McGinn, Smith found guilty of fraud
ALBANY, N.Y.—A federal jury on Feb. 6 convicted security industry investors Timothy McGinn and David L. Smith of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, securities fraud, and filing false tax returns, according to Richard Hartunian, U.S. attorney for the Northern District of New York.
The two—who also are facing a civil suit by the Securities and Exchange Commission claiming they bilked investors of at least $80 million in a Ponzi scheme—will be sentenced June 28 and could be sent to prison for years.
William Dreyer, Smith’s attorney, declined to comment on the verdict or whether Smith plans to appeal. He told Security Systems News in an email that “pending sentencing in June, which is when the judgment is entered, we are not making any comment about the verdict or our post-sentence plans.” He also declined to comment on the SEC case, which was filed in 2010 and is still pending.
McGinn’s attorney, E. Stewart Jones, could not be reached for comment before SSN’s deadline. However, according to the Albany Times Union newspaper, Jones called the jury’s verdict “tragically wrong [and] perplexing.” McGinn previously served as CEO of the Integrated Alarm Service Group (IASG) from 2003 to 2006.
A New York grand jury about one year ago indicted McGinn, 64, and Smith, 67—the founders of an investment firm based here that conducted dealings in the alarm industry—on 29 criminal charges that included mail, wire and securities fraud and filing false tax returns. One count carried a maximum penalty of up to 30 years in prison and fines of more than $1 million.
The government said the pair had “diverted approximately $4.1 million in connection with transactions related to the trusts for their own benefit and the benefit of another person.”
After a trial lasting about four weeks and four days of deliberations, a federal jury in Utica on Feb. 6 convicted McGinn, who served as CEO of IASG from 2003 to 2006, of 27 counts, and Smith of 15 counts, according to a news release from Hartunian’s office.
Hartunian said in a prepared statement that with the guilty verdicts against McGinn and Smith, “a measure of justice has been achieved for the many investors who placed their trust—and in some cases, their life savings—in these two men and their brokerage firm.”
The indictment said that from about 2006 to 2009, the pair devised a scheme to mislead investors in order to obtain money to “enrich themselves.” McGinn spent misappropriated funds on thoroughbred racehorses, alimony, his homes in New York and Florida, and for country club memberships in Ireland and the United States, among other expenditures, the indictment said. Smith spent ill-gotten money on his homes in Orchid Island, Fla., and Saratoga Springs, N.Y., and country club expenses, among other things, according to the indictment.
McGinn and Smith used such means as the U.S. mail and interstate wire transfers to conduct their fraudulent activities, the government said.