Former Kentucky banker admits using fake documents in donation scheme

·3 min read

A Kentucky bank official falsified documents to lure a customer into giving donations to the county humane society, where he was an officer, according to a federal charge.

The donor alleged in a separate court case that the banker, Mark F. Smith of Shelbyville, took the money she had donated.

The fraud totaled at least $618,692. That’s the amount Smith would be liable to pay in restitution under his plea agreement.

However, Smith may owe more, according to the document.

Smith was a business development officer and loan officer at Citizens Union Bank in Shelby County and president of the Shelby County Humane Society when the crimes occurred between December 2016 and April 2018, according to court documents.

Smith, who resigned from the bank in 2018, pleaded guilty in federal court in Frankfort Wednesday to one count of bank fraud, punishable by up to 30 years in prison, and one count of wire fraud, which carries a maximum sentence of 20 years.

One charge said that Smith made unauthorized draws from a bank customer’s $150,000 home-equity line of credit — the largest of $75,000 — and put the money into an account of the humane society.

On the other charge, Smith admitted that he gave false documents to a bank customer in order to lure her into making donations to the humane society.

The victim, identified in federal court records as M.G.M., was also on the board of the non-profit society and had pledged to match up to $300,000 in donations from others.

Smith set up a $50,000 loan from a Shelbyville business to the humane society and then told M.G.M. it was a donation, which she matched, according to his plea.

Smith also gave M.G.M. false documents showing other businesses and charitable trusts had made large donations, when in fact they had made only relatively small contributions or none at all.

For instance, Smith told the woman that a Diageo distillery had given $50,000, when the donation was actually $500, according to his plea deal.

All told, Smith induced M.G.M. to donate $300,000 under false pretenses.

Smith also cost the woman double for a land purchase for the humane society. After M.G.M. donated $273,952 to buy land for the organization, Smith sold it to someone else for $260,000 without the knowledge of the board, and M.G.M provided the money to repay the buyer, according to Smith’s plea agreement.

The plea agreement said Smith put the donations he arranged through fraud into accounts of the humane society. It didn’t say what happened to the money after that in most cases.

In a complaint filed as part of Smith’s separate 2019 bankruptcy case, however, an attorney representing M.G.M., Gregg Y. Neal, said Smith misappropriated money she had donated and kept it “for his own personal gain.”

In a case not related to the humane society, Smith set up an account at the bank for a fund for nursing scholarships, but then took out $1,000 in cash and switched $7,200 to his own bank account.

The restitution Smith owes is $560,000 to M.G.M., $8,692 to people who donated for nursing scholarships and $50,000 to the Shelbyville business that loaned money for the humane society.

U.S. District Judge Gregory F. Van Tatenhove scheduled Smith to be sentenced in November.

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