UPDATED: Yet Another Local Ponzi Scheme Indictment – Newport Financial

Posted on July 30, 2013 by

UPDATE: According to an article in the Salt Lake Tribune yesterday, Michael Kay Smith, 66, and his son, Quintin Fullmer Smith, 33, each pleaded guilty to two counts of third-degree felony attempted securities fraud as part of a plea deal with prosecutors in which four second-degree felony counts of securities fraud and one count of pattern of unlawful activity were dismissed.  The two men each face up to 10 years in prison when they are sentenced in 3rd District Court in September. 

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Michael Smith and his son Quintin Smith have each been charged with six counts of securities fraud and one count of pattern of unlawful activity, all second-degree felonies, in connection with a furniture loan company they owned called Newport Financial.  According to a Salt Lake Tribune article published today they have been accused of “bilking investors of hundreds of thousands of dollars — one while serving as counselor to an LDS stake presidency — in a fraudulent furniture-financing scheme that targeted, among others, a prominent University of Utah football coach.”

The indictment alleges that the Smiths promised a return of 18 percent to gain investments of at least $1.8 million from 18 victims.  Their biggest investor was Norm Chow, the offensive coordinator for the University of Utah’s football team, who invested $500,000.

The Smiths are accused of misleading investors about the default rate of loans that they had in Newport’s portfolio, and about the solvency of the company. Investors were solicited between 2005 and 2009.

According to my sources one of investors in Newport Financial had cancer but the Smiths refused to return any of his principal to him while he was struggling with his medical bills.  Meanwhile the Smiths paid themselves large salaries and purchased trucks, a MasterCraft Boat, and a new house on in Salt Lake’s expensive Country Club area.

As you may expect, this case does have an LDS Church angle.  According to the indictment recently Michael Smith had served as a counselor in a stake presidency, although it is unclear if he explicitly used his position in the church to solicit investments.  At least one investor was in his ward.  It is also unclear why the DA’s office didn’t charge them under Utah’s new law imposing enhanced penalties where religious affiliations are involved in fraud.

The Salt Lake County District Attorney’s Office recently formed a new white-collar crime unit with seven attorneys dedicated to prosecuting nonviolent felonies, and financial crimes in particular.  This is their first high-profile indictment, and this group appears to be aggressively targeting affinity fraud schemes here in Salt Lake.

Now if only somebody in Utah County would follow suit…

Copyright 2013 by Mark W. Pugsley.  All rights reserved.

5 Responses to “UPDATED: Yet Another Local Ponzi Scheme Indictment – Newport Financial”

  1. I was approached about this one, to help with the furniture finance side. DIdn’t appear like a ponzi scheme, more like a bad business model. I know for a fact they had furniture stores where they handled the financing. A ponzi scheme would be absent of a true business model. However, if the Smith’s made false statements to investors that warrants action from prosecutors.

    Too often people invest without understand how the product is supposed to work and don’t ask for the right information because they explicitly trust the judgment and representation of the solicitor. Fault is often on both sides of the table.

  2. These crimes will continue until Utah gets an US Attorney
    who is willing to prosecute these con men regardless of
    their political friends and LDS Church status. Utah is the
    con man capital of America. The Governor gets a 8900.00
    dollar contribution hours later after obviously rigging a
    billion dollar bid his contributer wins. Hours later the
    State of Utah pays out 11 million dollars to quiet the bid
    winner. He should be indited along with his friends’
    Nothing from the Feds or State. Utah is a DISGRACE!!!

  3. I know Quintin personally and am aware of this business. There was no deception, and the majority of people who lost money on this failed business were friends and family. It wasn’t a scheme to steal money. It was a business that failed in a bad economy when way more people started defaulting on loans than was anticipated. Even Norm Chow is still friends with the family. It’s always risky investing in business.

  4. There should be a revolution. The Prosecuting attorneys across the country, fed and state, abuse their charging and prosecutorial discretion to up the ante on citizens, forcing them to enter a deal and plead, to avoid catastrophe, even when they are innocent. There is not an ounce or moral courage or character in a ton of prosecutors.

  5. Clint, you have no clue what you are talking about. How would you know there was no deception? If there was no deception then why was he just charged with 7 second degree felonies? You think the state just made up those charges and pulled them out of a hat? Obviously the state has concrete evidence of deception if the Smiths are facing such serious charges. Your comment is ignorant. It’s people like you that trust con men like the Smith’s who are at risk of being their next fraud victim.

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