A financial adviser from Monmouth County admitted today he financed a lavish lifestyle with money from investors he duped in a $10.3 million Ponzi scheme.
Maxwell Smith, 69, of Fair Haven, pleaded guilty in Superior Court in Morristown to one count of first-degree money-laundering. Under the plea agreement with the state Attorney General’s Office, Smith is likely to be sentenced to a 15-year prison term, with five years of parole ineligibility, but it will run concurrently with an upcoming federal prison sentence. Smith also had pleaded guilty Tuesday in federal court in Trenton to wire fraud in the same securities scheme, authorities said.
Over the years, Smith raked in $10 million from the investors and paid out $2 million in interest to give a false sense of security, but he spent the other $8 million on himself and his wife. The money financed their high living, overseas travel and renting a villa in France, as well as dining in fancy restaurants, buying pricey antiques and gambling.
Smith also agreed to pay $10 million in restitution, but victims probably will never get all of their money back, said Edward D’Alessandro, attorney for 10 of the 13 victims.
"We’re trying to fill a bucket with a thimble," D’Alessandro said. "All of the money is gone. They lived very well and had an unbelievably lavish lifestyle."
The fraud began to unravel when the daughter of one elderly investor couple, Leonard and Collette Frederick of Whippany, thought Smith’s investment plan sounded a lot like the Ponzi scheme of disgraced financier Bernard Madoff, D’Alessandro said.
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Monmouth County Financial Advisor Admits Ponzi Scheme in State Court