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The SEC alleges that McGinn and Smith knew that it would never be possible to repay investors their principal, let alone the quarterly interest payments promised. McGinn and Smith instead misused offering proceeds to support their financially troubled or bankrupt entities, to make payroll for MS Co., and even for their own personal activities such as procuring strippers for a “sexually themed” cruise. Although the full extent of the fraud is not yet known, it appears that investors are currently owed at least $80 million..

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