The hits just keep on coming for former Arkansas Razorbacks head football coach John L. Smith.
According to two complaints filed this week in United States Bankruptcy Court, Smith is accused of defrauding several creditors by using his employment contract.
Smith, who previously served as head coach at Louisville and Michigan State, filed for Chapter 7 bankruptcy last year, claiming more than $40 million in liabilities, most of which are the result of bad real estate investments made around the Louisville area. Smith hoped the move would have the debts he owed discharged so that he can move on with his life, but the creditors are trying to prevent that from happening.
The creditors cite his unusual contract with the Razorbacks last year, in which 71% of his $850,000 salary was deferred until right after the 2012 season. In general, the bankruptcy estate controls assets acquired by a debtor before the date of the bankruptcy filing, which was Sept. 6 in Smith's case. Debtors generally can keep what they earn after the filing date.
A week before his bankruptcy filing, Smith signed a contract that stated $600,000 of his pay would be deferred in two lump sums of $300,000. One payment was to be made on Dec. 31, 2012, the other on Feb. 23, 2013. By having his pay deferred in this way, he was able to claim on his bankruptcy petition that his net monthly income was just $107.66, after expenses.
However, the deal marked a significant change from the initial contract he signed with Arkansas after being hired in April. Smith inked an agreement that stated he would received half of his $850,000 salary from the school in monthly payments, with the remaining half to come from the Razorback Foundation, the fundraising organization of the Arkansas athletic department.
Athletic Director Jeff Long told reporters last year that the deferred contract was made in an effort to help fund Smith's retirement. But the 64-year-old coach didn't retire. He is now the head coach at Fort Lewis College in Colorado after parting ways with the SEC school.
Part of the lawsuit reads that Smith has "unjustifiably concealed, destroyed, mutilated, falsified, and/or failed to keep or preserve recorded information, including books, documents, records and papers from which the debtor's financial conditions or business transactions might be ascertained."
A spokesman for Arkansas nor an attorney for Smith immediately returned a message seeking comment from the USA Today.
Via USA Today