Disgraced Albany broker David Smith was handed 10 years in federal prison this afternoon, just hours after his longtime business partner, Timothy McGinn, was taken away in handcuffs to start serving his own prison time.
Legacy left legacy left by McGinn and Smith will continue to resonate through the courts and their victims.
March 6, 2013: McGinn, Smith witness gets probation
Feb. 6, 2013: McGinn and Smith are guilty.
Jan. 27, 2012: Feds: Albany brokers stole millions
U.S. District Court Judge David Hurd gave Smith a lighter sentence, acknowledging that he appeared to lead an otherwise exemplary life. But Smith failed to rein in McGinn, his business partner of more than 30 years, even after questioning his investment practice in a 1999 letter, the judge said.
"If you stepped in and got Mr. McGinn to stop, you wouldn't be here today," Hurd said before imposing sentence.
Earlier in the day, McGinn, was sentenced to 15 years in prison.
Smith, 68, was found guilty of conspiracy to commit mail fraud, guilty of conspiracy to commit mail and wire fraudulent, wire fraud, securities fraud and filing a false tax return -- 15 counts in all --following a 5-week trial ending in February.
The sentencing ends the criminal case that started with their indictment on 30 counts in January 2012. The partners still face a civil trial file by the U.S. Securities and Exchange Commission more than three years ago.
In April 2010, the Financial Industry Regulatory Authority filed a civil complaint accusing Tim McGinn and David L. Smith of selling tens of millions of dollars in unregistered debt offerings and trusts. The same day, the U.S. Securities and Exchange Commission obtained a court order freezing the firm’s assets, alleging the partners funneled $136 million raised from roughly 900 investors into their own financially troubled or bankrupt pursuits and for their personal activities.
Over the next year and a half, investigators methodically built a criminal case against the partners. McGinn and Smith were both indicted in January 2012 on dozens of charges, including conspiracy to commit mail fraud, conspiracy to commit mail and wire fraud, wire fraud, securities fraud and filing a false tax return.
Federal prosecutors had asked U.S. District Court Judge David Hurd to impose “very substantial” prison terms for both McGinn, 65, and Smith, 68.
In court on Wednesday, Smith's daughter sobbed loudly as her father was put into handcuffs. He showed up to the sentencing with 70 letters of support, with some of the writers showing up in court.
Smith's attorney, William Dreyer, said on Wednesday that Smith recognized there were problems. "And when he recognized wrongs, he tried to correct them," Dreyer said of Smith.
One of Smith's victims who spoke in court for the sentencing was Syril Burn, of White Plains, who described the sentencing as emotional and said she didn't sleep in anticipation of the event.
Speaking on Wednesday, U.S. Attorney Richard S. Hartunian lamented the fact that nothing can undo what was done by Smith and McGinn. "The sentences imposed today send a strong and clear message...that fraud and tax cheats will not be tolerated," he said.
Regarding the victims, Hartunian added, "They all have one thing in common: They're suffering."
While the criminal case against the disgraced business partners will largely conclude this week, the legacy left by their failed investment schemes will continue to resonate through the courts and their victims. The civil complaint lodged by the SEC has been on hold until the criminal case was resolved, leaving the partners’ assets frozen and their investors — some who lost their life savings — wondering whether they’ll ever receive any of the money they lost.
Follow @MasonAbridged on Twitter for live coverage of the sentencing in Utica.