A former director of men’s basketball operations for the University of Kentucky accused of taking nearly $1.3 million from professional athletes pleaded not guilty Monday in U.S. District Court in Lexington.
Leon A. Smith, 44, was indicted earlier this month on federal 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.” Between September 2011 and Jan. 29, 2015, Smith misappropriated $1,298,506 in funds belonging to clients, the indictment says.
Smith appeared in court with attorney Elizabeth Hughes. U.S. District Judge Joseph M. Hood scheduled a trial for July 18.
Smith and Hughes left the courthouse without making comments to reporters.
Meanwhile, new information obtained by the Herald-Leader through an Open Records Request shows that UK officials were unhappy in 2006 when Smith, who was then director of men’s basketball operations, ordered more than $12,000 in Southeastern Conference Championship rings without going through proper purchasing procedures.
The vendor, Balfour, informed UK officials about a past-due invoice involving the rings.
UK had to tell the Balfour representative “we were unaware of any purchase and that we would look into it,” Catrina Gibson wrote in a Feb. 10, 2006, memo to Smith. “As you know, a purchase requisition should have been filled out by you and a quote should have been received prior to placing this order. Purchasing requires 2-3 quotes on orders for this amount of money.
“This incident has not only made you look bad but also the University and the Athletics Department,” Gibson continued in the letter to Smith. “… Please know that these policies are in place for a reason and the Athletics Business Office is looking out for you as well since Purchasing could deny the charges and make you responsible for payment.”
However, UK apparently paid the invoice “with the stipulation that this does not occur again,” the letter to Smith said.
Smith, a Louisville native, lettered three seasons as a wide receiver for the UK football team from 1993 to 1995. He was director of men’s basketball operations at UK from about 2001 to 2006 under Coach Tubby Smith and was an assistant athletic director from 2006 to 2010. Leon Smith resigned from UK in April 2010 “in order to explore new, professional opportunities,” according to his resignation letter.
Meanwhile, the 14-count federal indictment says professional athletes used Smith’s now-dissolved companies for various financial services. A civil lawsuit filed in Fayette County identifies one athlete as former UK basketball player Josh Harrellson, who claims he lost $180,000 to Smith. Other athletes were identified only by initials in the federal indictment.
Smith’s companies were called LSMG LLC, Legacy Pro Management Group LLC and Legacy Athlete Management LLC. The services 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.
Smith then devised a scheme to defraud the clients, the indictment says. That included abusing his access to clients’ financial accounts to use the money for unauthorized purposes, the indictment says.
Smith received payments that had been issued to clients, including payroll checks and federal income tax refund checks, and deposited those items into accounts opened in the name of Legacy, and then “used the funds for unauthorized purposes,” the indictment says.
Smith also used personal and financial data of clients to open unauthorized financial accounts in their names, including credit card accounts and lines of credit, the indictment says.
Smith concealed the unauthorized transactions by changing passwords to financial accounts belonging to Legacy clients, restricting access to new passwords, and fabricating expense reports that used fictitious expenses to explain low balances in the financial accounts, the indictment says.
Another count in the indictment alleges that Smith forged signatures and unique Internal Revenue Service check identification numbers, and knew that such means of identification belong to another person.
Smith’s companies were dissolved in September 2015, according to the Kentucky Secretary of State’s website.