‘Arrogant’ Alarm Broker McGinn Gets 15 Years, Partner Smith Gets 10 for Fraud
UTICA, N.Y. — A judge Wednesday sentenced alarm industry broker Timothy McGinn to 15 years in prison and his partner, David Smith, to 10 years for their involvement in a Ponzi-type scheme that defrauded millions of dollars from investors’ accounts.
The two men, who were convicted of fraud, conspiracy and tax evasion in February, were also ordered to jointly pay $5.7 million in restitution and other costs for duping clients out of their money, Times Union reports.
Initially, McGinn, 65, former CEO of Albany, N.Y., based Integrated Alarm Services Group (IASG) and Smith, 68, were indicted for swindling roughly $37 million through McGinn, Smith and Co., their registered broker-dealer investment firm. Prosecutors further accused the partners of diverting $4.1 million from investment trusts to benefit themselves, claiming the duo created false loan documents, mislead investors and lied to federal investigators.
Both faced a 29-count indictment that included charges of conspiracy, mail and wire fraud and filing false tax returns. The jury convicted McGinn of 27 counts and Smith of 15 counts.
During the sentencing, U.S. District Court Judge David Hurd described McGinn as arrogant, stating that the defendant only cared about making money for himself and his favorite clients. Hurd noted that Smith’s downfall was caused by going along with McGinn’s schemes. The judge also reminded Smith of a confession letter he wrote to McGinn in 1999, in which Smith expressed his fear that the firm’s actions could lead to criminal charges.
In 2010, McGinn, Smith & Co. was put into receivership. The Securities and Exchange Commission (SEC) filed a civil complaint against McGinn and Smith, claiming they defrauded 900 investors of $136 million. In that same year, the duo started McGinn Smith Alarm Traders, which auctioned off more than 5,000 alarm account to Security Systems Inc. for more than $2 million in April 2012.
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