Moreno Valley Man Sentenced to Over 15 Years for Orchestrating $24 Million Ponzi Scheme

FraudPhoto byPhoto by Tima Miroshnichenko: https://www.pexels.com/photo/person-in-handcuff-holding-rolled-dollar-

Teh U.S. Attorney's Office, Central District of California announced a Moreno Valley man, Paul Horton Smith Sr., 61, was sentenced today to 188 months in federal prison for orchestrating a nearly two-decade-long Ponzi scheme that defrauded more than 200 investors out of over $24 million. U.S. District Judge Jesus G. Bernal also ordered Smith to pay $13.3 million in restitution to his victims.

Smith, who pleaded guilty to one count of wire fraud in January, operated several Riverside-based companies, including Northstar Communications LLC, Planning Services Inc., and eGate LLC. From July 2000 to May 2020, he convinced numerous individuals, many of whom were elderly or retired, to invest in what he falsely claimed was a safe and secure investment opportunity. Smith's promises of fixed returns on investments ranging from annuities to real estate were nothing more than lies, as he never invested the funds.

“This defendant’s greed and deceit caused significant financial harm to his victims, many of whom were relying on these supposed investments for their retirement,” stated U.S. Attorney Martin Estrada. “Our office remains committed to prosecuting fraudsters who prey on vulnerable members of our community.”

FBI Assistant Director in Charge Akil Davis emphasized the betrayal of trust that underpinned Smith’s scheme, noting, “Smith's clients trusted him, and he used that trust to defraud them. The fact that many of his victims were seniors makes this case all the more tragic. Smith is now facing justice, and the FBI will continue to pursue those who exploit others for financial gain.”

Smith used funds from new investors to pay returns to earlier investors, creating the illusion of a profitable investment. One particularly egregious example occurred in April 2019, when Smith convinced a victim to invest $400,000, which were life insurance proceeds following the death of the victim’s spouse. Smith promised a 5% return but instead funneled the funds to repay other investors, making only partial payments to the victim totaling $163,324.

The scheme ultimately left 106 investors without full repayment, resulting in losses exceeding $13.3 million. The FBI conducted the investigation, with assistance from the U.S. Securities and Exchange Commission, which had previously filed a complaint against Smith and his company in 2020.

Assistant U.S. Attorney Benjamin J. Weir of the Riverside Branch Office led the prosecution of this case.