AP News

La. man gets prison for $3.3M real-estate scam


NEW ORLEANS (AP) — A Louisiana man was sentenced Thursday to 30 months in federal prison for defrauding hundreds of investors in a Texas real-estate deal out of millions of dollars.

U.S. District Judge Lance Africk also ordered Michael B. Smuck of Metaire to pay more than $789,000 in restitution that he still owes investors.

Because Smuck and prosecutors agreed two years ago on a 30-month prison term as part of his plea deal, the sentencing hearing focused on determining how much restitution he should be required to pay.

Smuck already has settled much of his restitution debt, but he and prosecutors disagreed on exactly how much more he should be required to pay. However, a court filing in 2010 said Smuck agreed with prosecutors that he owed at least a total of nearly $3.3 million to investors in two different real-estate developments.

Smuck, who pleaded guilty in May 2010 to one count of mail fraud, solicited investments in acquiring a Houston apartment complex called Briar Meadows. He sold the property in 2007 but misappropriated some of the proceeds to pay off unrelated debts rather than distribute the money to investors, according to prosecutors.

Smuck apologized for his actions, which he blamed on the collapse of his business in Hurricane Katrina's aftermath.

"I will always regret that when faced with failure, I refused to accept it and move on," he told Africk.

Smuck said he now know he made mistakes but believed at the time that he was trying to protect his investors.

"I had no intent to hurt anyone," he said. "I just did not want to let anyone down."

Before Africk sentenced Smuck, the judge heard from several investors. John Kochera, 75, of Kenner, said he and his wife, Sharon, lost their retirement savings investing with Smuck.

"The promise of that retirement no longer appears likely," Kochera said. "This gentleman deserves to pay."

After the hearing, Kochera said he believes the 30-month sentence is too lenient.

"It's grossly unfair," he said.

Africk ordered Smuck to pay $618,201 in restitution to Briar Meadows investors and $171,719 to a second group of people who invested in a real-estate project called Yellowstone Ranch. Smuck didn't admit to any criminal acts in connection with the Yellowstone Ranch investments but agreed to pay restitution to those investors, too.

Prosecutors argued that Smuck owes more than $1 million to Yellowstone Ranch investors, but Africk settled on the much lower amount because he said some investors' claims should be resolved in civil court.


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