Man’s role in failed project to be examined at hearing |

Man’s role in failed project to be examined at hearing

Con man or businessman trying to save projects? A hearing next month will look at what role Harvey Keith Smith played in a troubled Grass Valley office project that has been hit with lawsuits and allegations of missing funds.

Judge Lawrence Karlton, a federal judge in the Eastern District of California who is handling the case, noted two points of view regarding Smith’s conduct. One is held by the probation officer. Another is held by Smith’s attorneys.

“The probation officer’s view is your guy’s just a plain, old-fashioned crook, and what he was doing during this period of time was out filching money from folks,” Karlton said during a hearing Thursday.

“(Smith’s attorneys) argue he was doing God’s work; he was trying to save the Nut Tree, etc…,” said Karlton.

Embittered investors, who are out money on the Grass Valley Community Services Center’s project at 150 Hughes Road, seem to subscribe to the probation officer’s view.

Some of them, including Jim March, have written letters to Karlton regarding Smith, 76, a former Alta Sierra resident who is to be sentenced soon for probation violations in connection with the Hughes Road project and other construction ventures.

“We were able to document the funds that are missing even though the feds decided not to pursue that,” said March, who lives in the Grass Valley area. “It’s clear from (Smith’s) actions in Vacaville that he’s not about to give up his scam work. If he’s out of jail in two to four years, he’s going to have 10 to 15 years to scam people.”

March said he is out $200,000 he invested in the Hughes Road building, plus another $170,000 in legal fees and loans he will have to repay to banks that lent him money.

Another investor, Ron Sykora, said he is out several hundred thousand dollars, money dumped into the Hughes Road building, and into another project called Serene Mountain Properties, which would have been built in the McKnight Road area. A corporation was being set up for Serene Mountain, but the project never got past that stage.

“All of it is based on blind faith, I guess, trust,” said Sykora, who lives in Cupertino.

Court records say Smith was the agent in charge of the project, from which $1.5 million is missing. He has pleaded guilty to a probation violation of associating with a known felon and making a false statement on a credit and loan application, plus a second probation violation in connection with an office project at the Nut Tree Airport in Vacaville.

A federal probation officer has asked that Smith receive 45 months in connection with the guilty pleas.

But in documents filed in federal court that object to the sentencing proposal, including a 10-page letter, Smith’s attorneys paint a different picture of their client.

Attorneys say federal authorities looked at the allegations of fraud by disgruntled investors. But no charges were filed because there was no evidence of fraud.

Assistant U.S. Attorney James Arguelles disagreed with the assessment at Thursday’s hearing.

Arguelles said the Federal Bureau of Investigation did a cursory investigation. While they didn’t find enough to pursue a case, that doesn’t mean Smith has been exonerated.

Attorneys say Smith was trying to save the Nut Tree Airport project in Vacaville when he ran afoul of probation for the second time. He pleaded guilty to associating with a known felon, falsifying reports, and unauthorized travel from the federal court district.

Smith’s attorneys claim their client was trying to carry out the wishes of Solano County officials in trying to help them get the project going, agreeing to explain it to firms that Solano County had contacted, his attorneys claim.

Smith was in the midst of trying to revive the Nut Tree project at the behest of Solano County officials when he was picked up on the second probation violation charge.

A date for sentencing has not been set.

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