Out of sight.

• Author: Martin, Edward
• Position: Evaluation of business - Gary Smith - Smith Advertising & Associates

APPEARANCES MATTERED TO GARY SMITH, from his attire to every aspect of his ad agency and the clients it attracted. Since the '70s, he and, later, his son had built Smith Advertising & Associates into one of the Southeast's largest. And he had done it in a place known more for GIs and generals than marketing geniuses. Moving among Fayetteville's elite, the Smiths made quite an impression. Then----amid lawsuits, investigations and allegations of a Ponzi scheme--the image they crafted crumbled. But what really happened? Were they perpetrators or victims? Ad men know how crucial it is to control the message. But for Gary and Todd Smith, the medium became the message when they dropped

Sun filters through the pines on Skye Drive, which curves as gracefully as a swan's neck around the centerpiece lake in this Fayetteville neighborhood. "We built here in 1957, the first house on the street," Leon Shackleford says. A small, white dog darts into the yard. "Get in here, Mac! My wife would kill me if I ever let anything happen to that dog." The family across the street had a little dog, too. "We used to see their maid walking him."

Shack--"nobody knows me if you call me Leon"--was a car dealer for 50 years. He nods across the street, to the same house. "I sold him a couple," including a Buick Riviera. Shackleford is of the age that he refers to the neighbor as "that nice young man," even though the neighbor is 69. The old man shakes his head. "This has just been so heartbreaking to all of us up and down the street." He's talking about Gary Smith, who moved there in 1989, paying $310,000--more than $740,000 in today's dollars--for a single-story brick home in what politicians call a silk-stocking neighborhood. It was home for him and his wife, Lucy, and their three children, but it also amounted to a business investment: a prestige address for an image-obsessed ad man.

A few miles away is Highland Country Club, where the city's elite talk business under the chandelier in the richly paneled dining room. Smith was a regular, as was son Todd. They were leaders in the chamber of commerce, and Todd, at his father's urging, served on the city planning commission and spearheaded downtown redevelopment. Together, they pursued Gary Smith's longtime dream: to push Smith Advertising & Associates Inc. into the ranks of the top agencies in the nation. Together, they saw that dream die in disgrace.

In March 2012, Smith Advertising abruptly shut down. Gregarious Gary Smith--"you couldn't walk down the street with him without people constantly stopping him, wanting to talk," an acquaintance says--dropped from sight, along with Todd, 44, its chief operating officer. Cumberland County sheriff's deputies searched in vain, attempting to serve legal papers. That April, neighbors saw a moving van being loaded in front of Gary Smith's house. "He said they just needed a change of scene," the person who rents it now says.

In the crescendo of events to follow, federal agents raided the ad agency's headquarters, hauling computers and file cabinets from the restored Victorian mansion overlooking downtown. Worsening news broke the decorous silence at the country club. After the Smiths didn't show up to defend themselves, a federal civil judge in Florida ruled they had defaulted on a loan of more than $660,000. The owner of a Fayetteville-based Taco Bell franchise went public, alleging they had bilked him out of $700,000. Another Florida investor claimed they had taken him for more than $20 million. Though the Smiths have not been charged with any crime, investigations are underway, including a probe by a federal grand jury.

"Image is everything, Gary told me a dozen times" says a local businessman who has known him for nearly 50 years. "It was all about ego. He always had to be the best-dressed, the best-looking, to drive the nicest car. He always had to have the prettiest girls working in his office." Eventually, image could not save Smith Advertising. As it foundered, lawsuits and investigators allege, father and son crossed the line from desperate-but- legal maneuvers to fraud, creating fake invoices to get wealthy investors to pour money into a scheme that, they hoped, would keep the company afloat. A civil suit in Florida contends that the scheme, involving many investors in multiple states, churned through as much as $400 million.

Repeated efforts to reach the Smiths for comment were unsuccessful. But they have insisted to friends and business acquaintances -- some believe them; others don't -- that they are victims of predatory lenders. "They found themselves in loan-sharking," says someone knowledgeable with the ad agency's inner workings. He, like many of those interviewed for this story, asked not to be identified, citing long-held friendships...