A New Jersey-based financial adviser who operated a scheme that defrauded investors out of $9.8 million has been sentenced to 15 years in prison.

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Acting State Attorney General John Hoffman says Maxwell Smith III must serve five years of the sentence imposed Monday before he becomes eligible for parole. He also must pay nearly $7.9 million in restitution.

The 73-year-old Fair Haven resident pleaded guilty in November 2009 to money laundering. His state prison sentence will run concurrently with a seven-year federal prison term he received last month for mail fraud.

Authorities say Smith created a sham investment fund, promising his mostly elderly clients tax-free returns of up to 9 percent annually. But instead of investing the funds, Smith used the money for personal expenses, including gambling and international travel.

 

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