SEC Shuts Down Fraudulent Investment Adviser Targeting Senior Citizens

The Securities and Exchange Commission today announced that it has filed an emergency action and obtained a temporary restraining order and asset freeze against a California-registered investment adviser and his entities to halt an ongoing Ponzi scheme targeting senior citizens in Southern California. According to the SEC’s complaint, from at least January 2018 through the present, Paul Horton Smith Sr. offered and sold securities in his company Northstar Communications LLC, and used his investment advisory firm eGate LLC and insurance and estate planning company Planning Services Inc. to market the securities. Smith and Northstar through free workshops and other investor events allegedly promised investors guaranteed annual interest payments between 3 percent and 10.5 percent if they invested in so-called “private annuity contracts.” In reality, as the complaint alleges, Smith did not invest the funds raised in any securities and instead used new investor funds to pay investor returns in a Ponzi-like fashion.