Police sirens

For 14 years, outside the knowledge of his investment firm employer, longtime financial adviser Douglas Simanski operated a “Ponzi” style scheme based on false documents and inflated promises that swindled more than $4 million from 31 people – including retirees and war veterans, a federal prosecutor said.

On Wednesday, U.S. District Judge Kim R. Gibson ordered him to spend 6 1/2 years in federal prison.

Simanski, 54, was sentenced on securities and wire fraud as well as filing false federal income tax returns to hide his earnings from 2013 through 2015, after the Lilly man offered a teary-eyed apology and two men – one of them the commander of Ashville’s VFW Post 4315 – scolded him for “betraying” generations of veterans and the communities they serve.

“I made a serious mistake in going outside of my employers to (encourage people) to invest in these companies. 

“I lost their money. I lost their trust – and for that I’m truly sorry,” Simanski said in court, maintaining it was never his intention.

But Assistant U.S. Attorney Stephanie Haines viewed Simanski’s actions differently, describing him as a “despicable financial predator” who used fake investment CDs and pledges of up to 10 percent returns to coerce people he knew into investing their money, oftentimes their retirement savings.

“He preyed upon them because they trusted him,” she said.

In 2012, Simanski convinced one grieving man to cash in and invest a life insurance policy while his wife was dying at UPMC, Haines said.

Ashville VFW Post Commander David Seymore said Simanski was a longtime member of the post whose father served as commander there years earlier, which made it natural for the group’s members to turn to him with their investments a decade ago.

The fact Simanski “embezzled” club money was only part of the story, Seymore added, saying the loss has had a trickle-down effect that impacted local Scouting groups, elderly residents and schoolchildren the club supports.

“That’s still a problem,” he said afterward, because the community has hesitated to support the post because of Simanski’s impropriety.

The Lilly man said he regrets the pain he caused – and suggested he fell victim to the same investments, which included a coal mining company that folded six years later.

“I tried to repay (people) with my own money, but the losses were just too much,” he said.

His federal public defender, Chris Brown, argued the same in court in an unsuccessful plea for Simanski to receive home confinement, rather than jail time.

He said Simanski didn’t live a lavish life, and aside from his home – which is now in foreclosure – has few resources to his name.

“He’s not sitting on a pile of money ... like you often see in these cases. He has a (court-supplied) public defender,” Brown noted, indicating the man was “robbing Peter to pay Paul.”

Simanski’s nephew and a longtime friend stood before the judge describing the man as a “family guy” who was always willing to help others – and someone who’ll work hard to repay his debts.

Haines said more than $3 million of the $4.5 million Simanski acquired was unaccounted for as of Wednesday. 

But she suggested that he spent a significant amount of his investors’ money on his home and family.

She disagreed with Brown about his lifestyle, saying he built a $400,000 home and filled it with extras like $18,000 bamboo flooring and garage upgrades.

He invested more money into an online E-trade account that he opened in his wife’s name “so the funds couldn’t be traced to him,” Haines added.

“He didn’t accept responsibility ... until he was caught red-handed,” she said.

Simanski was also ordered to receive three years court supervision following his release.

A July 12 hearing has been set to determine how much restitution he has left to repay and the terms he’ll have to abide by to repay it.

“There are still questions over that total,” Gibson said.

David Hurst is a reporter for The Tribune-Democrat. He can be reached at (814) 532-5053. Follow him on Twitter @TDDavidHurst and Instagram @TDDavidHurst.