Father and Son Sentenced for Fraud

An elderly man in a wheelchair lost more than $100,000. A woman lost her high-end home and moved into a small shed on her son’s property. Another victim lost her life savings and could not afford eyeglasses. Some victims declared bankruptcy.

These stories are just a few from the more than 100 victims who lost $63 million as a result of a fraud scheme carried out by the owners of Smith Advertising from around 2008 to 2012.

“This is not just a crime about money. These were people with real lives who were lied to and deceived, and they paid a real price,” said Special Agent Jay Stone, who investigated the case out of the FBI’s Tampa Field Office, along with the U.S. Secret Service.

Gary Todd Smith, and his father, Gary Truman Smith, ran Smith Advertising, a North Carolina-based company with offices in Florida. At first, the company did legitimate advertising work, but it hit a financial snag in the mid-2000s, particularly after the 2008 financial crisis.

“The economic downturn was probably a crippling blow,” Stone said. “The right and legal thing to do if your business is struggling is to restructure and possibly claim bankruptcy. But they wanted money, so they devised this fraudulent scheme.”

The scheme was complex and successful—for a time.

When the business began to struggle, the company solicited investors—including friends and associates from their community, church, and civic organizations—for “bridge loans.” The company told investors that they would loan Smith Advertising money so the company could pre-purchase advertising at a discount. The company promised to pay back the investors what they loaned plus a cut of the discount.

In fact, the company wasn’t buying advertising. The loans were simply to keep Smith Advertising afloat and repay previous debts—the equivalent of opening a new credit card to pay off a maxed-out one. Some of the early victims were paid back with the promised return, but that was simply other people’s money that the company had borrowed. Other victims, however, lost all of the money they invested.

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