the Mille Lacs Messenger
June 10, 2009 12:00 am
Paul Smith, the executive director of Mille Lacs Academy, was arraigned in
federal court in Oklahoma June 8 on charges of embezzlement, mail fraud and
making false statements to federal investigators.
He pleaded not guilty.
The charges stem from events that occurred from 2001 to 2004, when Smith was
executive director of Marie Detty Youth and Family Services Center, Inc. of
The grand jury indictment says Smith stole funds from an employee
profit-sharing plan and falsely told the board of Marie Detty that there
were insufficient funds available, even though a federal grant fully funded
The indictment also alleges that Smith set up a consulting company called
Paradigm Associates and paid the company $66,000. Paradigm Associates had no
employees, no business location, and provided no services. According to the
indictment, Smith set up the Paradigm Associates bank account and opened a
post office box, to which only he had access.
Finally, the indictment says Smith made false statements to a special agent
of the U.S. Department of Labor on Feb. 11, 2008.
The embezzlement charge carries a maximum penalty of five years and
$250,000; the fraud charge, 20 years and $250,000; the false statements
charge, five years and $250,000.
In a prepared statement from Nexus, the corporation that manages Mille Lacs
Academy, Smith said, “These charges were thoroughly investigated in 2004 by
the Marie Detty board of directors. I was exonerated of all allegations, and
all charges were dropped. I’m sure the federal charges will be dropped as
Smith was originally indicted and arraigned last fall, but the original 27
counts were reduced to 10. On Nov. 7, he pleaded not guilty and was released
on his own recognizance. He agreed to inform his employer of the charges
against him. Nexus CEO David Hutchinson said Smith informed him of the
charges at the outset.
Smith joined Nexus in 2007 as executive director of the Mille Lacs Academy.
Since that time, the Nexus statement says, two annual independent, outside
audits have been performed and an additional special independent, outside
audit was completed in February 2009. No irregularities were found in the
Nexus CEO David Hutchinson said the audit findings are consistent with the
performance he’s seen from Smith. “Paul has demonstrated excellence in
leadership at Mille Lacs Academy. We stand behind him as he counters these
Hutchinson also said Nexus will continue to monitor the situation as it
unfolds. There are no plans to remove Smith from his post. “An indictment is
not a conviction,” Hutchinson said. “In our system of justice, a person is
presumed innocent until proven guilty in a court of law. We plan to let the
justice system run its course and will make appropriate decisions based on
the outcome of the case.”
Smith’s case is on the jury docket for Monday, July 13, before U.S. District
Judge Robin J. Cauthron.