MACOMB COUNTY, Mich. – Fred Smith was put in charge of
his mother’s affairs and ended up in the Macomb County jail because he
was unwilling to come clean about what happened to his mother’s money --
around $6 million is missing.
Smith, 73, served as trustee for seven years and four years ago the
court asked for the accounting. A Macomb County judge fined Smith, then
doubled the fine, and then exasperated sent him to jail.
Smith sat in jail for 79 days for civil contempt. Friday he
was granted a request for a release from jail. Now, he has freedom from
jail but he has to make an accounting of where his mother’s money went.
According
to his mother’s appointed guardian, George Heitmanis, Smith allegedly
bought and then lost a motorcycle dealership and purchased cars and
homes with his mother’s money. Heitman believes Smith made mystery
purchases in five states: Florida, Rhode Island, South Dakota, Virginia
and California.
Smith’s attorney, Lisa Walinske, said that Smith can comply with the court’s orders easier now that he’s out of jail.
Heitmanis said he will be pleasantly surprised if Smith finishes the accounting in the 90 days he has to complete it.
Fred Smith’s son traveled from out of state to Macomb County to plead
with his father to comply with a judge’s order to account for millions
of dollars in his mother’s trust fund.
The son, Fred Smith Jr.,
told his father at a Dec. 16 Macomb County Probate Court hearing, “Sure,
you made savvy business decisions on the front end of this to generate
the trust, the value of the trust. And there was poor decisions made.
You have to provide an accounting.
“It’s tearing mom apart. I hate to leave you in jail.”
Smith
Jr., choking back tears, told Judge Sandra Harrison: “This whole matter
has just torn up our family. We just need to move forward in this case.”
Fred
Smith Sr., 73, remains incarcerated over the holidays after he was
jailed Oct. 17 for failing to provide a credible accounting of roughly
$6 million of his mother’s money. He was the trustee for a decade ending
in 2015.
The case is under investigation by the Macomb County Sheriff’s Office.
Smith
Jr., a captain in the Navy, told Judge Sandra Harrison he will pay for
an accountant to help his father provide bank and other records of how
the money was spent.
Smith Sr.’s elderly mother, Shelby Steves
Smith, previously told her son in court she loves him and told the judge
at the Dec. 16 hearing from her wheelchair: “I’ll do what I need to do
to clear this up, but it seems to me a lot of things have been done that
should not have been done, and I don’t know how to handle that.”
Shelby
Smith resides in a Romeo nursing home while she waits for her
Washington Township home to be renovated to be wheelchair accessible.
Harrison at the hearing decided to keep Smith Sr. jailed until at
least a Jan. 3 hearing and granted a petition by his mother’s guardian
and conservator, George Heitmanis, to surcharge him $4.7 million, the
minimum amount of money for which Smith Sr. that officials say has
failed to account. She also awarded what is known as “treble” damages
that triples the amount to more than $14 million.
Judge Sandra Harrison of Macomb County Probate Court
Harrison said
she had been leaning toward releasing him but was displeased that Smith
appeared to lie to her at a Nov. 25 hearing when he said he had only one
storage unit at two separate storage facilities. Officials learned he
or a family member was renting four additional units at one of the
facilities.
“Because you perjured yourself the last time we were
here and you continue to attempt to hide (assets) and because you have
made no progress on filing this accounting, I am going to keep you in
jail,” Harrison said from the bench.
Smith Sr. responded: “It’s virtually impossible for me to complete the fudiciary reports while incarcerated.”
He complained he has very limited resources at the jail and must write with stubby pencils.
Smith
Sr., a Vietnam veteran, has denied wrongful spending, noting he has his
own income to spend, $7,000 per month in Navy retirement, military
disability and Social Security; the Social Security is currently
suspended while he is in jail.
He has accused Heitmanis of making “vicious attacks on my character and credibility.”
He said he would like transcripts to court hearings so he can refute,
“line by line,” the “falsehoods” and “inaccuracies” by Heitmanis, who
took over as guardian more than two years ago from attorney Terry
Gilsenan.
A Utica man has been confined to the Macomb County Jail for over
three weeks and will spend at least two more weeks there for failing to
account for millions of dollars spent from his mother’s trust fund that
he controlled.
Macomb County Probate Judge Sandra Harrison
originally jailed Fred Smith on Oct. 17 after she found him in civil
contempt and in early November ordered him jailed at least until Nov.
21.
Harrison said at a Nov. 7 review hearing that Smith has failed
to provide “an accounting” of millions of dollars despite four or five
orders over more than two years to do so. Harrison has implored him to
follow the orders many times.
“Mr.
Smith, you’re ordered to file these accounts,” Harrison reminded him.
“These are not complicated orders. They’ve been in place for two years.
You haven’t done anything to account for millions of dollars.”
Smith was trustee of the trust fund for about 10 years from 2005 to 2015, attorneys said.
Harrison
at a prior hearing told Smith he was “co-mingling everything and buying
whatever you wanted to buy and keeping no record of it.”
