The United States Attorney's Office

Western District of Michigan

Press Release

Contact:
PAUL D. LOCHNER
ASSISTANT U.S. ATTORNEY
PHONE: (906) 226-2500

February 20, 2008

SIX-YEAR SENTENCE AFFIRMED FOR THIEF OF AMERICAN RED CROSS 9/11 FUNDS

WEDNESDAY, FEBRUARY 20, 2008 - MARQUETTE, Mich. - The Court of Appeals for the Sixth Circuit has affirmed the 72- month sentence of Kimberly Sue Smith, the woman who stole money that was donated to the American Red Cross chapter in Houghton, Michigan, following the terrorist attacks of September 11, 2001, U.S. Attorney Charles R. Gross announced today.
Smith worked for about a year as the Executive Director of the Red Cross's Western Upper Peninsula Chapter, which was based in Houghton and provided services throughout the western U.P. She started this job the day before 9/11. Following 9/11, the American Red Cross created the "Liberty Fund", which collected funds that were intended to go to the victims of 9/11. Smith, however, embezzled the Liberty Fund donations that were coming into the Houghton Chapter and other funds belonging to the Chapter, and used these moneys to buy furniture, jewelry, vacations, a snow blower/tractor, and other personal goods for her own use. To hide this embezzlement, Smith made a number of false statements to the National Red Cross and allowed the Chapter's financial records to fall into disarray. By the end of Smith's tenure as Executive Direction, the Chapter had a net worth of negative $157,658 - a decline in net worth of approximately $250,000 over the course of only one year. The Chapter had been financially ruined and its doors were closed in September, 2002. Furthermore, as a result of Smith's embezzlement, community support for the chapter dried up, with donations falling off and volunteers quitting.

On January 10, 2006, U.S. District Judge R. Allan Edgar, sitting in Marquette, Michigan, sentenced Smith to 72 months in federal prison. Judge Edgar noted that the advisory Sentencing Guidelines range applicable to Smith's crimes was 41 to 51 months. But he imposed a greater sentence because he found that the Guidelines, which were based primarily on provable financial loss, did not take into consideration the full extent of the damage done by Smith's crimes. Specifically, he noted Smith's crimes occurred at a time when the Red Cross was collecting money to alleviate the suffering of the 9/11 attacks, and that these crimes had an impact on a large number of unidentified victims as well as the future ability of the Red Cross to provide services in the western U.P.

Smith appealed to the Court of Appeals in Cincinnati, arguing that Judge Edgar's sentence was unreasonably long and based on errors in legal reasoning. The Court of Appeals rejected all of Smith's arguments. A copy of the Court's Opinion is attached. Smith retains the right to petition the U.S. Supreme Court for review of the sentence.

Assistant U.S. Attorney Maarten Vermaat prosecuted the case in the U.S. District Court and wrote the brief for appeal, and Assistant U.S. Attorney Jennifer L. McManus handled the argument in Cincinnati. The Marquette office of the Federal Bureau of Investigation and the Hancock City Police handled the investigation.