Creditor Alleges John L. Smith Tried to Conceal Assets in Bankruptcy

by Mark Friedman  on Tuesday, Feb. 12, 2013 11:26 am  

John L. Smith, former football coach for the University of Arkansas Razorbacks. (Photo by Beth Hall)

A creditor of the former Arkansas Razorbacks football Coach John L. Smith alleged in a lawsuit Monday that Smith attempted to "hinder, delay or defraud his creditors" in his $40.7 million bankruptcy case.  

The creditor, RLBB Acquisition LLC of Louisville, Ky., is an unsecured creditor in the Chapter 7 bankruptcy Smith filed in September. Smith, who listed $1.3 million in assets, has blamed bad real estate investments in Kentucky for his financial woes.

Smith was a member in RLBB and personally guaranteed loans for real estate investments. RLBB filed the lawsuit in Smith's bankruptcy case to prevent its debt of $4.5 million from being discharged.

In December, RLBB's representatives rummaged through 6,000 documents from Smith and found "no documentation for substantial periods of time and no explanation to date on where such documentation may be," the lawsuit said.

But RLBB did find evidence of several real estate transfers that happened since 2008 involving properties in several states, including IdahoKentuckyMichigan and Utah. The lawsuit says Smith transferred some of the properties to a trust established in the name of his wife, Diana Smith, while others went to his adult children.

"In all instances, either the title of the properties belonged to [Smith] or an entity over which he had control prior to the transfers," the lawsuit said.

Smith ordered that the title of the properties be placed in the name of the trust, "thereby intentionally avoiding title in his individual name," the lawsuit said.

"Numerous transfers of cash, funds in bank accounts, or interests in certificates of deposit with significant cash values believed to be in excess of $1 million were transferred to Mrs. Smith, the Trust, the Debtor's adult children or other insiders and/or affiliates since 2008," the lawsuit said.

The lawsuit also said that within a year of filing for bankruptcy, Smith renegotiated his $850,000 contract with the Razorback Foundation and the University of Arkansas so he would "receive the majority of these payments after he filed for Chapter 7 relief in an effort to place the majority of theses payments beyond the reach of his creditors knowing he was planning to file for Chapter 7 relief."  

Smith performed the actions to "conceal and prevent assts from collection by RLBB," the lawsuit said.

RLBB says it's entitled to a nondischargeable judgment of at least $1 million.

Smith's bankruptcy attorney, Jill Jacoway of Fayetteville, was unavailable for comment Tuesday. 

Smith, who was on an interim, 10-month contract with the UA football program, will take over as coach at Division 2 Fort Lewis College on March 1. Speaking at the Little Rock Touchdown Club in October, UA Athletic Director Jeff Long said the university did not have the bankruptcy in mind when it agreed to delay payments to Smith.

"There was absolutely zero efforts by the University of Arkansas, Razorback athletics, the Razorback Foundation to assist coach Smith with hiding assets from bankruptcy court," Long said. "I've learned through this process that's not something we could do, even if we wanted to do."

 

 

Please read our comments policy before commenting.
Search

Latest Arkansas Business Poll

Do you approve of the president taking executive action on immigration?