CdA man sued over Iraqi currency offer

A Coeur d’Alene man used an Iraqi currency scam to swindle investors out of more than $600,000, according to the Idaho Department of Finance.

Jack Lee Smiley told investors they could get a 33-fold return by giving him funds to buy up Iraqi dinars, court documents said.

Smiley speculated that the dinars would increase in value when a new currency – backed by the United States, England and Israel and tied to oil contracts – was issued later this year, according to court records. Part of Smiley’s sales pitch was allegedly telling people that “Halliburton, large banks, corporations, politicians and the U.S. military” would reap millions from the new currency.

More than 40 people fell for Smiley’s scheme, giving him amounts ranging from $1,000 to $300,000, Department of Finance officials said.

Now, the department is suing Smiley, saying he violated Idaho’s Commodities Act, which regulates foreign currency trading, by making false reports. The suit seeks a $5,000 fine for each violation, and the return of investors’ money.

“Despite Smiley’s representations, there is no viable market for Iraqi dinars outside of Iraq,” the Finance Department said in the lawsuit, which was filed this week.

Smiley could not be reached for comment. His attorney, Susan Weeks of Coeur d’Alene, did not return a phone call.

According to the lawsuit, Smiley started recruiting contributors to his “Iraqi Currency Enterprise” in early 2005. He said he was working with a business associate who operated three Middle Eastern offices and ran millions of dollars through Swiss banks without paying taxes, the suit said. According to court documents, Smiley also used the name “Jack Cowart.”

Smiley promised to “personally guarantee” the money he was given, court documents said. He told investors that he would store the dinars in a safe deposit box and rented three safe deposit boxes for a short period, according to the suit. Smiley later closed the accounts and removed the boxes’ contents, the suit said.

“The current location of the dinars is unknown, but a witness has seen a great many dinars in the trunk of Smiley’s car,” court documents said.

The Finance Department issued a cease-and-desist order against Smiley in mid-2005. As recently as January, however, an investor wired Smiley $37,000, believing Smiley’s pitch that the dinar was on the verge of being released as an international currency, the suit said.

Smiley used some of the funds he received for personal expenses, according to court documents.

None of the individuals or companies that invested in Smiley’s scheme is named in the Finance Department’s lawsuit. But he is also being sued by David and Janet Carpenter of Coeur d’Alene, who gave him $10,000 to invest on their behalf in foreign currency but never received a return, according to the suit.

Janet Carpenter declined to comment Tuesday on the pending litigation. Smiley and his attorney are trying to have the case dismissed.