Ross secretary gets jail time in $330,000 textbook funds fraud

Feb 26 2010 - 1:04am

SALT LAKE CITY -- A former Davis School District secretary who admitted stealing more than $330,000 in textbook funds between 1999 and 2005 was sentenced in federal court Thursday to a year and a day in prison.

Stella V. Smith, 57, of Layton, also was ordered by U.S. District Judge Dee Benson to pay $324,579 in restitution and serve 60 months of supervised probation following her release from prison, said her attorney, Paul Grant, of Salt Lake City.

"She takes full responsibility and accepts her punishment with humility," Grant told the Standard-Examiner following the sentencing.

Smith will likely serve her sentence at a minimum-security federal prison in Arizona, he said.

Smith was initially charged with 37 counts of mail fraud in November 2006. She pleaded guilty in October 2007 to a single count of mail fraud.

She will be eligible for 54 days off her sentence for good behavior, as she was sentenced to more than a year in prison.

Smith has admitted to inventing a fake company, E.B. Smith Company, for the sole purpose of defrauding the school district.

Smith submitted false invoices to the district, representing that the fake company had supplied books to the district.

Smith served as a secretary to Susan G. Ross, then the district's director of federal programs.

Ross was sentenced by U.S. Magistrate Judge Clark Waddoups to three years of probation in December for money laundering. She was ordered to pay $350,115 in restitution and to complete 3,000 hours of community service as part of her sentence.

Chris Williams, a spokesman for Davis School District, said Thursday that soon after Susan Ross was sentenced, her attorney asked Superintendent W. Bryan Bowles if Ross could complete her community service hours working for the school district.

The request was quickly rejected, Williams said.

A federal investigation found that Susan Ross and her husband, John, who worked for the district as a federal grant specialist, created a fraudulent book scheme that cost the Davis district more than $4 million.

John Ross also received probation for his role in the scam. The offenses committed by Smith and the Rosses are apparently unrelated, said Melodie Rydalch, spokeswoman for the U.S. attorney's office in Salt Lake City.

However, Smith's actions may have been influenced by Susan Ross' success in defrauding the district, Grant said. "She (Smith) saw how easy it was."

Assistant U.S. Attorney Loren Washburn expressed two concerns to Benson on Thursday regarding Smith's sentencing.

Washburn's first concern centered on the serious nature of the offense by a public employee taking advantage of a position of trust and the need for a deterrence message to be sent, Rydalch said in an e-mail to the Standard-Examiner.

Secondly, Washburn said he was concerned with the resolution of the Susan and John Ross case, which resulted in no jail time for either of them, Rydalch said.

Benson responded he wasn't involved in the Ross case and could only sentence the case in front of him involving Smith, Rydalch said. He also noted Smith had violated a position of trust, hasn't paid any restitution so far and that her criminal conduct only stopped when she was caught.

School district officials weren't consulted by the court regarding sentences handed down to Smith or the Rosses, Williams said.

"The unfortunate thing is that this ever occurred," he said. "We have certainly taken steps to do our very best to ensure that it not occur again."

Updated 11:54 p.m.

 


Former school district secretary ordered to pay restitution for stolen funds

SALT LAKE CITY -- A former Davis School District secretary who admitted stealing more than $330,000 in textbook funds between 1999 and 2005 was sentenced in federal court Thursday to a year and a day in prison.

Stella V. Smith, 57, of Layton was also ordered to pay $324,579 in restitution, said her attorney Paul Grant of Salt Lake City. Smith was initially charged with 37 counts of mail fraud in November 2006. She pleaded guilty in October 2007 to a single count of mail fraud.

She will be eligible for 54 days off her sentence for good behavior since she was sentenced to more than a year in prison.

Smith has admitted to inventing a fake company, E.B. Smith Company, for the sole purpose of defrauding the school district.

"Under the District approval process, (Smith) could personally submit requests to the Purchasing Department under a $1,000 threshold without management approval," the indictment states.

"Once the purchase orders were issued ... (Smith) mailed or caused to be mailed false and fraudulent invoices representing that E.B. Smith had supplied the requested books to the District, when in truth no such books had been provided."

Smith served as a secretary to Susan G. Ross, the Davis School District's former director of federal programs, who was sentenced to three years probation in December for money laundering.

A federal grand jury indicted Ross on 47 felony counts in November 2006, but she pleaded guilty to one charge. The remaining counts were dismissed.

A federal investigation found that Ross and her husband, John Ross, who worked for the district as a federal grant specialist, created a fraudulent book scheme that cost the Davis district more than $4 million.

John Ross also received probation for his role in the scam, Melodie Rydalch, spokeswoman for the U.S. Attorney's Office in Salt lake City said Thursday.

The offenses committed by Smith and the Ross' are apparently unrelated, said Rydalch.

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