Kansas City Attorney and His Client Found Guilty of Criminal Contempt

KANSAS CITY, Mo. - Two Kansas City men have been found guilty of criminal contempt following a six-day bench trial.

Charles Floyd Anderson, 81, and his attorney Robert Pete Smith, 80, were found guilty of contempt by U.S. District Judge Roseann Ketchmark. The Court found Anderson and Smith willfully violated a court order to provide truthful, accurate and complete financial disclosures in an underlying civil action. The civil action was brought by the Federal Trade Commission (FTC) and the State of Missouri alleging that consumers paid over $100 million in response to deceptive sweepstakes and prize mailers distributed by a family business enterprise built by Anderson, FTC v. Next-Gen, Inc. et al., No. 18-cv-00128-DGK (FTC Case).

Smith, a partner at McDowell Rice Smith & Buchanan, P.C., represented Anderson and his businesses for over 25 years before the FTC Case. As part of the FTC case, Anderson was ordered to complete certain individual and corporate financial disclosures. The entities, accounts and transactions that supported the criminal contempt proceeding involved Anderson and Smith acting as business partners or close friends, reaching far outside of the typical attorney-client relationship. The criminal contempt case focused on the apparent effort undertaken by Smith to conceal that affiliation and wash himself and his business relationship with Anderson from the FTC disclosures. Anderson, as a lay person, had a duty to provide truthful, accurate and complete information to the FTC.

Following the bench trial, the Court found, "Attorney Smith and Anderson willfully violated both the letter and the spirit of the financial disclosure required by the district court in the FTC Case. . . . Orders duly entered by a district court must be followed and respected. Persons or parties who do not do so, and who instead opt for willful deceptive gamesmanship or otherwise act in bad faith in complying with a district court's orders are subject to criminal sanction." The Court further found that "Defendants' conduct illustrates a picture of deception and sanitization of particular relationships and assets from the FTC's view." The Court ultimately adjudged Anderson and Smith guilty of criminal contempt as charged. The Court's order is attached.

This case is being prosecuted by Assistant U.S. Attorneys Patrick D. Daly and Matthew N. Sparks and Special Assistant U.S. Attorney Amanda K. Hanson. It was investigated by the Federal Bureau of Investigation.