School Closings And Delays

Court Records: Rep. Smith Deep in Debt

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A state lawmaker owes more than $100,000 in personal loans, and now two banks have said enough is enough.

Court papers show State Representative Ken Smith owes more than $135,000 in personal loans and hasn't paid back one single dime in more than two years.

The court papers show the banks have been trying to collect on the personal loans from a man who earns $80,000 a year as a state lawmaker.

Despite that salary, Representative Ken Smith seems to be unwilling, or unable, to pay back the money.

One default judgment against Ken Smith was filed by Dunmore-based Fidelity Deposit and Discount Bank, which claims the state lawmaker took out a pair of loans in 2008.

Court papers show Smith last made a payment on those loans in January, 2010 and still owes $122,000.

The other default judgment was awarded to Pittsburgh-based Alliance Capital Management from a personal loan to Smith in 2007. Records show Smith still owes the bank more than $15,000 and hasn't made a payment in more than four and a half years.

"What it looks like is that he never had any intention to pay it back," said Tim Potts of the government watchdog group PA Democracy Rising. He said the unpaid loans raise questions about the financial management of a state representative who gets paid roughly $80,000 a year.

"There's no excuse for this. He's a very well paid legislator. He has a higher standard to set than the average guy on the street," Potts added.

Smith's own statement of financial interests show that he appears to have violated state ethics laws that require him to report any loan of more than $65,000.

On his 2009 and 2011 statements Smith reported the Fidelity loan but not the Alliance loan. In 2010 Smith did not report either loan.

"It tells me he violated the law and somebody should be coming after him and it should be from the state ethics commission," said Potts.

Banks have been coming after Smith the past few years as his former restaurant on Cedar Avenue in Scranton sank deep into debt.

Smith's restaurant failed to pay back a state loan of almost $40,000 for restaurant improvements.

When the restaurant defaulted on more than $150,000 of debt in July, 2010, a bank repossessed it and closed it.

In all the paperwork in the two court judgments, there are no mentions of Smith's failed restaurant. They show, simply, personal loans to Smith with unsecured credit, meaning the banks could have a hard time getting back even a fraction of the more than $138,000 they say smith owes them.

"It just doesn't pass the smell test and particularly if he doesn't disclose it on his ethics form, and he doesn't repay it. How much worse could it get?" Potts asked.

Smith did not return Newswatch 16's calls seeking comment, and when we stopped by his office in Dunmore Thursday afternoon we were told he was away from the office.

Officials from Fidelity Deposit and Discount Bank also did not return our calls.

A spokesman from the state ethics commission said the agency will investigate the representative's apparent failure to report the loans if someone files a complaint.