McGinn, already charged with fraud, now in contempt of court


There was an interesting new development this week regarding Timothy McGinn, one of two security alarm industry investors charged in April by the SEC with bilking investors in a Ponzi scheme.

I wrote recently about Security Alarm Credit, a new investment venture started this summer by McGinn and David L. Smith.

Smith has quit the new venture, but this week a U.S. magistrate judge in New York found McGinn–who served as CEO of IASG from 2003-2006–in contempt of court for his involvement in SAC. A July 2010 court order prohibited the pair from conducting further securities investment offerings without court approval.

Longtime partners Smith and McGinn were the principals of McGinn, Smith & Co., an Albany-based investment firm that conducted investment dealings in the alarm industry. The company is now in receivership after the SEC in April seized Smith’s and McGinn’s business and personal assets and accused the pair and their company of defrauding investors of at least $80 million. Places the money went included the pair’s own pockets and to pay for exotic dancers on McGinn’s You Only Live Once cruise ship business, the SEC said. The court case is pending.

Smith and McGinn this summer then formed SAC, their new investment company, and were trying to raise more than $500,000 to loan a small Georgia-based alarm company $425,000 at an annual interest rate of 19.62 percent.

Smith's and McGinn's former administrative assistant was listed as SAC's owner and the business was run out of her home in Rensselaer, N.Y. Smith and McGinn were designated as her employees--and executive vice presidents.

The new venture came under the SEC's radar and this fall it filed a motion to hold Smith and McGinn in contempt for violating a preliminary injunction prohibiting them from making further securities offerings.

In a Dec. 1 decision on the motion, made by Judge David Homer in U.S. District Court in the Northern District of New York, the judge denied the motion regarding Smith because he had resigned from the SAC.

But Homer noted that thaowner/administrative assistant said her "only function was to type documents" and that "McGinn was responsible for everything."

Homer found McGinn in contempt, saying SAC's offering to investors contained "material misrepresentations and omissions" and also noted that "the SAC offering is remarkably similar to those prior offerings" that landed McGinn and Smith in court in the first place


Stay tuned for more on this story.




Maybe Platinum Protection could borrow money from these guys to help save their sinking ship. These guys sound just like Platinum's broker, Dan Dyer, who was also convicted of ponzi schemes. They all deserve each other.

Is it just me, or does it seem like those guys try hard to be stupid?