Smith was re-elected to his State Senate seat without opposition in 2012. Following his reelection, he joined forces with the Independent Democratic Conference to form a "bipartisan governing coalition" with Senate Republicans. He expressed interest in running for mayor of New York City as a Republican in the 2013 mayoral election. He would have needed a Wilson Pakula certification in order to do so. His attempts to obtain that certification led to his April 2, 2013 arrest by the FBI for allegedly attempting to bribe Republican leaders whose permission he needed to run for mayor on the Republican ticket despite being a registered Democrat. Following Smith's arrest, he was expelled from the Independent Democratic Conference. In September 2014, Smith's Democratic primary challenger, former New York City Councilman Leroy Comrie, defeated him in a landslide.