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Written by 2:11 pm Current Investigations, Securities Fraud Articles

Former Iowa Broker Darrell D. Smith Faces Federal Fraud Charges

Darrell D. Smith

Recovery of Investment Losses with Darrell D. Smith

Did you suffer losses investing with Darrell D. Smith of Forest City, Iowa? If so, the attorneys at The White Law Group may be able to help you recover your losses through FINRA Arbitration.

According to reports, former broker Darrell Duane Smith allegedly told Grafton, N.D., farmers they’d be “crazy” not to invest in his biofuels companies, saying he expected 70 cent per gallon in subsidies for non-corn ethanol. Smith, 61, was purportedly a primary fund-raiser for companies including Energae L.P., of Clear Lake, Iowa, which had significant ownership in Permeate Refining Inc., an ethanol plant in Hopkinton, Iowa.

Smith allegedly attempted to enlist farmers in the Grafton, N.D., to raise sugar beets in March 2012. He hyped an opportunity to invest at least $10,000 in a Grafton corn ethanol plant, to combine with his Energae companies in Iowa and elsewhere. Additionally, Smith allegedly promoted tax credits for non-corn ethanol production, which were later declared invalid by the state of Iowa.

Reportedly, Smith is in jail in Linn County, Iowa, for violating earlier pre-trial rules against contacting investors. He will remain behind bars until his sentencing hearing, which hasn’t been set.

According to AGWeek, Smith is intending to plead guilty to federal fraud and identity theft charges but his plea hearing was cancelled at the last minute, before a 10:30 a.m. hearing on Monday, June 5.

Tony Morfitt, an assistant U.S. attorney, on June 7 said that Darrell Duane Smith still is expected to make the plea, but the timing of rescheduling is not yet known, according to reports.

Darrell D. Smith was permanently barred from the securities industry.

According to FINRA BrokerCheck, Smith has fifteen disclosure events including twelve customer disputes. Allegations include sales of fraudulent securities, misrepresentation, and unsuitable investments among others. He was registered with Multi-Financial Securities Corporation in Mason City, Iowa from February 2001 through March 2012.

Darrell D. Smith was permanently barred from selling insurance or handling investments in Iowa in July 2012, because of allegations he had transferred money out of insurance client accounts several times, and in some cases used the money for his own personal use. Smith reportedly agreed to the sanctions without admitting guilt.

According to court documents, Smith allegedly solicited funds from investment clients to be invested in Permeate and other bio-energy companies by having the funds transferred to Energae. Purportedly, Smith transferred money or checks to be issued from his clients’ investment accounts via wire and mail without their knowledge or authorization.

Recovery of Investment Losses

The brokerage firms that employed Darrell D. Smith had a legal responsibility to adequately supervise all his business activities. When a FINRA affiliated broker makes unsuitable investment recommendations and misappropriates funds the brokerage firm may be liable for negligent supervision and responsible for investment losses.

If you are concerned about investment losses with Darrell D. Smith, please contact the securities attorneys of The White Law Group at 888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.



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