Listen. I get the SEC has to make up for their many, many past fuck-ups. And some people’s scams are actually worthy of being shut down, especially when whoever is running it is spending his/her ill-gotten gains on entirely selfish purchases that will make only them happy and no one else. But what of the con-artists who, while perhaps not running the most legit shops, are taking whatever money they’ve stolen and using it to spread joy far and wide in the form of, for instance, “sexually themed cruises”? Apparently the SEC sees no distinction when, to us, it’s black, white and wearing boob tassels.

The Securities and Exchange Commission today filed an emergency enforcement action to halt a fraudulent scheme being orchestrated by two co-owners of an Albany, N.Y.-based firm who misused investor money to fund their struggling business operations and meet ever-increasing liquidity needs. The SEC has obtained a court order to freeze their assets.

According to the SEC’s complaint, filed in U.S. District Court for the Northern District of New York, Timothy M. McGinn and David L. Smith — through their firm McGinn, Smith & Co., Inc. (MS & Co.) and affiliated entities — raised approximately $120 million from investors in more than 25 debt offerings that were not registered with the SEC under the securities laws. They misrepresented that the investments would generate sufficient income to support the promoted interest rates and the return of principal at the end of the notes’ terms.

The SEC alleges that McGinn and Smith knew that it would never be possible to repay investors their principal, let alone the quarterly interest payments promised. McGinn and Smith instead misused offering proceeds to support their financially troubled or bankrupt entities, to make payroll for MS & Co., and even for their own personal activities such as procuring strippers for a “sexually themed” cruise. Although the full extent of the fraud is not yet known, it appears that investors are currently owed at least $80 million.

SEC Files Emergency Action to Halt Fraudulent Scheme at Albany-Based Firm [SEC]

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Comments (44)

  1. Posted by Anonymous | April 20, 2010 at 3:39 PM

    “where do you get off”

    My, that’s a personal question . . .

  2. Posted by Anonymous | April 20, 2010 at 3:44 PM

    First – the SEC Deputy’s name is Calamari and now there is this!

    Could be good

    http://www.nydailynews.com/news/2009/11/04/2009-11-04_bruno_wanted_involvement_hushed__boss.html

  3. Posted by Anonymous | April 20, 2010 at 3:56 PM

    Looking at that pic gave me ever-increasing liquidity. Now I’m in need.

  4. Posted by Anonymous | April 20, 2010 at 4:04 PM

    Oh, I’ll make you a firm offer.

  5. Posted by Pfluger the Barbarian | April 20, 2010 at 4:06 PM

    The cruise sucked. I was sea sick the entire time. I was going to sue, but then unfortunate personal matters arose which required my full and undivided attention.

    - Steamroller 9

  6. Posted by Tax Chick | April 20, 2010 at 4:13 PM

    You can’t make this crap up!

    “We were looking to expand that penetration …,” McGinn said.

  7. Posted by Tiger | April 20, 2010 at 4:14 PM

    I was my yacht, you know. I was going along to, eh, supervise.

    TW

  8. Posted by Anonymous | April 20, 2010 at 4:16 PM

    “Where do you get off?” is a registered trade mark of the co-branded Capital One/Beamers card. I ask you to cease and desist using it in this manner as it is likely to provoke consumer confusion.

  9. Posted by Steve Cohen's Unruly Lapels | April 20, 2010 at 4:22 PM

    I hide mine in birthday cakes.

  10. Posted by Anon | April 20, 2010 at 4:27 PM

    @4 Solid as a rock!

  11. Posted by Michael | April 20, 2010 at 4:31 PM

    @10
    I’m not sure how that helps make people forget we built houses in Iraq…

  12. Posted by GOB | April 20, 2010 at 4:36 PM

    @11 Cause these folks are living in F— City!

  13. Posted by Anonymous | April 20, 2010 at 4:45 PM

    @12 – The new business model

  14. Posted by Anal_yst | April 20, 2010 at 4:55 PM

    pictures or it didn’t happen?

  15. Posted by Doode | April 20, 2010 at 5:32 PM

    Top second from the left looks my girlfriend after Rick’s visit. I make her go there all the time to get new costumes. Sailor outfit is da bomb!

  16. Posted by Anonymous | April 20, 2010 at 5:44 PM
  17. Posted by SEC Investigator | April 20, 2010 at 5:59 PM

    Ok we admit it, we only took a look at these guys so we could go undercover and, um, investigate thoroughly. The discovery of fraud was completely by accident

  18. Posted by Anonymous | April 20, 2010 at 11:28 PM

    @15 Yeah you’re right, it does look like her. Though I prefer her catholic schoolgirl outfit :)

  19. Posted by Cato | April 20, 2010 at 11:59 PM

    “Timothy McGinn, chairman of McGinn Smith & Co. Inc., testified to details of the firm’s employment of Bruno from 1993-2005 as a part-time financial consultant. Court papers show the company paid Bruno $630,000 over that time, increasing his pay after he became the most powerful person in the Senate.”

    http://albany.bizjournals.com/albany/stories/2009/11/02/daily19.html

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