January 25, 2019
By Dominic Bartolone
Contributing Editor, Fraud Friday
Fraud Friday – Arkansas Businessman Sentenced to Federal Prison for Bank Fraud
Robert Craig Smith, 55, of El Dorado, Arkansas will spend two years in federal prison, followed by five years of supervised probation after being convicted of bank fraud in federal court.
Smith was the owner and operator of an El Dorado business known as Working Chemical Solutions, Inc. (WCS). The company manufactured retail chemical products such as “C’mere Deer,” which is used to attract wild game.
According to court documents, Smith sought and received two loans and extensions for WCS through Timberland Bank of El Dorado. Timberland secured the loans with a security interest in Smith’s company, including an interest in stocks and other instruments, along with contract rights to specific products, which included C’mere Deer.
According to U.S. attorneys, in 2006, Smith sold the C’mere Deer formula, along with trademarks and confidential information to Environmental Science Technologies, LLC for $500,000. Out of the proceeds, Smith paid Timberland Bank $149,035 and kept $350,064 for use by WCS or personal use.
Smith later opened business checking accounts in the names of ATS Scientific Group of Louisiana, LLC and Wells Safety and Technical Products of Louisiana, LLC at First Guaranty Bank in Dubach, Louisiana. He also opened accounts under two other business entities, Gilbo, LLC, and RCS Investment Trust at First Financial Bank of El Dorado.
During a bank audit in 2016, First Financial Bank’s Internal Audit Department found that it appeared Smith was kiting checks between Gilbo and RCS Investment Trust accounts at the bank, along with checks drawn from ATS Scientific and Wells Safety accounts at First Guaranty Bank.
Based on the findings of the audit, First Financial Bank placed holds on all unverified deposits, resulting in the checks from First Guaranty Bank to First Financial being returned, while the checks from First Financial to First Guaranty were also returned for insufficient funds.
Smith was indicted on six counts of bank and wire fraud, pleading guilty to two counts of bank fraud in September of 2018.
In addition to sentencing him to two years in prison, U.S. District Court Judge Susan O. Hickey ordered Smith to pay $850,399 in restitution.