November 18, 2009, 10:58 AM EST
A New Jersey-based financial adviser has admitted operating a scheme that defrauded investors of more than $9 million.
Sixty-nine-year-old Maxwell Smith of Fair Haven pleaded guilty Tuesday to a five-count criminal information charging him with mail fraud.
Smith will remain free on bail pending sentencing on Feb. 26. He faces up to 20 years in prison per count and a $250,000 fine, although the actual sentence could be far less under federal sentencing guidelines.
Prosecutors say Smith created a sham investment fund, promising clients tax-free returns of up to 9 percent annually.
Instead of investing the funds, Smith admitted using the money for personal expenses, including gambling and international travel.