CALIFORNIA – 56 year old Riverside resident, Paul Horton Smith Sr., was arrested on Thursday, May 21 on a federal criminal complaint. The complaint alleged that Smith embezzled millions of dollars from elderly retirees in a long-running Ponzi scheme that took in more than $10 million in victim-investor money. The complaint charges Smith with one count of wire fraud that carries a statutory maximum sentence of 20 years in federal prison.
According to court documents, Smith offered 75 clients an investment called “Northstar” from 2013 until the day of his arrest. The defendant claimed that “Northstar” was a private annuity contract that was a safe alternative to the stock market. The investments alleged annual rate of return was between 5 percent and 6 percent.
Smith, who advertised himself on his website as a chartered senior financial planner, is the owner of several businesses in the Riverside, California area including Planning Services, Inc. and Northstar Communications LLC. Planning Services Inc. is located at 3637 Arlington Ave. Ste. A (100) in Riverside, California.
According to the Planning Services Inc. webpage:
“Paul Horton Smith Sr. is a veteran in the financial services industry. Paul has spent more than 2 decades educating and assisting Riverside and San Bernardino Counties retirement population. As President of Planning Services, Inc., Smith’s mission is to provide pre-retirees with the education they need to make informed decisions about their retirement future. Paul’s organization works directly with those in retirement to develop a financial strategy that suits their specific needs and situation. Paul helps retirees protect and preserve their life savings, guard assets from excessive taxes, probate and the high-costs of assisted living and nursing home expenses, and plan for the distribution of their life savings in the most tax-advantageous manner possible while ensuring that they will be financially secure throughout their retirement years. Paul is a member of many distinguished industry organizations, most notably the National Association of Financial and Estate Planners (NAFEP) and the Association of Chartered Senior Financial Planners (ACSFP). He is a Chartered Senior Financial Planner (CSFP) which assists him in his mission to help clients guard assets and leave a legacy to heirs. Paul attributes his success as a Senior Financial Advisor to his passion for helping others, his pursuit of providing financial security in the golden years and his commitment to client satisfaction. Smith resides in Moreno Valley with his wife Joylynn. Together they have four children.”
The defendant solicited victims at sites of free seminars at various locations around the Riverside area where he discussed estate planning, trust creation to protect assets, and other financial matters.
According to court documents, Smith used investor money as lulling payments to earlier investors in the scheme. A 70-year-old victim who had known Smith from their mutual church association in the 1990’s sold a home in Arizona in August 2016 to write a $175,000 check to Northstar as an investment. The defendant transferred the victims $175,000 investment to other investors while also using the money to pay off the other investors’ tax bills with the IRS and the Franchise Tax Board.
In November 2019, an 86-year-old victim who had known Smith for many years invested approximately $169,126 in Northstar from the sale of a rental property. The following day, Smith took $134,863 of the victim’s money to pay off another investor in the scheme.
A review of bank records show that these victims have transferred more than $10 million to Smith’s business entities since 2013, and there is evidence to support that this scheme may even go back to the early 2000’s.
The FBI investigated this matter that is now being prosecuted by Assistant United States Attorney, Benjamin J. Weir, of the Riverside Branch Office.