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Stock Fraudsters Prey on the Retired

Stock Fraudsters Prey on the Retired

Starr Austen & Miller has represented over 1,400 investors who have lost their hard earned savings to bad brokers and investment fraud.  Almost always the victim is an elderly person or someone nearing retirement who is defrauded of all or nearly all of their retirement savings.

The following story is a reprint from, an article authored by Hayley Fowler, that summarizes a similar case.

Bad stock brokers and bad investment advisors will quote high returns while touting the “safety” of the investment they are pushing.  This pitch is especially attractive to retired folks who are worried about stretching their retirement earnings to meet retirement living expenses.

If you or your parents have fell victim to such investment fraud, call Starr Austen & Miller today for a free consultation.  We have been suing bad brokers and other fraudsters since 1982.

Scott L. Starr


Pa. Broker Gets 5 Years For $2M Ponzi Scheme

By Hayley Fowler of

Law360 (May 4, 2018, 7:45 PM EDT) — A Pennsylvania broker received a roughly five-year sentence at the low end of federal guidelines on Thursday after federal prosecutors and the U.S. Securities and Exchange Commission accused him in separate criminal and civil suits of running a $2 million Ponzi scheme for 25 years whose victims included the retired and elderly.

U.S. District Judge Gerald A. McHugh ordered Paul W. Smith in Pennsylvania federal court to pay $886,214 in restitution and serve 63-months in prison, according to a statement from the SEC on Friday. Smith pled guilty to mail and securities fraud in January after prosecutors accused him of fleecing investors through a company known as the Haverford Group, allegedly paying them with proceeds from other investors and using more than $247,000 for his own personal benefit.

Arthur Donato Jr., who represented Smith, said he had asked for a significant downward variance from the 63 to 78-months guideline range, citing Smith’s cooperation with authorities and his diagnosis with severe depression and alcohol and gambling addictions.

“The government asked for a sentence at the top of the guideline range. The court gave some recognition to the mitigating factors but not as much as I had hoped,” he told Law360 on Friday. Smith “cooperated in every investigation, accepted responsibility very early on, did everything that you would want someone to do in this situation.”

The SEC and U.S. Attorney’s Office in the Eastern District of Pennsylvania filed simultaneous complaints in December alleging Smith formed the Haverford Group in 1991 and collected $2.3 million from investors until 2016.

He struck a $363,000 deal with the the SEC shortly thereafter and consented to a permanent ban from future securities violations. His plea deal with the U.S. Department of Justice was filed under seal in January, court documents show.

Prosecutors alleged Smith used minimal funds to actually purchase securities over the years, saying none were bought after 2011 and he was instead distributing fictional account statements to cover up the fraud.

The scheme crumpled in 2016 when one elderly victim asked to liquidate her investments. According to the DOJ’s suit, the woman purchased legitimate investments through a brokerage firm that employed Smith in 2009.

From 2011 to 2013, he allegedly withdrew $105,000 from her account and put it towards the Haverford Group. Prosecutors said he issued her a false account statement in September 2016 that stated her balance was $127,359.

But when her son met Smith to receive the check for those funds, Smith claimed the money was lost in the market, prompting the woman’s daughter to call the police.

Prosecutors said 17 investors had contributed $886,214 to the Haverford Group when the scheme collapsed. The company’s bank account at that time allegedly had less than $50.

Representatives for the SEC and DOJ did not respond to requests for comment on Friday.

The government is represented by Assistant U.S. Attorneys Karen L. Grigsby and Joseph F. Minni.

The SEC is represented by Jennifer Chun Barry.

Smith is represented by Arthur Donato Jr. of the Law Offices of Arthur Thomas Donato.

The cases are U.S. v. Smith, case number 2:17-cr-00626, and SEC v. Smith, case number 2:17-cv-05480, both in the U.S. District Court for the Eastern District of Pennsylvania.


The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.