Smith Sentenced to Prison for Stealing from Clients

A former investment adviser who stole over $2.4 million from his clients was sentenced on Friday over 14 years in federal prison.

62-year old Darrell Smith of Forest City received the prison term after pleading guilty last year to one count of wire fraud and one count of aggravated identity theft.  Smith’s nearly fifteen-year prison term follows a thirteen-month prison sentence that he received in 2016 for payroll tax fraud.

Smith’s admissions at the plea hearing, as well as evidence presented in other court proceedings, established that Smith was a broker and adviser for several investment firms.  From 2010 to 2013, he caused withdrawals of over $2.4 million in funds from ten of his investment clients’ accounts without those clients’ knowledge or authorization.  The funds were transferred to Energae, LP, a partnership Smith previously had formed with another individual to invest in different bio-energy companies.  Smith then used those stolen funds to pay expenses related to the operation of Permeate Refining, LLC, which operated a now-defunct ethanol plant in Hopkinton.  In order to transfer funds from client accounts, Smith used authorizations purportedly signed by the client authorizing the withdrawal of funds from the investment account.  He either forged his clients’ signatures on the authorizations or used pre-signed, blank authorization forms without the clients’ approval.

Smith has also been ordered to make more than one million dollars in restitution to ten victims.  He is being held in the United States Marshal’s custody until he can be transported to a federal prison.

In sentencing Smith, Judge Linda Reade noted that Smith was a skilled “con man” who used diversionary techniques, appeared to have an answer for everything, and “picked on” vulnerable investors, including the elderly.  She stressed that Smith’s sentence was “brought on himself”.