SALT LAKE CITY — Two men accused of using a Salt Lake investment company to perpetuate a multimillion-dollar financial scam have entered guilty pleas.
Michael Kay Smith, 66, pleaded guilty to two counts of attempted securities fraud, a third-degree felony, in 3rd District Court Monday while Quintin Fullmer Smith, 33, pleaded guilty to two counts of attempted securities fraud, a class A misdemeanor. Both men originally faced six felony counts of securities fraud and one count of pattern of unlawful activity, second-degree felonies, according to 3rd District Court records.
Michael Smith will be sentenced Oct. 7 and could face up to five years in prison on each count. Quintin Smith faces a potential penalty of up to a year in jail for each of the misdemeanor counts.
All of the other charges were dismissed in exchange for Michael Smith's guilty plea. The two third-degree felony counts can be reduced to class A misdemeanors if Michael Smith successfully completes probation and pays full restitution of almost $1.3 million, the agreement states. Prosecutors can still argue for a prison sentence, however.
According to charging documents, the pair ran a company called Newport Financial Services and allegedly guaranteed investors an 18 percent return by purchasing contracts of furniture store customers who could not qualify for traditional financing options. They allegedly told people they had invested $1 million of their own money, which investigators say is a lie.
At least 18 investors put in a total of nearly $3 million, including Norm Chow, a former assistant football coach at the University of Utah and BYU, who invested $500,000, court documents show. Chow's oldest son, Carter, a sports agent whose clients include former BYU receiver Austin Collie, invested $400,000.
Six of those people listed in the charges received minimal or no return on their investments, charges state. The documents don't indicate whether Norm Chow or Carter Chow received any money back.
Investigators say the Smiths made false claims to attract investors such as they were making "100 percent on every dime they put out there."
"Mike and Quintin said they were making money hand over fist," according to court documents. They allegedly told one investor that "if everything were cut off today, we would have enough to pay every investor back and still have $2 million left over."1 comment on this story
A month later, police say they told investors all the money was gone.
According to Michael Smith's plea statement, he pleaded to his actions in connection with two individuals who apparently gave money from their retirement accounts.