In the SEC 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 their money to the accounts of at least 10 other customers — in effect, “robbing Peter to pay Paul,” as the SEC put it.
Schmidt had pleaded “no contest” to the charges after being indicted in December.
Judge Gregory Singer said he took into account Schmidt’s age, his “remorse even if convenient” and the fact that this was his first criminal conviction.
“Your honor, I feel terribly, terribly sorry that I single-handedly ruined the lives of people who were friends,” Schmidt told the judge, with Dayton attorney Steve Pierson at his side during the sentencing hearing.
“I feel constant guilt about the nightmare that I put these people through,” he added. “I was too much of a coward to tell people they were running out of money.”
More than a dozen of his victims and their relatives were in court Tuesday. Some voiced unhappiness with the sentence.
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In the hall after the sentencing, Leo Kessler, whose aunt and uncle had been clients of Smith, told county Assistant Prosecuting Attorney Anthony Schoen that the issue was not that Wells Fargo had made restitution of about $3.7 million to Schmidt’s former clients.
Those clients can never be made truly whole, Kessler maintained.
“The issue was that he (Schmidt) broke the law, and he should have gotten 10 years,” he told Schoen.
Schoen told victims and relatives that Schmidt should serve the entire five-year prison sentence, absent seven days credit for jail time already served and possible time off for “good behavior” in prison.
He also stressed that prison most likely will not be a pleasant experience for the defendant.
“At least for the next five years, he’s going to be eating bologna sandwiches, and you’re going to go to the Pine Club,” Schoen told families outside the court.
Pamela Greenwald, a Michigan resident, spoke to Singer in court on behalf of a relative who had been a client of Schmidt’s.
“Greg Schmidt is a despicable human being, preying on the weakest in society,” Greenwald said.
Another witness, Mary Wright, reading a letter written on behalf of her parents, said Schmidt’s machinations left her parents uncertain and insecure.
“My wife has dementia and has no short-term memory, and we have no idea what the future holds,” Wright said, reading the letter.
Schmidt did business under the Wells Fargo umbrella from a Paragon Road office. Wells Fargo fired him in 2017 after learning of the unauthorized financial transfers between clients’ accounts, prosecutors wrote in their sentencing memorandum.
Prosecutors and the SEC said that many of his former clients suffered from Alzheimer’s disease or dementia. The SEC also said that Schmidt continued to defraud one client even after that client’s death.
Afterwards, Pierson said the issue “is a very serious matter. I think that the judge considered all the relevant information.”
Asked if the sentence surprised him or Schmidt, Pierson said: “We talked about this being a possible sentence.”