Former financial adviser sentenced to 5 years prison, pay over $34K to one victim

Published: Tuesday, June 25, 2019 @ 9:29 AM
Updated: Tuesday, June 25, 2019 @ 11:43 AM

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UPDATE @ 11:45 a.m.:

John G. Schmidt has been sentenced to five years in prison and has been ordered to pay more than $34,000 to one of the victims who has not yet received compensation.

“I was too much of a coward to tell people they were running out of money. I feel horrible,” Schmidt said when apologizing to his victims during his sentencing.

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Schmidt was charged with more than 100 felony counts for allegedly defrauding investors.

“I thought my money was fine. I had $2,00 in my account,” one victim said.

“We were friends. He attended the wedding of my youngest daughter. He removed money from my mom’s account,” another victim said on behalf of her parents.

FIRST REPORT:

A former Bellbrook financial adviser who pleaded “no contest” to charges of stealing nearly $1 million from clients will be sentenced today in Montgomery County Common Pleas Court.

In a sentencing memorandum, county prosecutors recommended that John Gregory Schmidt, 68, be sentenced to prison for at least a decade.

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“The evidence in this case shows that the defendant performed these actions with regularity over more than a decade,” prosecutors wrote.

A maximum consecutive sentence would approach 142 years, prosecutors said in a memo to Judge Gregory Singer.

The defense entered its own memo Monday, with letters from friends and family on behalf of Schmidt.

“This case is extremely unusual because the defendant never took any of this money for his own personal gain,” Schmidt’s attorney, Steven Pierson, wrote in the defense memo. “The monies that were transferred fraudulently were moved from one client of the defendant to another client.”

Added Pierson: “No one has ever claimed that the defendant ever took a single cent for himself.”

In a separate case, the U.S. Securities and Exchange Commission (SEC) sued Schmidt in federal court last year, and in that civil case, U.S. District Judge Walter Rice ordered Schmidt to pay more than $1.1 million.

According to SEC charges, Schmidt misappropriated more than $1.16 million from accounts owned by seven customers, transferring that money to at least 10 other customers — in effect, “robbing Peter to pay Paul,” as the SEC put it.

But Pierson wrote that Schmidt was “taking from Peter to pay Paul, never with him benefiting financially.”

Pierson wrote also that his client’s victims have been made whole. He asked the court sentence Schmidt to “community control” or probation.

Schmidt pleaded “no contest” in April to more than 100 felony charges against him.

In a December indictment, he had been charged with 123 counts of forgery, two counts of theft from elderly or disabled adults and two other fraud charges.

The SEC and county prosecutors each said many of Schmidt’s victims were older, some of them suffering from dementia. In its original complaint, the SEC charged Schmidt with continuing to defraud a client even after that client died.

“Between 2003 and Oct. 24, 2017, defendant perpetuated his fraud by regularly misrepresenting his clients’ account balances in statements that he personally generated to appear as genuine,” county Assistant Prosecuting Attorney Anthony Schoen wrote.

“He would direct these clients, most of which were elderly and trusted him, to only look at and rely on the fraudulent statements he delivered,” Schoen wrote.

Because of the deception, clients sometimes tried to withdraw money that wasn’t there, the prosecutor wrote.

Kim Peters told News Center 7’s Mike Campbell Tuesday that she knew Schmidt for years.

“The reality is, he took advantage of us and took advantage of my mother, who is a victim of Alzheimer’s disease — and he knew that,” Peters said.

Schmidt did business under the Wells Fargo umbrella from a Paragon Road office. Wells Fargo fired him in 2017 after learning of unauthorized financial transfers between the accounts of his clients, prosecutors wrote.