A former director of men’s basketball at the University of Kentucky pleaded guilty Monday in federal court to nine counts of aggravated identity theft as part of a scheme to defraud $1.3 million from professional athletes.
Monday’s change of plea came two weeks after Leon A. Smith quietly pleaded guilty Nov. 20 to five other federal counts of wire fraud and money laundering.
A jury trial had been scheduled for Nov. 28 in federal court in Lexington, but the proceeding was set aside after Smith, 45, pleaded guilty.
The guilty pleas Monday and Nov. 20 were entered without an agreement with government prosecutors.
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“The evidence was very clear. He was guilty of those charges,” defense attorney Elizabeth Snow Hughes said after Monday’s hearing. “There was no reason to put his family through a trial.”
Smith had no comment as he left U.S. District Court. The minimum sentence he could receive is two years in prison.
U.S. District Judge Joseph M. Hood scheduled sentencing for March 12.
One of Smith’s clients was former UK and NBA player Josh Harrellson, who was awarded more than $1 million in August as part of a separate civil suit in Fayette Circuit Court. Harrellson, 28, now plays for a team in Japan.
“That judgment is meaningless,” Hughes said. Smith has repaid more than $500,000 to victims, according to a court document, but Hughes said she would be surprised if her client could make full restitution.
“He has no assets,” she said. “He has depleted everything in order to make the payments he has already made. Certainly, he’ll be required to make restitution, and he’s going to do his best. But I feel like the payments will be minimal.”
Smith was director of UK men’s basketball operations from about 2001 to 2006 under Tubby Smith and was an assistant athletic director from 2006 to 2009. The Louisville native lettered three seasons as a wide receiver for the UK football team from 1993 to 1995.
Smith parlayed his connections to athletes to become a financial adviser, with access to personal information that allowed him to conduct transactions on their behalf.
The indictment alleged that Smith abused his access to clients’ financial accounts and used the money for unauthorized purposes.
For example, the indictment said, he opened unauthorized financial accounts in clients’ names, including credit card accounts and lines of credit.
He concealed the unauthorized transactions by changing passwords to accounts belonging to clients, restricting access to new passwords, and fabricating expense reports that used fictitious expenses to explain low balances in the accounts, the indictment said.
The federal indictment said Smith misappropriated $1,298,506 belonging to clients from September 2011 to January 2015. His financial services companies were dissolved in September 2015.
Harrellson learned in 2015 that Smith had been taking money from him over a two-year period. To conceal his actions, Smith set up a post office box in Harrellson’s name and had checks mailed to that box without Harrellson’s knowledge. Smith also used money Harrellson earned.
This past summer, Fayette Circuit Judge Pamela Goodwine awarded Harrellson $1,025,308 in punitive damages, or six times the amount of compensatory damages ($170,884) that she ruled that Smith must also pay Harrellson.
Hughes said she plans to appeal Goodwine’s decision.
Because he filed a separate suit in state court, Harrellson is the only athlete who was identified as among Smith’s clients.
A protective order filed in the federal criminal case prohibited the public identification of other clients. They were identified only by initials in the indictment.
During Monday’s proceeding before Judge Hood, Smith said he takes medication for bipolar disorder. Hughes said Smith attempted suicide when allegations first arose but before he was charged.
“It’s a very heartbreaking situation,” Hughes said. “He’s been through a lot of therapy. He’s had a lot to come to terms with, and he’s done so beautifully.
“My personal opinion is Leon Smith is a fine man,” she said. “He’s the fine man everybody believed he was before all of this happened. I believe he was debilitated by misdiagnosed mental health issues, and he is proving to be the fine man again after going through all of it and coming out on the other side.”
Smith, who lives in Batesville, Ind., is to remain free on bond until his sentencing in March.