Motion: Investigator misled grand jury in case against hockey coach

PALMER — The prosecution of a longtime Mat-Su Borough School District hockey coach and teacher is built around the misleading and inaccurate testimony of a state investigator, according to a motion to dismiss the five-felony indictment of James D. Smith.

Smith was indicted in February on allegations he defrauded the Alaska Avalanche Junior A hockey program’s booster club of more than $48,000. Smith held multiple front office positions with the club from 2005 to 2009, including president of the Spirit Booster Club.

The motion, filed Tuesday by Smith’s attorney, Palmer-based Josh Fannon, claims the grand jury indictment was based largely on the testimony of state investigator Kristian Heikkila. Those charges include two counts of second-degree forgery and one count each of first-degree theft greater than $25,000, scheme to defraud more than $10,000 and fraudulent use of an access device greater than $25,000.

The motion says Heikkila told the grand jury that Smith illegally used funds raised by the booster club to benefit the for-profit Alaska Avalanche Hockey Club LLC,.

In fact, Smith ran the nonprofit Alaska Avalanche, a separate entity from the limited liability company owned by Mark Lee, according to the motion. By using booster club funds to pay expenses for the nonprofit Alaska Avalanche, Smith did nothing illegal, the motion says. Because Heikkila knew of the different statuses but only testified about the for-profit business, the grand jury didn’t receive the correct information, Fannon said.

“The bottom line is, this case only hinges on was the business for-profit,” Fannon said Wednesday. “They claim that a for-profit business Jamie owned was having its bills paid for by the booster club.”

In the detailed 43-page motion to dismiss, Fannon outlines how more than 80 checks signed by Smith were legitimate expenses and fully legal. Those expenses include things like purchasing ice time, paying for scouting services, insurance, purchasing bingo pull-tabs, team travel, buying meals for visiting teams and other team-related expenditures.

“This, of course, as the state pointed out to the grand jury, would only be illegal conduct by Mr. Smith if the Alaska Avalanche were a for-profit organization,” the motion says. “If the Alaska Avalanche were a nonprofit organization, using the funds from the gaming permit held by the Spirit Booster Club would be perfectly legal and quite acceptable behavior. … Heikkila misled the grand jurors with false information relating to the organizations’ business status.”

Smith registered the Alaska Avalanche as a nonprofit in April 2008 and entered into an agreement with Lee to purchase the club in December 2008, Fannon said. By failing to divulge there were two Avalanche entities with different ownership, Heikkila “misled the grand jurors with false information,” the motion says.

Fannon also said he believes the omission of that information may have been deliberate and part of “a vendetta” against his client.

“Exculpatory (beneficial) information, however, is unfortunately the casualty of war that occurs when the entity of law enforcement charges ahead with an intended goal rather than with eyes wide open searching for the truth,” to the motion says. “Had that difference been recognized earlier by better trained professionals, perhaps Mr. Smith’s family name, reputation, livelihood and overall standing in the community, which he spent more than 30 years building, would not have suffered the tremendous strain and embarrassment that it has, coupled with the overwhelming legal and financial burdens that have come along for the ride.”

Juneau-based state attorney Lisa Kelley, who is prosecuting the case for the Office of Special Prosecutions, said she’s aware of the motion to dismiss, but hasn’t seen it yet.

“I can’t give you a reaction because I haven’t seen it,” she said, adding that after looking through the allegations in Fannon’s motion, she will respond to the court. “Obviously, I will be writing a response to the court.”

Asked if she’s confident in the state’s case against Smith, Kelley said she “can only charge based on the information given to us.”

A call investigator Heikkila was not returned by press time.

Disputed charges

In disputing the felony charges, the motion says the forgery counts stem from Smith signing the name of another booster club representative to checks and the state gaming license. That, in and of itself, isn’t illegal, Fannon said. There also has to be intent to use the funds for personal gain, which wasn’t the case with the Avalanche. All the checks, he said, were used for their intended purposes relating to team expenses.

As for the theft and fraud charges, the motion goes through each of more than 80 checks offered as evidence and discounts them based on the alleged erroneous presumption Smith was acting on behalf of a for-profit business.

A couple of situations stand out in the motion, including a $30,000 loan made to Smith by his mother to help the cash-strapped team and a $17,000 personal line of credit Smith obtained to pay travel expenses for the Avalanche for a road trip to Wenatchee, Wash.

“Mr. Smith made this commitment (of encumbering personal debt) because he loved the kids and he loved the hockey program,” the motion says. “For those same reasons, Mr. Smith made a commitment to invest his life savings and even his personal credit and security in the Alaska Avalanche organization. … It was misleading to the grand jury to leave that information out.”

More specifically, the motion spells out what happened with the loan from Smith’s mother. The $30,000 was borrowed from her home equity line on Feb. 20, 2009, to pay for the team’s travel for scheduled out-of-state games, the motion says. Subsequent checks Smith signed in an attempt to pay back that debt were legal, because those funds were used for the nonprofit team activities.

“Mr. Smith made an agreement with his mother that she would be repaid at a monthly rate through the Alaska Avalanche and the Spirit Booster Club,” according to the motion. “Mr. Smith took a loan from his mother when neither the team nor the booster club had the finances to assist the organization, with the understanding that his mother would be repaid a little each month as the team and the booster club could afford.”

As for the personal line of credit, the same argument applies, the motion says. The booster club was reimbursing Smith $400 a month for that. All of those expenses are backed up by bank and credit card paperwork, the motion says.

The motion alleges that the grand jury likely would not have indicted Smith had its members known the full story about the for-profit and nonprofit Avalanche entities. Because of that, and because most of those allegations are based on the testimony of Heikkila, Fannon argues the charges should be dismissed.

Instead, the motion says the impression the grand jury and community have received was that Smith was “secretly siphoning off gaming proceeds to pay off personal debts.”

Contact Greg Johnson at 352-2269 or greg.johnson@frontiersman.com.