Reality TV Producer Sentenced to One Year in Prison for $2 Million Fraud

The producer behind reality shows like “Ink Therapy” and “Living Out Loud” was sentenced Thursday to a year in federal prison for defrauding an investor out of $2 million.

Jonathan Lee Smith, 41, pleaded guilty last year, admitting that he had concocted fraudulent license agreements to get a loan from Bay Point Capital Partners.

Prosecutors had asked Judge John F. Walter to sentence Smith to 21 months, arguing it was important to impose a stiff sentence to deter white-collar crime.

“Defendant is an experienced businessman in the entertainment industry. He knew it was wrong to lie to secure a $2 million loan, but did it anyway,” prosecutors said in their sentencing memorandum. “And rather than make just one misrepresentation, defendant backed up his lie with counterfeit documents to show fake accounts receivable and fictitious incoming payments.”

Smith’s attorneys, meanwhile, asked for probation, noting that Smith had accepted responsibility for his conduct. The defense argued that Smith’s company, Hoplite Entertainment, was devastated by the COVID-19 pandemic. Revenues dwindled and Smith sought additional financing to keep the company afloat. According to the defense sentencing memo, Smith “pinned his hopes on a wealthy individual living in Los Angeles who made repeated commitments to him, provided wire confirmations, and even claimed he would drop off a check at Jon’s house on Christmas Eve.”

“None of the money materialized,” the defense attorneys wrote.

Smith sought the $2 million loan from Bay Point Capital, believing he could pay Hoplite’s bills and keep his employees on staff, the defense memo argued.

“He made a sadly poor choice hoping to survive,” the defense said. “To obtain the loan, Jon made various misrepresentations and provided fabricated documents to Bay Point, including several false license agreements with distributors that made it appear that Hoplite had collective accounts receivable well beyond reality. … Jon’s panic and fear led him to lose his moral compass for the first and only time in his life. Jon is fully and painfully aware that what he did is wrong.”

Smith and the company later declared bankruptcy.

The defense also argued that unlike in many other fraud cases, Smith had not spent the proceeds on luxury goods.

“He used the loan money to keep his businesses afloat when they were floundering, not to inflate his lifestyle,” the defense wrote.

The government argued that Smith’s misconduct affected “real people” who rely on Baypoint to provide returns that “support their lifestyle in retirement or rely on the earnings from the fund to support them when they enter retirement in the future.”

The sentencing guidelines called for a prison term of 33 to 41 months, largely due to the substantial dollar figures involved. However, the government agreed to a reduction, noting that Smith had agreed to plead guilty at a time when courts will still closed for trials, and he appeared relatively unlikely to reoffend.

Walter sentenced Smith to a year and a day in federal prison, and also ordered him to pay $2 million restitution.

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