Two Plead Guilty in $8.9 Million Ponzi Scheme

Authorities announced that two men entered guilty pleas to charges they operated a Ponzi scheme that defrauded investors our of nearly $9 million.  Jason Snelling, 48, and Jerry Smith, 50, each pled guilty to one count of conspiracy to commit mail and wire fraud, one count of obstruction of justice, and one count of income tax evasion.  The conspiracy and obstruction charge each carry a maximum sentence of twenty years in prison, while the income tax evasion charge carries a five-year maximum sentence.  

Snelling and Smith operated Dunhill Investment Advisers and CityFund Advisory in downtown Cincinnati, where they guaranteed high rates of returns to clients under the guise that the firms were successfully engaging in day-trading.  The two offered guaranteed rates of return ranging from ten to fifteen percent, with some investors receiving higher promised rates.  In an effort to convince investors of the safety of the operation, Snelling and Smith represented that their position would be liquidated to cash at the end of each trading day.  In total, the scheme raised nearly $9 million from seventy-two investors.  But instead of engaging in day-trading, Snelling and Smith spent the majority of investor funds to sustain an exorbitant lifestyle that consisted of boats, jet skis, plastic surgery, and private school tuition.  

Smith is scheduled to be sentenced on September 20, 2012, while Snelling will be sentenced October 2, 2012.  Snelling is currently serving a sentence after being convicted on state securities fraud charges.