News

Idaho man convicted of conspiring to help brother in fraud scheme

Faces up to 20 years in federal prison

(Dreamstime/TNS)
(Dreamstime/TNS)

CEDAR RAPIDS — An Idaho man who conspired with his brother to influence a witness in a fraud case was convicted this week in federal court.

David Emerson Smith, 70, of Pocatello, Idaho, pleaded guilty in U.S. District Court to one count of conspiracy to obstruct, influence and impede an official proceeding.

During the hearing, David Smith admitted he agreed with his brother, Darrell Smith, 62, a former Forest City investment adviser, to obstruct, influence and impede his brother’s sentencing in late 2018.

While pending a sentencing hearing at the Bremer County Jail in June 2017, Darrell Smith told David Smith in a recorded phone call that one of the victims in his fraud scheme, in which he stole money from clients to fund an ethanol plant in Hopkinton, could “make it really hard” for him if she continued to “complain” to prosecutors.

Darrell Smith told his brother it would be “two extra years” if the woman continued to complain but he could get her some stock shares within a year if she stopped, according to the plea agreement. At Darrell Smith’s request, David Smith agreed to contact the woman in February 2018 and sent a letter indicating Darrell Smith had $40,000 for her, in her children’s names, in accounts at an investment company.

The letter also reminded the woman she had “$350,000 in tax credits” and 2 million shares of an energy company available to her, the plea shows. However, the “tax credits” and shares were not real.

Authorities discovered the scheme before Darrell Smith’s sentencing in October 2018. A judge found Darrell Smith stole $2.4 million from his investment clients, including $161,800 from the victim whom David Smith contacted at Darrell Smith’s request. The court also found Darrell Smith obstructed justice and sentenced him to over 14 years in prison, and he was ordered to pay over $1 million in victim restitution.

Darrell Smith was also convicted in 2017 of wire fraud and aggravated identity theft.

David Smith faces up to 20 years in federal prison and a $250,000 fine. Sentencing hasn’t been set.

The case is being prosecuted by Assistant U.S. Attorney Timothy Vavricek and was investigated by the Federal Bureau of Investigation and the United States Postal Inspection Service.

l Comments: (319) 398-8318; trish.mehaffey@thegazette.com