Thursday, December 3, 2009

New Market Mayor Faces Fraud Charges...From His Own Family

Once in a while, small-town politics can be home to something of interest or amusement.

New Market mayor Larry Smith is being accused by his brothers of stealing from their share of the inheritance left to all three of them by their mother when she passed in 2001.

Apparently, there were 2 trust accounts that were to be divided up so each brother would inherit $994,568. Instead, one trust paid the brothers $3000/month, and Smith kept the money from the other trust (if I'm reading this correctly).

"I was getting the majority of the value on the outset and there was a distribution to my brothers," Larry Smith said in a Dec. 9, 2008, examination with an attorney for Farmers and Merchants Bank, according to a transcript of the examination. "Because I was serving as the trustee, the understanding I was serving as the trustee and it was my sole source of income."

That statement, from the previously-linked Northern Virginia Daily article, cannot be true. Smith owns and operates the Cross Roads Inn which is a bed and breakfast here in New Market. Obviously, he has more than one source of income.

Smith also claims that he needs the money more than his brothers do. While that may be true (Smith is in the midst of his second bankruptcy filing in less than 16 months), he was not properly executing the distribution of the funds. Also, Smith claims that his has a right to the money as a fiduciary fee. Given that his brothers claim that Smith has paid himself over $2 million from the trust, I find a 60+% fiduciary fee hard to believe as reasonable.

Smith has also used the trust as a guarantor for many loans (both personal and business), and there is now $1.25 million in claims against the trust.

Ouch, Mr. Mayor. Business loans? I thought this trust was your sole source of income?

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