Another house on block in fraud case

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07/08/2011

There’s another housing development this month in the court case court case against Timothy McGinn and David L. Smith, two New York security alarm industry investors the U.S. Securities and Exchange Commission has charged with defrauding investors of more than $80 million in a Ponzi scheme.

Nancy McGinn, Timothy McGinn’s wife, has sold the couple's home in Niskayuna, N.Y., according to the Albany Times Union newspaper. “Half the proceeds from the sale, minus fees and taxes, will be held in escrow pending the resolution” of the SEC’s fraud case against McGinn and his business partner Smith, the paper said. The transaction was still pending and the sale price was not disclosed in court documents, the paper’s July 5 report said.

Earlier this year, in February, a judge ruled that a vacation home in Vero Beach, Fla. that Smith and his wife bought 10 years ago be sold to help benefit investors.

In the case of the McGinn house, according to court documents, a judge ruled July 1 that Nancy McGinn could keep approximately $7,000 from the sale of furniture in the house for herself as living expenses.

Magistrate Judge David Homer, in his ruling in U.S. District Court in the Northern District of New York, noted that the SEC opposed Nancy McGinn’s request to keep the furniture sale proceeds, but he said that New York State law would allow her to keep $5,000 of the sale anyway, and the receiver for the company would only get $2,000 at most.

McGinn and Smith were principals of McGinn, Smith & Co., an Albany-based investment firm that conducted investment dealings in the alarm industry. The SEC contends that from 2003 to 2009, the pair diverted funds into financially troubled entities and also into their own pockets, and to pay for exotic dancers on McGinn’s You Only Live Once cruise ship business.