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Jailed California Financier Loses Appeal of Theft, Tax Evasion Conviction

January 14, 1985

WASHINGTON (AP) _ Former San Diego financier C. Arnholt Smith, 85, lost a Supreme Court appeal today of his 1979 conviction for grand theft and state tax evasion.

The justices, without comment, refused to hear arguments that Smith, who began serving a one-year sentence in the San Diego city jail in November, was unfairly prosecuted.

Smith built a corporate and financial empire in the 1960s, becoming the major shareholder and leading force of the since-collapsed United States National Bank of San Diego. He at one time controlled a number of other private companies.

The Internal Revenue Service investigated Smith’s financial dealings in the early 1970s, but declined to criminally prosecute him.

In 1975, however, he was indicted by a state grand jury. Following an eight-month trial, Smith was convicted of grand theft from one of the companies he controlled and of state tax evasion for the years 1971 and 1973.

In the appeal rejected today, Smith’s lawyers contended that he was the victim of ″invidiously discriminatory prosecution″ by San Diego District Attorney Edwin Miller, who they portrayed as a political rival.

Smith was active in the Republican Party in San Diego.

The Supreme Court in 1983 left intact a ruling that awarded millions of dollars in damages to bank shareholders who suffered losses when Smith’s financial empire collapsed in 1973.

The ruling had been appealed to the high court by Smith’s wife and daughter, who claimed they should not be held liable for the losses.

Damages of $23.3 million had been awarded against Smith; nearly $7 million against his wife, Helen; and $9.3 million against his daughter, Carol Smith Shannon.

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