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Home > Blogs > Butler County News and Issues > Archives > 2009 > August > 04 > Entry
Dynus trial continues. What new details will emerge?
The defense team for former Dynus Corp. owner Orlando Carter will continue cross-examination of former company president Jim Smith in federal court today.
This follows Smith’s tell-all testimony yesterday:
Former Dynus Corp. President Jim Smith told a federal jury Monday, Aug. 3, how he lied, forged documents, paid elected officials and concealed information from others to over-inflate his company’s profits.
Smith’s testimony came in the second week of the trial of former Dynus owner Orlando Carter, who is fighting an 11-count indictment including charges of bank fraud.
Smith said the company’s motto was “Up and to the right,” with Carter demanding that revenues increase every single month — even if it was just on paper.
Smith admitted to forging the name of former West Chester Twp. Administrator Dave Gully — currently administrator for Warren County — on a 2005 contract to make it look like he had a contract with the township that didn’t exist.
“(Carter’s) words were I don’t care if you have to sign it yourself, I want to book the revenue this month,” Smith said.
At the same time, Smith was trying to secure a deal with Butler County that he had told the bank already existed. In the process, he said he worked with then-Butler County Commissioner Michael Fox and then-Auditor Kay Rogers to conceal details of a deal between the county and company from other county officials.
Smith said he was introduced to Rogers and Fox through West Chester Twp. Trustee George Lang. Smith said he met Fox and Rogers at Jags, a restaurant owned by Lang, and discussed the need to hide the details of the deal from the county administrator, deputy administrator and Commissioner Charles Furmon.
“They would stop or slow down the deal,” Smith said.
For giving them access to county officials, Lang was paid more than $300,000, Smith said, roughly $100,000 of which was given back to Smith in “kickbacks.”
Smith said the company also paid $50,000 to Scott Owens, then executive director of the Butler County Republican Party. Owens was Lang’s campaign manager and worked on the campaign of county Prosecutor Robin Piper.
The hope, Smith said, was that Owens would use his connections to get Piper to sign an opinion of counsel letter that said a deal with the county indeed existed. Dynus needed that letter because it had already borrowed $4 million in the county’s name.
Smith’s testimony is part of his 2006 plea deal, in which he pleaded guilty to bank fraud in relation to the Dynus deal.
Rogers also pleaded guilty in relation to the deal and is awaiting sentencing.
In this story, we explore Smith’s motives, and his relationship with Carter:
Former Dynus Corp. President Jim Smith testified against his former boss and close friend Monday, saying that company owner Orlando Carter asked him to take the fall for the company taking out a multi-million dollar loan in Butler County’s name without county approval in 2004.
“(Carter) was like a brother to me,” Smith said. “We had a lot in common, we would go different ways and tell each other we love each other.”
Smith took the stand in Carter’s federal court trial Monday, Aug. 3, describing Carter as a shrewd businessman with direct oversight of how his company was run.
Carter’s defense team has argued he was not involved in the details of the Butler County deal.
The Mason man is fighting an 11-count indictment, including charges of bank fraud and forgery. Carter is alleged to have misrepresented his income to secure a $1.2 million home and misled banks about business deals with Butler County. He’s also accused of lying on a bankruptcy petition.
Smith described himself as ambitious, with a personal goal of retiring by age 40. He said he met Carter in early 2004 through his business dealings with West Chester Twp. Trustee George Lang, and found a mentor in Carter.
“If you want to learn to make a lot of money, you learn from somebody who has made a lot of it,” Smith said.
Smith quickly rose through the ranks from a consultant to company president.
But in its quest to chart unbridled profits, the company soon turned to unscrupulous means, Smith testified. He admitted to forging documents, saying the company had contracts with governments that it didn’t, lying to banks to borrow millions of dollars and bolstering the company’s books with contracts that didn’t exist.
“Why did you do those things?” asked assistant U.S. Attorney Richard Chema.
“Misguided greed and ambition,” Smith replied.
Smith said several public officials got pulled into the issue. This included then-Butler County Auditor Kay Rogers, who resigned after pleading guilty to bank fraud for her role in the Dynus deal.
Smith said he signed on behalf of Butler County for a $2.5 million loan from National City Bank for equipment to use the county’s fiber optic ring to build a telecommunications company in the county.
“Who told you to go ahead and do that, to sign for Butler County?” asked Chema.
“Kay Rogers,” replied Smith.
Smith said he later took out another $4 million loan from National City in the county’s name on the promise that he would produce a letter from the county attorney saying a deal existed.
When the bank balked, Smith said he had Rogers and then-county Commissioner Michael Fox — who later retired after serving as Children Services director — lean on a bank employee.
“They called me and told me they called and quote, unquote lit him up,” Smith said of the bank employee. “They basically told him they don’t know who we are, we’re the auditor and commissioner of the county and you need to get this done or we won’t do business with you.”
The bank agreed to the loan, with another $1.2 million to follow once the letter was produced. Despite repeated attempts to trick county officials into signing such a letter, Smith said a letter never came.
When other county officials and the banks caught wind of the dealings, Smith said Carter came to him and made him an offer.
“He said he wanted me to take the blame and that would be rewarded to me in the future,” Smith said.
Smith said he initially lied to the FBI during its investigation of the deal, but he had woven too tangled a web.
“It was overwhelming, trying to keep up with your own lies and what you’d said and what you hadn’t said,” he said.
Carter’s defense team had only begun its cross-examination of Smith when court adjourned Monday.
Smith said on cross-examination that he hoped to gain favor from U.S. District Judge Sandra Beckwith for cooperating in the trial under the terms of his plea agreement for pleading guilty to bank fraud.
Defense attorney Wende Cross stressed how freely and often Smith had lied during the investigation and that Smith was one of several Dynus employees Carter had close relationships with. She implied that the pressure to grow the company’s profits was personal, not a directive from Carter.
“You put a self-imposed pressure on yourself to do well, correct?” she asked. “You wanted to prove yourself to Orlando Carter, right?”
“Yes,” Smith replied. “I wanted to be a part of something big.”
Permalink | Comments (2) | Post your comment | Categories: Dynus
Comments
By spottedduck
August 4, 2009 10:22 AM | Link to this
OK Govenor Strickland, I warned you there was corruption all over Southern Ohio and you turned it over to one of y our flunkies and did nothing to investigate it. When are you going to learn? Do not count on getting re-elected. Y our are useless and condone corruption.
By Sayitaintso
August 4, 2009 11:27 AM | Link to this
SpottedDuck,what the heck does Strickland have to do with this? The Feds have been all over this since its federal offenses. What role would the State have?