Macomb County Probate Judge Sandra Harrison MACOMB DAILY FILE PHOTO
Smith, 73, denies any improper spending and protested his
incarceration. He claimed he is trying to comply but cannot do so while
confined in jail.
“I’m not effective in a jail cell, your honor,”
Smith said. “I’m limited to a short stubby pencil and limited amount of
paper. ... It’s been difficult to operate at all without resources.”
He called the attempted inquiry a “witch hunt.”
“There is nothing there,” he said. “I’m not hiding anything.”
He
said he has been stymied in his efforts to provide an accounting as he
hired an attorney who failed to provide a quality report, and a Romeo
accountant also has worked on getting the information but wrote to
Harrison she doesn’t have access to all of the bank accounts.
Harrison
said Smith has had plenty of chances to follow the multiple orders. In
October 2018, she fined him $200 per day to follow the orders and at one
point increased it by another $100. The total amount of fines is about
$110,000; Smith has not paid the fines.
“What else would you have
me do? What else do we have to do to get your in line?" Harrison said.
"You’re going to remain incarcerated until you make real progress to get
these accounts filed.
“You gotta get it done. No matter how you go about it or accomplish it, get it done.”
She said Smith can work with his associate, Marty Prehn of Eastpointe, and jail officials in exchanging and filing paperwork.
Smith
has failed to follow up on the judge's offer to sign subpoenas for him
to secure information from financial institutions, she said. She said
Smith needs to provide copies of items such as bank statements,
cancelled checks, receipts and invoices.
Fred Smith, carrying his comfort dog,
appears in front of Michigan Attorney General Dana Nessel and other
government officials last July at the Macomb Intermediate School
District building in Clinton Township during one of Nessel's "listening
tour" stops regarding elder abuse.
MACOMB DAILY FILE PHOTO
Smith on Nov. 1 appealed Harrison’s Oct. 17 rulings to the state Court of Appeals.
Prehn,
a self-described elder advocate, said Macomb Probate Court does not
have jurisdiction over the case because the trust fund was created in
Florida. Smith’s mother’s husband died in the 1990s when they resided
there.
Smith has not formally made that argument in court but on
Oct. 17 as he was being taken from the courtroom to go to jail, remarked
the court didn’t have jurisdiction.
At an elder-abuse
listening-tour event held by Attorney General Dana Nessel in July in
Clinton Township, Smith complained about his mother's case.
Prehn also argued to The Macomb Daily “the whole purpose of a trust” is to protect funds from Probate Court interference.
At
the Oct. 17 hearing, Smith said his mother, Shelby Smith-Steves, 92, is
being isolated from him. Moments before Thursday’s hearing started,
Smith greeted his mother in her wheelchair, and she told him she loves
him.
Prehn said he believes Smith has grounds for a lawsuit
against the county. Prehn said he has complained to the FBI and state
Attorney General’s Office about attorney George Heitmanis, the guardian
and conservator for Smith-Steves for his actions in this case.
Heitmanis
not only staunchly supports Harrison’s efforts to force an accounting
of a roughly estimated nearly $5 million in alleged unaccounted funds
but gained an order from Harrison to refer the matter to Nessel's office
for a potential criminal investigation into Smith and his actions.
Heitmanis told The Macomb Daily he disputes the claim that Macomb
Probate Court, a state court, does not have jurisdiction. He said a
Michigan court has jurisdiction if any alleged misspending occurred
here.
“The question is, what happened to the money?” Heitmanis said. “Who is the end receiver of the money?”
He
said at the Oct. 17 hearing, “$5 million can’t just disappear and
nobody account for it. That’s something the state recognized has to be
resolved.”
He said the Attorney General’s office expressed interest in the case.
As
the trustee of the trust, Smith “had a duty to account. He was acting
on behalf of his mother for her benefit,” Heitmanis said.
Attorney
Eugene Hamlin, substituting for Heitmanis at the Nov. 7 hearing, said
regarding Smith’s incarceration: “Our position is if he doesn’t comply
with the orders, he should sit in jail.”
Harrison also ordered
Smith to bring a classic car that he purchased to Heitmanis’ office so
it can be inspected and photographed. She had ordered that previously.
In
addition, she ordered that Prehn remove photos of Smith-Steves at the
nursing home where she is residing from his Facebook page and has been
barred from visiting her. Prehn took the photos during a visit by him
and Fred Smith in September.
Harrison scheduled another review hearing for Nov. 21.
Smith-Steves also has a court-appointed attorney, George Drosis, who supports the judge’s effort to seek an accounting.
Smith
also filed a motion for release from jail based on his comfort dog,
“Schubert,” being in poor health. He said the dog needs him. Smith said
he served in the military during the Vietnam War and suffers from post
traumatic stress disorder.
But Harrison denied it, expressing sympathy for the dog’s illness but saying that it was not a sufficient reason for release.
Smith-Steves
has been residing in a Romeo nursing home for several months but told
the judge Oct. 17 she wants to move back into her Romeo area home, which
must be renovated to further accommodate her. Her other son currently
resides there with his wife, and they would take care of her during off
hours when care-taking staff wasn’t working, under a plan revealed at
the Oct. 17 hearing.
