Former Upstate Medical President Smith pleads guilty to “abusing his position to illegally boost his pay”

SYRACUSE, N.Y. — David Smith, former president of SUNY Upstate Medical University, on Monday pleaded guilty to “abusing his position … by using several methods to illegally increase his pay.”

Smith pleaded guilty to three counts of official misconduct, the office of New York Attorney General Barbara Underwood announced in a news release.

As part of a plea agreement, Smith must pay over $250,000 in restitution and fines.

“David Smith brazenly abused his position and exploited those he served in order to line his own pockets – and now he’s facing the consequences,” Underwood said. “We have zero tolerance for those who try to game the system and violate the public trust, and my office will continue to hold public officials to account.”

The plea agreement also stipulates that Smith is required to pay $247,419.95 in restitution and $3,000 in fines. Smith is also expected to be sentenced to three years of probation on Dec. 10. If Smith fails to follow the terms and conditions of his probationary sentence, including the payment of his restitution obligations, he could face up to three years in jail.

Background

Smith served as president of Upstate Medical from approximately September 2006 to November 2013 when he resigned.

A joint investigation by the attorney general’s office and the inspector general’s office revealed that Smith’s initial compensation was negotiated by SUNY leadership followed by approval of the SUNY board of trustees.

Following Smith’s appointment as president of Upstate, he knew that he was required to obtain approval from the SUNY Chancellor prior to receiving any raises or other increases in his compensation.

The investigation revealed, and Smith’s admissions in court Monday confirmed, that Smith abused his authority as president of Upstate to “increase his pay without authorization, using several methods,” per the attorney general’s release.

Specifically, Smith admitted that his actions were done “with the intent to obtain a benefit, namely, additional unauthorized compensation, in his capacity as president of Upstate.”

He admitted that he directed his subordinate to approve an unauthorized raise in the amount of about $28,450 in 2007 through the SUNY Research Foundation for Smith’s benefit. Smith received the proceeds from that raise through the date of his resignation, totaling about $189,412 in additional salary “he would not have otherwise earned.”

Smith also “submitted, approved, collected, and received unauthorized reimbursements” for housing expenses above and beyond his authorized $5,000 per month housing allowance. He submitted receipts and credit-card statements for reimbursement of expenses “to which he was not entitled,” and by “orchestrating an increase” in his Medical Service Group supplement to cover housing expenses “to which he was not entitled.”

Smith also “directed and oversaw” the creation of an unauthorized deferred compensation plan through MedBest Medical Management, Inc. for the benefit of himself and others, “without the authorization or knowledge of the SUNY Chancellor.”

“Once a top executive at a premier medical school and now a convicted criminal, this defendant shamelessly corrupted his position of trust and exploited the university’s lax oversight for an extraordinary theft. Dr. Smith improperly manipulated and siphoned from numerous funding streams under his control, and my investigation is continuing to help ensure such foul play can never happen again. It is now clear that his primary role of ensuring the highest quality education for students and care for patients was at best secondary to his cynical schemes to illicitly pad his income. I thank Attorney General Barbara Underwood and her office for their work on this case,” New York Inspector General Catherine Leahy Scott said in the release

Contact Reinhardt at ereinhardt@cnybj.com