Three years before pleading guilty to bank fraud and other federal charges, Dynus Corp. President James Smith waltzed into West Chester Twp. and tried to sell trustees an idea that would not only save them money, but make them money. As it turns out, those promises were nothing more than a bill of goods.
What was planned as a $2.4 million project to add wireless and other technology in West Chester eventually folded and became fodder for the U.S. government after it was determined Smith forged the signature of then-Administrator Dave Gully.
It was an attempt to show the deal with West Chester was legitimate, especially since Smith and other Dynus officials had already booked the $2.4 million as revenue even though no money ever exchanged hands, testified Julia Light, financial officer for Dynus Corp.
Smith has been a key witness in the federal trial against former Dynus owner Orlando Carter, who is fighting an 11-count indictment in U.S. District Court in Cincinnati. U.S. attorneys have said Carter misrepresented business deals with Butler County, West Chester Twp. and other entities across the country, adding what was later determined to be imaginary revenue to Dynus’ bottom line to expand the company’s credit line with area banks.
He’s also accused of lying on a bankruptcy filing, mortgage and other loan applications and tax forms. He faces up to 30 years in prison if convicted. Smith has yet to be sentenced.
West Chester officials began having discussions with Dynus in late 2004, according to meeting minutes and video recordings provided by the township. In January 2005, trustees discussed whether to proceed with the supposedly booming technology company by giving Gully the go-ahead to explore the interest.
Trustee George Lang — then in his first term as trustee — moved and voted on providing Gully with that authority.
At the same time, Lang was employed by the company as a consultant for one of its subsidiaries, Dynus Financial. Lang became an officer in March of that year.
Lang said this week he felt confident in making the motion for Gully to proceed because Dynus was not going to benefit financially unless the township agreed to accept them as a business partner. It never got that far.
Following an April 2005 work session, the township received a contract with Dynus that allegedly had Gully’s signature on it.
“We all said, ‘That’s not Dave Gully’s signature,’” said Trustee Catherine Stoker.
Soon after, Lang and others moved to turn over everything they had to Butler County Prosecutor Robin Piper.
“There’s a lot of the story to be told and a lot of facts that still need to come out,” Lang said this week.
He declined to comment further, saying he’d been advised to do so by his and U.S. attorneys because he is under subpoena and may be called to testify in his former boss’ trial. Lang has never been charged criminally in connection with his Dynus duties.
“I think West Chester made the right decision back then,” Stoker said.
Smith’s April 2005 presentation was polished and informative. He told trustees Dynus was soon to become a $100 million company, and that the township could save between $3,500 and $4,000 per month by using their technology.
He urged trustees to understand the importance of using such innovation to continue on their path of growth.
“The risk is that if West Chester doesn’t keep up with technology, you’ll lose momentum,” Smith said in 2005. “The highway (Interstate 75) is not going to be good enough to keep businesses located here.
“I’m here selling you on the fact that this is infrastructure that you better build if you want to compete,” he added later.
Smith told trustees they were working on a similar deal with Butler County, a deal that would eventually become the linchpin in the prosecution’s case against Carter and others.
Dynus is said to have taken out a multi-million dollar loan in 2005 in the county’s name without the county’s approval, forging the signatures of bank officials and former Butler County Auditor Kay Rogers. Rogers has pleaded guilty in 2008 to federal charges and is still awaiting sentencing.
During the trial last week, witnesses testified Lang received a $360,000 commission on the deal with the county, and that he gave Smith a $100,000 kickback, money that should have — but never was — claimed on the company’s bottom line, company officials have said.