The last 12 months haven’t been the best for John L. Smith. In that time frame, Smith led the Razorbacks to an embarrassing 4-8 season after taking over for Bobby Petrino, had to file bankruptcy, and was eventually fired by the university.
Former Arkansas football coach John L. Smith has been accused of using his employment contracts with Razorbacks to defraud several of his creditors, according to two complaints filed this week in U.S. Bankruptcy Court.
The bankruptcy arm of the U.S. Department of Justice also has investigated Smith for potential fraud and abuse of the bankruptcy system but has not filed a complaint, according to court filings.
At the center of the allegations is Smith’s Arkansas contract and the way it was structured. According to the complaints, the contract was structured in such a way that allowed Smith to defer payments until after the 2012 season.
Smith made a series of transactions “with the intent to hinder, delay, or defraud creditors,” said one of the complaints filed Monday.
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.
Old John L. may be in a bit of trouble.