Friday, March 8, 2013
Creditors: John L. Smith moved cash
LITTLE ROCK, Ark. -- Creditors are trying to block former Arkansas coach John L. Smith from liquidating $40.7 million in debt, saying he moved several properties and more than $2 million from his holdings before filing for Chapter 7 bankruptcy protection.
Federal bankruptcy court filings by Smith's creditors say he cashed $1 million in certificates of deposit in 2008 and he is "unable to explain the current location of the funds." The documents also allege that in 2008 and 2009, Smith transferred $1.16 million to his wife, son and daughter-in-law. Most of that sum, $975,000, went to the Diana Smith Trust, which is named for Smith's wife.
Smith has said Kentucky real estate investments that went sour led his financial troubles. He disclosed to The Associated Press last summer that he expected to file for bankruptcy protection and hoped his financial woes wouldn't be a distraction during the season as he took over for the fired Bobby Petrino. The Razorbacks struggled under Smith, and he was let go after the season.
In 2008, Smith shifted ownership of real estate -- two properties in Idaho and one in Michigan -- to the trust in his wife's name. The filings allege that Smith transferred his interest in a company, JLS Enterprises II LLC, to his wife's trust in 2008 and between then and 2012, Smith signed documents as a "member" of JLH, which held property in Kentucky.
On Sept. 4, 2012, that entity was folded into Fourth and One LLC, of which Diana Smith was the sole member.
Smith filed for bankruptcy two days later.
Smith's lawyer, Jill Jacoway of Fayetteville, didn't return phone and email messages seeking comment. Smith didn't reply to an email requesting comment and a spokesman at Fort Lewis College in Durango, Colo., where Smith is now head coach, said Friday that Smith was out of town.
"I spoke with Coach Smith on his cell and he said he's unavailable today due to his travels," spokesman Chris Aaland said in an email.
As of Friday, Jacoway had not filed a response to the creditors' complaint. A lawyer for the creditors, Thomas Robertson Jr., said he didn't want to discuss the case outside of court.
Arkansas hired Smith away from his alma mater, Weber State, last April when it urgently needed an interim coach. The school had fired Petrino after he hired his mistress to work in the football program.
Arkansas entered last season ranked in the top 10 but lost to Louisiana-Monroe in its second game and limped to a 4-8 finish.
Smith had a 10-month contract for $850,000 structured so that much of it would be paid on a deferred basis. Athletic director Jeff Long said during the season there was no intent by the university to keep that money from being seized in the bankruptcy proceeding.
But the creditors' filing alleges that Smith "intended to place such funds beyond the reach of the creditors."
Jacoway said after a hearing last fall that U.S. Bankruptcy Judge Ben Barry will decide what happens to money Smith earned at Arkansas.
"And if one side or the other doesn't like what Judge Barry says, then we appeal and we appeal and we appeal," she said.
The creditors include Terra Springs LLC, John D. Rhodes Revocable Trust, the Rhodes Family Limited Partnership, John D. Rhodes, Gerard J. Hart, Spring Farm Glen LLC, Spring Farm Pointe LLC, Terra Acquisitions LLC and Branch Banking and Trust Co.
Barry has assigned a trustee to handle any of Smith's assets.