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Idaho seizes Iraqi money used in scam

The $1 million worth of dinars will be used to repay victims of the investment scheme.

 - THE ASSOCIATED PRESS

Published: 07/02/09


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Former schoolteacher Jack Lee Smiley of Coeur d'Alene was found guilty of securities fraud last year and ordered to pay $1.2 million in restitution to investors he misled into investing in Iraqi currency.

Authorities said Smiley told investors they could make $1 million on $1,000 invested in his plan to buy and hold Iraqi dinars after the currency backing from foreign governments.

Smiley told potential investors that "Halliburton, large banks, corporations, politicians and the U.S. military" would make millions from the new currency, according to court records.

State records show that about 130 investors gave Smiley about $1 million to buy dinars.

About half of the investors were from Idaho.

Jim Burns, investigations chief with the Department of Finance Securities Bureau, wouldn't say how or where the 1.2 billion dinars were recovered. The dinars, worth less than a penny each, will be used to pay restitution.

"While the Iraqi dinar has appreciated only a fraction of the amount promised by Mr. Smiley, recovery of the dinars should provide investors with an opportunity for substantial recovery," Finance Department Director Gavin Gee said in a statement.

Smiley had been ordered by the state Department of Finance in June 2005 to end his investment pitch after it found he was violating the Idaho Commodities Act, which regulates foreign currency trading, when he asked investors to take part in the venture.

A judge in Kootenai County jailed Smiley in October for refusing to comply with a court order to turn over the dinars. He is expected to be released Thursday now that the state has the dinars.

The Spokesman-Review and the Idaho Statesman contributed.

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