Hopkinton, IA – Darrell Dwayne Smith, a former investment broker, was sentenced to 175 months in federal prison on October 5, 2018, for defrauding ten of his clients out of over $2.4 million. The scheme, spanning from 2010 to 2013, involved the illicit transfer of funds to prop up a failing ethanol plant in Hopkinton, Iowa, and ultimately landed Smith facing charges under Title 18 U.S. Criminal Code.
Court documents reveal Smith, acting as a broker and advisor for various investment firms, systematically siphoned money from his clients’ accounts without their knowledge or consent. The stolen funds were funneled into Energae, LP, a partnership Smith established to invest in bio-energy ventures. Rather than legitimate investment, the money was then used to cover operational expenses for Permeate Refining, LLC, the ethanol plant that would eventually shutter its doors.
The fraud was perpetrated through forged or improperly obtained authorization forms. Smith either directly forged his clients’ signatures on withdrawal requests or exploited pre-signed, blank authorization documents, effectively stealing from those who trusted him with their financial futures. The victims included vulnerable investors, including elderly individuals, whom Judge Reade specifically noted Smith “picked on” with his manipulative tactics.
Obstruction of Justice & Continued Deceit
Smith’s attempts to evade justice didn’t end with the initial fraud. Judge Reade increased Smith’s sentence due to his obstruction of justice during the investigation. Evidence presented showed Smith actively attempted to dissuade one of his victims from pursuing restitution and cooperating with federal authorities, enlisting the aid of a relative in the effort. Adding to his brazen conduct, while incarcerated awaiting sentencing, Smith allegedly convinced an individual in Dubuque to loan him $25,000 – a clear demonstration of his continued manipulative behavior.
Legal Ramifications & Restitution
Smith pled guilty in July 2017 to one count of wire fraud (18 U.S.C. 1343) and one count of aggravated identity theft (18 U.S.C. 1028(a)(1)). In addition to the 175-month prison sentence, Smith was ordered to pay $1,056,909.68 in restitution to his ten victims and $2,947.35 to cover the costs of prosecution. Upon release from prison, Smith will also be subject to a three-year term of supervised release.
Key Facts
- Defendant: Darrell Dwayne Smith
- Crime: Wire Fraud, Aggravated Identity Theft
- Location: Hopkinton, Iowa
- Years Active: 2010-2013
- Amount Stolen: Over $2.4 million
- Statutes Violated: 18 U.S.C. 1343, 18 U.S.C. 1028(a)(1)
- Sentence: 175 months imprisonment, $1,056,909.68 restitution, $2,947.35 prosecution costs, 3 years supervised release.
Judge Reade, during sentencing, described Smith as a “skilled con man” who employed diversionary tactics and presented a façade of competence to conceal his fraudulent activities. The case serves as a stark reminder of the devastating impact financial fraud can have on vulnerable individuals and the commitment of federal authorities to prosecute such crimes.
Source: EPA ECHO Enforcement Case Database
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