An Indiana man was sentenced to serve over five years in federal prison for his role in a Ponzi scheme that duped victims out of nearly $9 million. Jerry Smith, 50, was sentenced to serve 65 months in federal prison after previously pleading 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 sentence comes after Smith's co-conspirator, Jason Snelling, was sentenced in late-2012 to a nearly-11 year prison term.
Snelling and Smith operated Dunhill Investment Advisers ("Dunhill") and CityFund Advisory ("CityFund") in downtown Cincinnati, where they guaranteed high rates of returns to clients under the guise that the firms were successfully engaging in day-trading. Investors were promised annual rates of return ranging from ten to fifteen percent, with some investors receiving promises of even higher rates. Investors were assured 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.
However, the purported day-trading operation was nothing more than a Ponzi scheme in which Snelling and Smith misappropriated investor funds for a variety of unauthorized purposes. This included making so-called interest payments to investors and supporting a lavish lifestyle that included the purchase of boats, jet skis, plastic surgery, and private school tuition.
After authorities began looking into Dunhill and CityFund, Smith admitted to fabricating trading statements in an attempt to thwart the investigation. Smith was also accused of tax evasion for failing to declare the stolen investor funds as income.
Along with his sentence, Smith was ordered to pay $5.4 million in restitution to victims, as well as over $72,000 in restitution to the IRS.