Simanski ordered to repay $600K

Financial adviser awaiting placement in federal prison

A financial adviser for an Altoona brokerage firm who was sentenced in June to a prison term of 78 months for defrauding many of his clients now has been ordered to pay more than $600,000 in restitution to those victims.

Late Thursday, U.S. District Judge Kim R. Gibson accepted a stipulation of the amount of restitution still owed by Douglas P. Simanski, 54, of Lilly, who is awaiting placement in a federal correctional institution.

Simanski earlier this year entered guilty pleas to federal charges of securities fraud, wire fraud and filing false income tax returns for the years, 2012, 2013 and 2014.

He was sentenced to 78 months in prison, but the imposition of restitution was delayed because Simanski took issue with many of the amounts being sought, pointing out some of the money he took for investment purposes had already been returned.

Gibson scheduled a restitution hearing for Friday but canceled it when Assistant U.S. Attorney Stephanie L. Haines, the prosecutor, and Assistant Public Defender Christopher B. Brown, for the defense, submitted a stipulation on the amounts still owed to 13 of Simanski’s 31 victims.

The agreement approved by Judge Gibson earmarks $207,437 of the $640,662 in restitution for the Internal Revenue Service.

During Simanski’s sentencing hearing, two of those victims spoke.

Dave Seymore, representing the Ashville VFW, noted that Simanski was given $157,000 of the organization’s money to invest. Seymore explained that the VFW uses the money from its investments to support many community projects.

The VFW listed its loss at $22,0000. Restitution in that amount was ordered.

A retired truck driver related the hardships that Simanski’s mishandling of his retirement account has caused him and his wife.

The stipulation included more than $45,000 for him.

The defendant was an investment adviser for NEXT Financial Group Inc. of Altoona but, according to the charges, more than 14 years ago Simanski went against company policy and created what he labeled Tax Free Investment contracts.

The contracts guaranteed the client returns of 5 percent or 10 percent on their investments over a two-year period.

The defense stated Simanski invested the more than $4.5 million he collected in stocks and other entities. One of his investments was in a coal mine that eventually failed.

The prosecution also claimed that Simanski used some of the money for improvements to his Lilly home that has a value of more than $400,000.

Many of the investments didn’t pan out and eventually Simanski’s efforts tuned into what the judge called a Ponzi scheme in which money from new investors was used to pay the initial investors.

The scheme came crumbling down in May 2016 when one investor wanted his money back and Simanski could not repay him.

He lost his lucrative job with the Altoona investment company and went into construction work.

In addressing what Simanski owes, the defense, in a document filed with the federal court in March, explained that of the

$4.5 million received from the 31 investors, approximately $1.5 million was returned.

“As a clarification, this is not a case where, as in some cases, an investment adviser promised to invest others’ money, took their money and spent 100 percent on himself,” the defense explained.

Much of the missing

$3 million was lost in investment opportunities that did not perform well, either in the stock market or other investments, the defense stated.

The restitution amounts agreed upon included as little as $7,500, $9,489 and $14,133, and went as high as $67,920, $60,0000, $58,724, $54,918, $45,753, $43,280, $28,431, $22,000 and $21,075.

The prosecution pointed out that many of the victims were elderly.