A Moreno Valley con man has copped to running a massive Ponzi scheme that swindled over $24 million from hundreds of victims, confirmed the Justice Department. Sixty-year-old Paul Horton Smith Sr., took a guilty plea for wire fraud late this past Monday, admitting to a nearly two-decade scam that preyed on the elderly and retirees.
Smith's operation, which included Northstar Communications LLC, Planning Services Inc., and eGate LLC, falsely promised investors a "safe investment" with fixed returns, akin to an annuity or connected to real estate or the stock market. He managed to deceptively garner funds from as many as 200 individuals, courting them in person, or via email and text messages. Investors were hoodwinked by assurances that their money would be dutifully put to work. However, as the Justice Department reported, Smith instead funneled these funds into a non-interest-bearing checking account to use them to sustain his fraudulent enterprise.
In a particularly egregious case, Smith duped a recent widow into investing $400,000—the sum obtained from life insurance after the passing of her spouse. He vowed to judiciously invest the money for a 5% return, yet not a penny was put into any legitimate investment. Smith's scheme was exposed when all he could muster was to return less than half of her original sum through payments totaling $163,324, drawn from the pockets of later victims.
Of the over $24 million in fraudulently obtained funds, a staggering $13.3 million is still owed to 106 victims who've yet been fully reimbursed. Smith, who masterminded the elaborate Ponzi scheme from July 2000 to May 2020, is now slated to face his day of reckoning. United States District Judge Jesus G. Bernal has set an April 1 sentencing hearing, where Smith could end up facing up to 20 years behind bars. The case was investigated by the FBI, with additional support from the United States Securities and Exchange Commission, which previously filed a complaint against Smith and his company.
The prosecution has been passed to Assistant United States Attorney Benjamin J. Weir of the Riverside Branch Office.
