A judge has awarded more than $1 million to former University of Kentucky basketball player Josh Harrellson in his civil case against Leon A. Smith, former director of the UK men’s basketball operations.
In a civil suit filed in Fayette Circuit Court earlier this year, Harrellson alleged that Smith had defrauded and stolen money from him during the time that Smith was supposed to be looking after Harrellson’s investments.
Fayette Circuit Judge Pamela Goodwine’s Monday ruling on punitive damages — $1,025,308.14 — is six times the amount of compensatory damages — $170,884.69 — she ruled that Smith also must pay Harrellson.
“Leon Smith preyed on Harrellson’s financial vulnerability,” Goodwine wrote in her final judgment. “His conduct is egregious. He engaged in deliberate, repeated acts of theft over the course of two years.”
It is not known whether Smith, 44, who now lives in Batesville, Ind., can pay the compensatory and punitive damages. He has not contested the civil case, and court papers don’t list an attorney for him.
Conrad Cessna, Harrellson’s attorney, said Tuesday it remains to be seen whether Smith will pay.
“I can tell you this: We will actively pursue collection,” Cessna said. “We’re not just going to get a judgment and let that go.”
Elizabeth Snow Hughes, a Lexington attorney who represents Smith in a separate federal criminal case, had no comment Tuesday on the civil judgments.
Smith was indicted in May on federal criminal charges of money laundering, aggravated identity theft and “devising a scheme to defraud and obtain money and property from clients by means of false pretenses.”
Smith has pleaded not guilty, and a trial is scheduled for Sept. 5 in U.S. District Court in Lexington.
Harrellson was employed as an NBA basketball player in July 2011. Harrellson was drafted in the second round of the 2011 NBA Draft by the New Orleans Hornets, but was traded to the New York Knicks.
Soon after he began playing professionally, he was contacted by Smith, whom the court papers describe “as a former employee of the university and confidant.”
Smith offered financial services to Harrellson, who testified that he trusted Smith “110 percent.” Harrellson wanted Smith to “watch and invest his money,” court papers said.
Harrellson testified during a July hearing that he relied on Smith to receive, manage and invest both general and royalty income and to help him budget his finances. Smith required Harrellson to provide him with a written power of attorney so that Smith would have complete access to Harrellson’s accounts.
The agreement seemed to work initially. Smith was responsive to Harrellson’s needs and requests for information. But that changed over the course of two years.
Harrellson testified that at the end of 2013 and the beginning of 2014, Smith quit responding to Harrellson’s calls, texts and emails.
In the summer of 2014, Harrellson was contacted by Justin Sherman, a former business partner of Smith. Sherman told Harrellson that “Smith had been taking money,” according to court papers.
“Harrellson began looking at his finances more closely and determined that monies were missing,” the papers say.
In early 2015, Harrellson was contacted by an Internal Revenue Service agent. The agent told Harrellson that Smith had been taking money from him over the past two years. To conceal his actions, Smith established a post office mail box in Harrellson’s name and had checks mailed to that box without Harrellson’s knowledge.
“Harrellson learned that Smith had forged his name on pay checks and never deposited them into Harrellson’s accounts,” the papers say.
In addition, Smith never invested the money Harrellson earned, but converted the funds to Smith’s personal use. “Harrellson testified that Smith even took monies from him during a period of time when Harrellson was injured,” the court papers say.
While some NBA players sign lucrative multi-year contracts, Harrellson was on a year-to-year contract.
Goodwine had awarded the $170,884 judgment for compensatory damages on July 6. Under the law, punitive damages in the range of four to 10 times the compensatory damages are “not an unreasonable amount to be awarded,” Goodwine wrote.
“Harrellson testified that the ordeal has been very stressful” on him and his family, the court papers say. “Nearly all of his savings were stolen by Smith.”
Smith resigned from UK in April 2010 “in order to explore new, professional opportunities,” according to his resignation letter.
Information obtained through an Open Records Request shows that UK officials were unhappy in 2006 when Smith, who was still director of men’s basketball operations, ordered more than $12,000 in Southeastern Conference championship rings without going through proper purchasing procedures.
However, UK apparently paid the invoice with the stipulation that it not happen again.
The 14-count federal indictment said professional athletes used Smith’s now-dissolved companies for various financial services. Athletes were identified only by initials in the federal indictment.
Smith’s companies were called Legacy Pro Management Group LLC and Legacy Athlete Management LLC. The service they provided included assistance with relocation, real estate purchases or rentals, bill payment, and referral to other professionals for legal needs and financial planning.
Smith received compensation for his services, which was generally a percentage of the client’s earnings.
In each instance, the client entrusted Smith with financial-account data, birth date, Social Security numbers and other personal information that allowed Smith to conduct authorized financial transactions on the client’s behalf.
Between September 2011 and Jan. 29, 2015, Smith misappropriated $1,298,506 in funds belonging to clients, the indictment said.
Another count in the indictment alleges that Smith forged signatures and unique IRS check identification numbers, and knew that such means of identification belonged to another actual person.
Smith’s companies were dissolved in September 2015, according to the Kentucky Secretary of State’s website.