While Chris Smithers was the central architect of the massive fraud committed against firms like M318 LLC and Lawyers Realty LLC, he did not operate alone. His scheme was actively enabled by supposed professionals at PFG (Peregrine Financial Group) – the very brokerage firm where he previously worked and lost his license.
The evidence shows that two PFG brokers, Mike Young and Terry Sacca, played pivotal roles in facilitating Smithers’ illegal trading by providing him with the accounts and access he needed to drain client funds. Their ingrained decisions paint a disturbing picture of complicity rooted in the pursuit of fees and commissions at any cost.
Mike Young: The Gatekeeper’s Betrayal
As a broker at PFG, Mike Young’s primary role should have been safeguarding client interests and upholding ethical standards. Instead, he flagrantly violated this duty by conspiring with Chris Smithers from the outset.
According to Smithers’ affidavit, he openly disclosed his tarnished history to Young upfront: a lost broker’s license, a felony conviction, a gambling addiction, and lacking authorization to manage client money. Any one of those disqualifying factors should have immediately raised alarms and stopped the relationship.
But rather than protecting PFG’s clients, Young made the unforgivable decision to enable the fraud anyway. He assisted Smithers in setting up accounts for individuals and businesses solicited under false pretenses. Even more egregiously, Young then illegally provided Smithers with the login credentials needed to covertly take over the trading.
This outrageous lapse of ethics appears motivated by pure greed. By funneling accounts to Smithers, Young was assured of receiving commissions from the illicit trading activity, regardless of client losses. He willfully trapped victims like M318 and Lawyers Realty into a predatory scheme while lining his own pockets.
Throughout the fraud, Young also worked to actively conceal irregularities from PFG’s clients. He was complicit in covering up a $70,000 loss on Smithers’ errant trading in M318’s account by advocating to have the firm eat the loss and reset the balance. This ensured M318 remained oblivious to Smithers’ mishandling of their funds.
Even more shockingly, Young failed to act when informed that PFG was processing trades called in by Smithers impersonating actual account holders. This clear red flag of identity fraud was ignored in favor of perpetuating the illegitimate money flow.
Terry Sacca: The Co-Conspirator
If Mike Young was the gatekeeper enabling Smithers’ fraud, then his fellow PFG broker Terry Sacca served as a co-conspirator actively participating and concealing the illicit scheme.
Like Young, Sacca showed no ethical hesitation after being made aware of Smithers’ disqualifying background information. He moved forthright to help Smithers gain control over accounts like M318 and Lawyers Realty under manufactured pretenses.
Sacca then provided Smithers with the account logins to surreptitiously begin trading and withdrawing from these clients without their knowledge. He fielded compliance requests from PFG about the unauthorized positions while openly validating they belonged to Smithers, not the account holders.
Perhaps most damningly, Sacca engaged in an overt cover-up when confronted with a $70,000 loss caused by one of Smithers’ trades in M318’s account. Despite this being a massive, fatally damaging incident of fraud, Sacca advocated for PFG to simply eat the loss and bring the account back to zero.
The purpose was clearly to ensure M318 remained entirely unaware their money was being mishandled. Sacca overtly lied to the client and undermined their relationship in service of enabling Smithers’ scheme to continue unabated.
Throughout the fraud, both Young and Sacca were in constant communication with Smithers about irregularities plaguing client accounts. They consistently chose to resolve issues through further deception instead of coming clean. Their repeated prioritization of collecting fees over ethics caused compounding financial devastation.
PFG’s Institutional Complicity
While Mike Young and Terry Sacca deserve substantial blame as co-conspirators, PFG itself also exhibited wanton organizational negligence as an institution. The evidence indicates the firm was aware of Smithers’ illicit account access and invalid trades, yet they turned a willfully blind eye for months.
On multiple occasions, Smithers’ accomplices directly communicated instances of errant trading and deception that should have instantly raised red flags. Rather than shutting down the fraud and protecting clients, PFG representatives instead advocated for covering up the issues and sweeping losses under the rug.
This negligent lack of oversight enabled ever-greater violations and client losses to accrue. PFG was undoubtedly aware Smithers was exceeding his authority, and that Young and Sacca were improperly providing access. Yet they failed to act until the damage had been catastrophically compounded.
The corporate culture at the time seemingly incentivized this unethical behavior. Young and Sacca directly cited how their lucrative commission payments motivated their silence in the face of mounting fraud. There seemed to be little to no accountability for representatives willing to set aside compliance standards in pursuit of profits.
This tacit endorsement of unscrupulous conduct fostered an environment ripe for bad actors like Smithers to infiltrate and exploit with impunity. Management’s failure to establish a culture valuing ethics over earnings created an immense liability that manifested in millions lost for countless victims.
A Case Study in Collective Culpability
The scandal surrounding Chris Smithers underscores how fraud is rarely accomplished through a single bad actor alone. His ability to perpetrate such extensive deception over months relied upon a vast network of complicit enablers more concerned with earning fees than practicing due diligence.
From Mike Young and Terry Sacca directly conspiring to grant Smithers unfettered access, to PFG’s top-down ethical rot allowing rampant fraud to fester, this represented an organization-wide lapse prioritizing profit over compliance. Innocent investors like M318 and Lawyers Realty became collateral damage to these brokers’ treacherous cash grab.
This level of individual and institutional malpractice not only warrants criminal prosecution but also an overhauling of accountability standards in the finance industry. No investor should have their life’s savings systematically looted by such a coordinated conspiracy of avarice unconcerned with fundamental legalities.
The actions of Young, Sacca, and PFG epitomize the toxic ethical decay that erodes faith in the financial sector. Only by reviving an obligation to integrity over blind profits can catastrophic breaches like this fraud be prevented. Otherwise, more unwitting victims will inevitably suffer at the hands of remorseless con artists and the industry enablers empowering them.