MADISON – A Baldwin man who defrauded several elderly people out of more than $1 million when they were clients of his coin brokerage was sentenced Wednesday in federal court to 4.5 years in prison and ordered to make restitution of $1.137 million.
Jamie Smith, 42, operated American Platinum Gold & Silver Inc. in Hudson 2014-2016 before moving his business to River Falls where it is known as American Independent Gold & Silver Inc.
According to court documents:
Smith previously operated a coin brokerage in Minnesota. That ended with federal mail fraud indictments against his co-workers, Robert Gundy and Jay Flynn, in October 2014. Both men pleaded guilty and were sentenced in 2015, with Flynn, a cousin of Smith’s, receiving 4 years and 4 months in prison.
Smith was not charged in Minnesota but entered into a civil settlement agreement with the Minnesota Attorney General’s Office in August 2012, and was enjoined from engaging in deceptive practices in the precious metal business.
Smith then moved his business to Hudson and targeted elderly clients who wanted their coin collections appraised or wanted him to buy them rare coins as an investment. Smith defrauded them by selling their coins despite promising not to without their approval and never returned them. He also never purchased rare coins with funds they gave him nor return the funds, or by taking their money without buying the coins they agreed upon.
Instead of producing or returning the coins, Smith lied, saying their coins or money were in the mail.
Smith then used clients’ coins or sale proceeds for his personal use buying a $268,000 house in Baldwin, or at restaurants, Victoria’s Secrets, for groceries, utility bills and cash withdrawals from ATMs.
When his clients complained about not getting their coins, Smith told them that Flynn had embezzled from him, and in December 2015, asked them not to go to the police or file lawsuits, which would force him to file bankruptcy and they would lose the money they had given him.
On Wednesday, Assistant U.S. Attorney Daniel Graber said that Smith had reasons for targeting the elderly in his fraud scheme.
“For one, they have lived long enough to acquire some savings, and at their age their mental acuity wasn’t the best,” he said.
While Smith Clients’ patience eventually ended, they filed lawsuits and the FBI, St. Croix County Sherriff’s Office and River Falls police investigated, searched and his business ending Smith’s scheme.
Smith repaid some clients but from funds he received from subsequent customers in a classic Ponzi scheme, said Graber.
His scheme spanned at least three years, affected at least 46 victims, all elderly, with most in their 70s. His fraudulent conduct caused losses in excess of $1,122,000, Graber wrote the court.
Smith was charged with 11 mail fraud counts and 11 wire fraud counts. He pleaded guilty to one count of mail fraud in September.
Smith faced an advisory guideline sentence of 92 to 115 months based on prior convictions, seriousness of the offense and the amount of loss. On Wednesday, District Judge William Conley reduced that to 51 to 63 months finding that many of Smith 29 prior convictions occurred more than 10 years ago and couldn’t be factored into his punishment and some were for non-alcohol related traffic offenses.
Graber had sought a sentence from the near the top of the initial guideline range saying Smith was a “career criminal … not deterred by the criminal justice system." Graber also wrote that Smith has a drinking problem that can be a danger to the public and police who used a Taser on him during an April 2018 disorderly conduct incident.
Smith’s attorney, Craig Cascarano, sought a sentence of 24 to 30 months, contending that Flynn perpetrated some of the fraud when Smith was establish a concrete business in 2014. A claim that was debunked by an investigator with the Minnesota Department of Commerce.
Smith apologized in court saying, “I’m truly sorry for the loss and the pain I’ve caused.”
Conley said he wanted to impose a sentence on Smith that is similar to Flynn’s and gave Smith until Jan. 13 to report to prison.
After court, Graber said Smith’s victims will be receiving a letter from the U.S. Attorney’s Office detailing what happened in Smith’s case but couldn’t offer the victims much other help.
“That’s the nature of a Ponzi scheme, when it stops the last ones in take the loss,” he said.