Former Portland Marathon director pleads guilty to tax fraud

Lester V. Smith, who managed the Portland Marathon for nearly 35 years, pleaded guilty to one charge of federal tax fraud Tuesday — changing his earlier not-guilty plea.

Why it matters: The plea — and his sentencing to three years' probation including eight months of home confinement, which happened in the same hearing — closes an ugly chapter in the premier running event.

• The marathon's growth in the 1980s was entwined with the rise of downtown as a lively and well-used public space.

Details: Smith, who is 83 and uses a wheelchair, faced seven felony counts, including embezzling more than $1 million from a nonprofit race organization and evading more than $400,000 in federal income taxes.

• Federal prosecutor Claire M. Fay told the court that, starting in 2012, Smith illegally moved hundreds of thousands of dollars from the nonprofit Portland Marathon Inc. to his personal brokerage and bank accounts, spending the money on luxury items, including travel, a car and home improvements.
• "Mr. Smith occupied a position of privilege when he committed this crime," Fay told the judge. "He had the trust of the Portland Marathon, the members of the racing community and the community at large for decades."

Smith's lawyers declined to comment, but when the judge asked him to confirm he had known he owed more taxes than he declared when he filed, Smith turned to his lawyers and quietly said, "I think I have to say yes but I honestly did not know."

• His lawyers requested a short recess, and after they conferred privately, Smith entered his guilty plea.
• At the end, Smith told the judge he was "so sorry for what has happened. It certainly doesn't reflect my life."

Flashback: Smith ran the Portland Marathon from 1985, a dozen years after its origins on Sauvie Island, through 2017.

• In 2018, the Oregon Department of Justice announced an $865,000 settlement with Smith for running the nonprofit without proper oversight. Oregon officials confirmed to Axios that Smith paid the settlement in full.

By the numbers: Judge Michael H. Simon ordered Smith to pay the IRS $411,279, in minimum payments of $100 or 10% of gross earnings per month, whichever is more.

The intrigue: Smith's plea was part of a deal that included dropping six other charges. The only disagreement was over sentencing.

• In addition to three years of probation, prosecutors wanted the judge to order electronic monitoring for the eight months of confinement to his home in Texas. But the judge decided to use a probation officer instead, saying he wanted to spare Smith the cost of the monitoring equipment, which convicts are often required to pay.
• "He's on a limited income; he has a sizable debt," the judge said in court.

What's next: This year's marathon, put on by Utah event management company Brooksee, is scheduled for Oct. 1.

• The route passes the federal courthouse where Smith was sentenced.