Smith Solicits Governor’s Aid in Freedom Bid

Jailed financier C. Arnholt Smith has petitioned Gov. George Deukmejian to commute his one-year sentence in the County Jail for stealing millions of dollars from one of his bankrupt companies.

The 11-page petition, dated March 21, argues that Smith, 86, is “the only person in the United States over the age of 85” to be sentenced to jail and called the sentence “inappropriate, unfair and inequitable.”

Smith was initially sentenced to three years, but that was later reduced to one year. San Diego County Dist. Atty. Edwin Miller has urged Deukmejian not to commute the sentence and noted that Smith is scheduled to be released on July 26 after serving only eight months.

An aide to Deukmejian called Smith’s petition “unusual” and said that the governor does not get many “credible” requests for clemency from inmates.

Smith, who once wielded immense business and political clout in San Diego, was sentenced in November for his May, 1979, conviction on embezzlement and tax fraud charges. He was convicted on one felony grand theft count for stealing $8.9 million from his securities company, Sovereign State Capital. He was also convicted on four felony tax fraud charges that were later reduced to misdemeanors by an appellate court.

A former confidant of President Richard M. Nixon, Smith avoided going to jail for five years through a series of lengthy appeals to the state and federal courts, including the U.S. Supreme Court.

Vance Raye, Deukmejian’s legal affairs secretary, did not offer much hope that the governor would act favorably on Smith’s petition for a reprieve.

“This is an unusual request. You don’t usually get a request for clemency from an inmate in the county jail,” Raye said. “Actually, we don’t get very many credible requests for reprieves from people in prison. The governor has yet to grant a reprieve.”

However, Deukmejian has granted 70 pardons during his term in office, Raye said. Those receiving pardons have been out of prison for at least 10 years without committing a crime, he said.

Smith’s petition, which was submitted by attorney Peter H. Benzian, claims that he is in poor health and in danger of dying in jail. During a hearing in October, Smith’s doctor testified that he had about five years to live. Superior Court Judge Kenneth A. Johns said he considered the doctor’s testimony in reducing Smith’s jail term from three years to one year.

Miller, in a letter to Deukmejian, called the petition “a tissue of distortions.”

Miller said that since his conviction in 1979, Smith has been telling judges that he is “old, sick and may die soon.” But Miller said that Smith’s mother lived more than 90 years and he has an older brother who is alive and well.

“We cannot permit advanced age to become a license to cheat and steal with impunity,” said Miller. “ . . . (Smith) has received extraordinarily lenient treatment when one considers the magnitude of his crime. In contrast, the court sentences young burglars to lengthy prison terms everyday, though their crimes are trivial compared to Smith’s.”

The San Diego-based United States National Bank was one of the many businesses controlled by Smith. The bank grew to be the ninth largest in California and the 78th largest in the country.

In August, 1973, the Internal Revenue Service sued Smith for $23 million and the bank collapsed in October, 1973. At the time it was the largest bank failure in American history.