According to documents filed in court, during 2002 and 2003, Smith was a practicing attorney who owned and operated a San Diego-based entity known as Corporate Deposit Program (“CDP”), and previously Corporate Development Program and Corporate Development Partners. CDP raised capital for target companies through investment funds. It did so, in part, by issuing prospectuses for each investment that misrepresented to investors that the majority of investor funds were being used to acquire stock. In fact, only approximately 25 percent of the investor funds were used to purchase stock. The majority of investor funds were used to pay commissions and for operating expenses. Smith ended his involvement with CDP in 2003 and began to raise capital for Dermacia (a cosmetic and skin care company), through an entity called Shorepoint Financial (“Shorepoint”). Smith eventually became Vice President and General Counsel of Dermacia.

According to court documents, in 2002 and 2003, Smith received over $219,000 of taxable income from his activities at CDP and Shorepoint in the form of sales commissions and other payments. In an attempt to evade taxes, Smith caused commission checks to be made payable to his girlfriend (and eventual wife) and to a nominee entity. Smith also never maintained a personal bank account and instead converted the majority of commission checks into either cash or cashiers’ checks and deposited numerous checks into his wife’s checking account to disguise the receipt of taxable income.

Despite his receipt of income, Smith never filed a federal individual income tax return until 2007, after being made aware of the criminal investigation. Smith’s late-filed tax returns were also false in that Smith failed to report taxable income that he received beyond what was reported on Forms 1099 issued to him and filed with the IRS.

The case was investigated by agents from the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection, and prosecuted by Special Assistant U.S. Attorney Timothy J. Stockwell and Assistant U.S. Attorney Stacey Sullivan.