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Two men who swindled investors, including a prominent University of Utah football coach, out of thousands of dollars over the course of four years one while serving as a counselor in an LDS stake presidency pleaded guilty Monday to orchestrating a fraudulent furniture-financing scheme.
Michael Kay Smith, 66, pleaded guilty to two counts of third-degree felony attempted securities fraud as part of a plea deal with prosecutors. He faces up to 10 years in prison. His son Quintin Fullmer Smith, 33, pleaded guilty to two counts of misdemeanor attempted securities fraud. He faces up to two years in county jail. They will be sentenced in 3rd District Court in October.
As part of their plea deals with prosecutors, four second-degree felony counts of securities fraud and one count of a pattern of unlawful activity were dismissed for each man. Had they been convicted of any one of the second-degree felonies they were initially charged with, the Smiths each could have faced up to 15 years in prison.
The two allegedly promised an 18 percent return on investment to clients and attracted at least $1.8 million from 18 victims beginning in 2005. Their biggest investor was Norm Chow, the former Utes' offensive coordinator, who invested $500,000.
On Monday, the men said little as they appeared before Judge Elizabeth Hruby-Mills.
Michael Smith, tall, balding and wearing glasses, lowered his head slightly as the judge read him his rights. Quintin Smith, shorter with light-colored hair, shuffled from foot to foot.
According to charging documents, the Smiths ran a business called Newport Financial that bought the contracts of furniture customers who could not qualify for traditional financing. The Smiths understated the default rate of the furniture customers and lied about the solvency of the company, which operated only with new investor money, the documents state.
At least five of the investors did not receive their promised payments and lost at least $911,000 in the deal, the documents state.
The scheme allegedly lasted from September 2005 through August 2009.
During that time, Michael Smith served as first counselor in the Salt Lake University LDS 2nd Stake presidency, which was dissolved in April 2011 during organizational changes. Several of the victims met the Smiths through relatives, but at least one attended church with Michael Smith, investigators said.
At the time of the Smiths' arrest, church officials condemned "get-rich-quick schemes and financial deceptions."
Defense attorneys said several of the victims have expressed an interest in speaking at the Smiths' sentencing in September. It was not immediately clear if Chow, now the head football coach at the University of Hawaii at Manoa, would attend.