Wayne Man's 'Stock Investment Club' Was Ponzi Scheme, Feds Say

WAYNE, PA – A Wayme man who operated a "stock investment club" that federal prosecutors say was a Ponzi scheme has been charged with fraud-related crimes on Thursday, Dec. 7.

Paul W. Smith, 63, was charged by indictment with mail fraud and securities fraud in connection with "the Haverford Group," which Smith ran from 1991 to 2016, according to United States Attorney Louis D. Lappen.

The Haverford Group was formed by Smith to serve as a "pooled investment vehicle," according to court documents filed by the Securities and Exchange Commission.

From 1991 to 2016, which is when the scheme fell apart after an investor told police Smith had not repaid him, Smith raised about $2.35 million from The Haverford Group investors.

Smith allegedly used that money to pad his personal accounts and to pay off other investors he had been involved with, according to court documents.

Officials said most of those who invested with the Haverford Group were retired or elderly.

Smith allegedly used various tactics, such as created fake account statements, to hid the scheme, prosecutors said.

If convicted, Smith faces a maximum possible sentence of 40 years prison time, a three-year period of supervised release, a $5,250,000 fine, and a $300 special assessment, as well as full restitution of as much as $886,214, according to officials.

The case was investigated by the Federal Bureau of Investigation with assistance from the Securities and Exchange Commission, and is being prosecuted by Assistant United States Attorney Karen L. Grigsby.

An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

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