In keeping with the fine old traditions and scruples of Bernie Madoff and his ilk, the Securities and Exchange Commission (SEC) recently halted an alleged fraudulent scheme involving two owners of an Albany, New York, brokerage firm. What was their crime? They are accused of using the proceeds gleaned from unregistered offerings for its operations and to hire strippers.
The owners of McGinn, Smith & Co Inc, Timothy McGinn and David Smith, are accused of having sold via four funds and at least 18 trusts created by the firm about $120 million in more than 25 unregistered debt offerings. The complaint against them was filed in a New York federal court one day after the Financial Industry Regulatory Authority (FINRA) accused the firm of fraud in the sale of $89 million in unregistered securities.
Smith allegedly directed $17 million into businesses that his company either controlled or in which they had a financial interest. Regulators claim that he made $34 million in loans, of which $22 million remains unpaid. Investor funds were misused and funneled into exorbitant transaction and commission fees and interest payments.
According to Andrew Calamari, associate director of the SEC New York regional office:
“The proceeds… went to supporting the firm’s struggling operations and to meet payroll… McGinn and Smith deceived investors about the true purpose behind these offerings. They falsely promised investors a profitable payday but secretly siphoned off money for their own payroll. They also used funds to hire strippers for a ‘sexually-themed cruise’ and other personal activities.”
Anyone wonder why today no one answers the phone at McGinn-Smith?
Maybe Smith and McGinn will end up in a cell next to the Ponzi King of schemers, Bernie Madoff? Together who knows what these thieves could come up with!
Latest posts by marjorie (see all)
- Nathan Sawaya: LEGO Artist Extraordinaire - April 7, 2012
- Is Recently Discovered Fossil Ape or Man? - October 5, 2011
- Extreme Diving Stunt From Roof of Boston Art Museum - October 1, 2011