(Cincinnati, Oh.) – A Brookville man who helped run a multi-million dollar Ponzi scheme has been sentenced to five years and five months in prison.
Jerry Smith, 50, must also pay $5.4 million in restitution to the people he cheated out of money and over $72,000 to the IRS. Smith was sentenced Wednesday in U.S. District Court for Southern Ohio by Judge Herman J. Weber.
Smith had earlier pleaded guilty to charges of Conspiracy to Commit Wire Fraud, Obstruction of Justice and Tax Evasion last June.
With the help of his business partner, Cincinnati resident Jason Snelling, Smith defrauded 72 investors from Indiana, Ohio, and Kentucky out of $8.9 million. In Indiana alone, 30 investors in Dearborn and Franklin counties were swindled out of $4.5 million between 2007 and 2010 as part of the scheme disguised as a securities investment venture called CityFund/Dunhill.
"Consistent with a classic Ponzi scheme, early investors were paid interest or return of capital payments, which were not generated by investment earnings, but rather by monies solicited from later investors," U.S. Attorney Carter Stewart said. "These payments served to lull the victims into a false sense of security and to prevent or delay the discovery of the fraudulent investment scheme."
During the course of the fraudulent scheme, Stewart said, Smith used investors' money to pay for his expensive rural Indiana home, to buy a boat and jet skis, and to operate his insurance business.
Snelling was sentenced to 10 years, 11 months in prison last October. He also had to pay about $5.3 million in restitution to the victims and $597,000 to the IRS.