New Jersey Financial Advisor, Maxwell B. Smith (“Smith”), was sentenced to seven years in prison for operating a $9 million Ponzi Scheme, Health Care Financial Partners. During the last 17 years, Smith was employed by:
Rickel & Associates, Inc.
Atlantic Group Securities, Inc.
WL Lyons, Inc.
PNC Investments, and
Cantone Research, Inc.
Smith began soliciting investments in the Ponzi Scheme as early as 1992. It appears Smith created a phony prospectus and promised returns of 7.5% to 9%. Investors that were defrauded purchased bonds in amounts ranging from $25,000 to $300,000.
Under FINRA rules and regulations, Broker-Dealers have a responsibility to supervise the activities of their advisors, or they may be held liable in a FINRA arbitration for investor losses.
According to The Securities Law Firm of Menzer & Hill, P.A., it has become more and more evident over the last several years that many Broker-Dealers are failing miserably in the supervisory responsibilities, which in turn is costing innocent investors millions of dollars.