Waco businessman could lose assets in settlement
By MIKE COPELAND Tribune-Herald business editor
Waco businessman A. Colin Smith may be forced to give up $3 million, a Jaguar automobile and lakefront lots on Richland-Chambers Lake near Corsicana as part of a settlement with the Securities and Exchange Commission, which accuses him of selling unregistered stock.
Meanwhile, his ex-wife, Lourdes G. Smith, must forfeit ownership of a home in San Antonio valued at $381,000. It allegedly was paid for with money that belonged to Colin Smith's company, Great White Marine and Recreation, said SEC attorney Robert Brunig. Lourdes Smith can keep the home if she pays for it with her own funds.
Attorneys for the Smiths; Great White Marine and Recreation; Kenneth Ursrey, who is Colin Smith's son-in-law; and the SEC met in federal court in Waco on Tuesday. They agreed to let Clark Will, a Dallas attorney, decide how to divide up the money that the Smiths must "disgorge."
Will will make a recommendation to U.S. District Judge Walter S. Smith Jr.
"It is my assumption the money will be divided among investors" in Great White Marine and Recreation, said Brunig. "But I certainly don't know if it will be 'X' cents per share, or a percentage of what each investor has invested and lost. There will be an opportunity for shareholders to object to the process and make their own proposals."
The SEC alleges that Smith sold $11 million worth of unregistered stock, misappropriated $3 million to $5 million for his own use, and inflated the value of his company in information he transmitted via the Internet. Stock owned by shareholders dropped to pennies in value after the SEC took legal action against Smith in July 1999.
Great White Marine and Recreation is a Nevada corporation that maintained a home office at 208 Otis Drive in Waco for several years. "Nearly all sales operations are conducted in Mexico," according to the SEC lawsuit. The company brokers and sells water craft ranging from small boats to ocean-going yachts.
Smith resigned as president and CEO of the company after running into legal problems with the SEC. Brunig, the SEC's attorney, said the company has practically no assets.
"I'm told they have $800 in one account," said Brunig, adding, "They haven't done business for months."
The telephone directory lists 2709 Live Oak Ave. as the new address for Great White Marine and Recreation. An answering machine invites callers to leave their name, telephone number and a message.
Allen Pennington, a Fort Worth attorney representing Great White Marine and Recreation, said "all of its assets are in Mexico, and we do not know who controls them. The company has no assets in the United States."
The SEC's case against Smith and his company went to mediation before a Fort Worth attorney, John Hughes, in April. The two sides reached an oral agreement on April 25, according to court records.
However, Pennington requested that Judge Smith hold a "status conference," which he did on Tuesday. Pennington said the attorneys were struggling to finalize the mediated agreement, and needed Smith to intercede. Smith instructed the attorneys to agree on someone by day's end to distribute the disgorgement money.
They did, said Brunig, in choosing the "experienced" Clark Will of Dallas.
The mediated settlement calls for Colin Smith, Lourdes Smith and Ursrey "to make certain disgorgement" of money or possessions acquired with money that should have gone to the company. Colin Smith and the company also would be enjoined from engaging in any future sales of unregistered stock.
"Colin Smith has filed a financial statement saying he has virtually no assets," said Brunig. "We're saying, 'Find them.'" He said the SEC contends Smith has lakefront lots on Richland-Chambers Lake, a new Jaguar, a $100,000 bond posted with the court, and a "substantial amount of cash."
Asked if that cash totals $3 million, a figure mentioned during Tuesday's hearing, Brunig said, "I think that's a figure you'll hear quite a bit about."
Brunig said Colin Smith and Ursrey likely will be forced to give up any stock they own in Great White Marine and Recreation. He said they should not benefit from the disbursement Clark Will recommends.
The SEC attorney added that he has "no evidence" that Lourdes Smith or Kenneth Ursrey took part in any misrepresentations. "It's just that they got property they were not entitled to." accesswaco.com |
