Maxwell B. Smith Sentenced for Running a New Jersey Ponzi Scheme: Investors Should Look to His Brokerage Firm for Relief

June 12, 2013

Maxwell B. Smith was sentenced to serve the next seven years in federal prison for operating a $9 million Ponzi scheme. Maxwell sold investments as a fund that made loans to nursing homes. Smith had previously plead guilty to several counts of mail fraud as well as money laundering.

It is believed that Smith was employed as a financial professional at several financial firms in New Jersey, where he provided financial advice to his clients, many of whom may have lost money to his Ponzi scheme, Health Care Financial Partners ("HCFP"), purportedly a fund with hundreds of millions of dollars in assets. Investors even received a prospectus guaranteeing 7.5% to 9% per year, tax free. Investors could buy bonds in amounts ranging from $25,000 to $300,000.

Investors may not know that broker-dealers, like the ones that it is believed registered Mr. Smith, have a duty to supervise their employees. As a result, in situations like these, investors may be entitled to recover against the financial firms that employed the financial advisor for failing to supervise their employee.

Mr. Smith was apparently employed by Rickel & Associates, Inc., Atlantic Group Securities, Inc., JJB Hilliard, WL Lyons, Inc., PNC Investments, and Cantone Research, Inc. during the Ponzi schemes operation. It is believed that had these firms properly supervised Mr. Smith, they should have caught and stopped this Ponzi scheme.

If you or a family member fell victim to Mr. Smith, it is your right to consult with an attorney and explore your options. For a free consultation, contact the investment fraud attorneys at Malecki Law at (212)943-1233. Malecki Law has recovered millions of dollars for victims of Ponzi Schemes.