Convicted brokers released to halfway houses
Timothy Mcginn, David Smith defrauded hundreds of clients
Former investment brokers Timothy M. Mcginn and David L. Smith, who were convicted of defrauding hundreds of clients in a massive fraud scheme, have both been released from federal prison and are being held in halfway houses.
Mcginn, 71, and Smith, 75, had been sentenced in 2013 by a federal judge to 15 and 10 years in prison, respectively, for their convictions on fraud, conspiracy and tax evasion charges.
The U.S. attorney’s office in Albany, which prosecuted the case, cited more than $30 million in losses to at least 250 victims and had asked the judge to sentence the men to life in prison.
Assistant U.S. Attorney Elizabeth C. Coombe, a lead prosecutor in the case, had said the defendants’ argument that their crimes were caused by a collapsing financial market was false.
“After persuading investors to part with their money, defendants used it as if it were their own. Not only did they secretly skim large percentages of investor funds to line their own pockets, but they did their very best to make sure that the investments would keep coming in by using new investor money to pay old investors,” Coombe wrote in a 13-page memorandum filed in 2013 with U.S. District Judge David N. Hurd.
It’s unclear whether the men were released early from prison due to concerns about COVID-19 infections in prisons. U.S. Attorney General William Barr has said that federal prison inmates must serve at least half of their prison sentences before being eligible to be released early due to concerns about the coronavirus.
Mcginn would not have served half of his 15-year sentence until next year. Smith has served more than half of his sentence. Mcginn is at a federal re-entry facility in Pittsburgh and Smith is at a re-entry facility in Phoenix, according to the U.S. Bureau of Prisons.
Mcginn and Smith co-founded their Albany brokerage, Mcginn, Smith & Co., more than 30 years ago, and built a clientele that included some of the region’s wealthiest residents. But court records indicate that their clients also included many people with moderate assets and whose savings were wiped out when the firm shut down at the end of 2009.
In April 2010, federal
agents raided the homes and offices of Mcginn and Smith here and in Florida.
That same month, the SEC filed a civil complaint accusing Mcginn, Smith and their various investment entities of securities fraud.
A federal grand jury in Albany began reviewing evidence in early 2010 and heard testimony from about 40 witnesses for almost two years before Mcginn and Smith were indicted in January 2012.
Smith and Mcginn blamed an economic collapse in 2008 and poor record-keeping for a series of financial misdeeds that government regulators, in a separate civil case, have said left hundreds of investors defrauded of up to $136 million.
Coombe, in the government’s sentencing memorandum, said Mcginn and Smith cannot blame economic conditions because they “concealed their fraud by directing the creation of false accounting entries. They also directed the movement of money in a circuitous manner to cover their tracks.”