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VOL. 122 | NO. 174 | Friday, September 14, 2007

Forest Hill Owner In Contempt Again

By Bill Dries

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Forest Hill Cemeteries and Funeral Home owner Clayton Smart has the money to hire attorneys to represent him on criminal charges. But that doesn't mean he's likely to get out of jail anytime soon.

Chancellor Arnold Goldin approved Wednesday the use of up to $120,000 from the sale last month of one of Smart's homes in Oklahoma to hire attorneys. He also ruled Smart is in contempt of a court order for having his wife, Nancy, sell the house without court approval.

Smart and Forest Hill co-owner Stephen Smith, both of Oklahoma, and former Smith Barney broker Mark Singer, of Bucks County, Pa., were indicted in April by a Shelby County grand jury on conspiracy, theft and money laundering charges. Two civil suits also have been filed by state authorities and the court appointed receiver of Forest Hill, Max Shelton.

Those lawsuits seek to recover the $20 million Smart, Smith and Singer allegedly diverted from Forest Hill trust funds for personal use.


Multiple actions

Attorneys Michael Scholl and Lee Gerald will represent Smart in the criminal case but not the civil cases. The criminal case is likely to proceed before the civil cases are tried or settled, Goldin said.

"In this situation, we're going to be defending Mr. Smart vigorously throughout the case and fight for his innocence," Scholl said. "There's two sides to every story and we plan to bring that forth in court."

As Scholl was talking to reporters in the hallway and Goldin was in his chambers, Smart was telling his side of the story to James Newsom, Shelton's attorney.

"You're going to get your eyes opened up. You're going after some money that don't belong to you," Smart told Newsom.

Newsom had little to say in reply as state and local investigators listened intently. Scholl quickly dashed back into the courtroom and advised Smart not to say anything else. Smart was then handcuffed and taken back to the Shelby County Jail, just a block from the courthouse, where he has remained since he was extradited to Memphis from Oklahoma April 26.


'Ludicrous'

In court Wednesday, Newsom argued that Smart should be punished for the violation of the court injunction against him transferring property and to prevent Smart from moving any other property.

Goldin agreed. But he also agreed with Gerald that since the house was bought in January 2004, before Smart became owner of Forest Hill, and since the Smarts paid in cash with money that wasn't from the cemetery trust funds, the money made on the sale could be used by Smart.

"The court needs to be protected," Goldin ruled. "On the other hand ... no use was made of (the money) without the court's authority."

The money was put in an escrow fund of attorney Robert V. Seacat, who is representing Smart in Oklahoma. Under terms of Wednesday's court order, that money is to be transferred to the account of the Forest Hill receiver. Gerald and Scholl will bill the receiver for their retainer.

Goldin previously ordered Smart jailed for violating a February court order instructing him to list money in the Forest Hill trust funds when he assumed ownership and to disclose where the money went. That contempt finding is being appealed.

As he found Smart in contempt of the second court order, which was issued in May, Goldin said, "Any further incarceration is ludicrous."

Money matters

Goldin will hold a hearing Oct. 2 to consider whether Nancy Smart also should be held in contempt.

Clayton Smart's next court date is a Sept. 25 appearance before Criminal Court Judge Otis Higgs. Smart probably will be arraigned at that hearing, said Gerald, who told reporters Smart will plead not guilty.

The arraignment had been delayed as Smart claimed he had no money to hire an attorney. Shelby County Public Defender Robert Jones said his office couldn't represent Smart given his possible access to at least some of the millions of dollars in the seized assets. Attorney Scott Kramer withdrew, citing the complexity and expense of trial preparations.

Even if bond was set for Smart's release at the Sept. 25 hearing and Smart paid it, he couldn't be released from jail because he still hasn't complied with Goldin's order to reveal where the Forest Hill money went.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 56 437 16,061
MORTGAGES 76 508 18,556
FORECLOSURE NOTICES 8 56 2,461
BUILDING PERMITS 241 876 33,390
BANKRUPTCIES 64 301 10,314
BUSINESS LICENSES 15 125 5,303
UTILITY CONNECTIONS 17 125 6,273
MARRIAGE LICENSES 19 98 3,511