains and $383,059 in prejudgment interest, while Smith must also pay a $4,238,400 civil penalty.
Smith is also awaiting trial for charges in a parallel criminal action.
