Elliot Smerling, who operates JES Global Capital accused of $95 million bank fraud
In what federal prosecutors call a “brazen fraud,” a 52-year-old Lake Worth Beach-area private equity manager is accused of persuading a bank to loan him $95 million by forging documents, including the names of top business and university endowment officials.
Elliot Smerling, who operates JES Global Capital and has
sprawling homes in suburban Lake Worth Beach and Wellington, was indicted in
New York City on charges of bank fraud, wire fraud and aggravated identity
theft, court records show.
He appeared in U.S. District Court in Manhattan on Thursday
and pleaded not guilty to the charges. If convicted at a trial scheduled for
February, he could be sent to prison for as long as 62 years.
Miami attorney David Kubiliun, who represents Smerling,
declined to comment on allegations that his client forged the names of
university endowment officials and various business tycoons, including
billionaire hedge fund manager Steve Cohen, the owner of the New York Mets.
“We’re looking forward to our day in court,” Kubiliun said
when reached Friday.
In prior court hearings, federal prosecutors described
Smerling as a sophisticated fraudster who forged multiple documents to convince
Silicon Valley Bank in California to loan him nearly $100 million.
“This was a brazen fraud,” said Assistant U.S. Attorney Adam
McMichael said during a hearing in federal court in West Palm Beach in March.
Smerling falsified bank records, an audit letter and other
documents to convince the bank that at least four institutions had invested
millions in his fund, McMichael said.
“This wasn't a fraud that was committed by underlying
individuals within the business of the defendant,” the prosecutor said. “Rather,
it was the defendant soliciting himself the $95 million from the victim bank
and then supplying fraudulent documents to the victim bank to secure that
amount of money.”
In a lawsuit Silicon Valley Bank filed against Smerling in
March, it said he falsely claimed he handled millions in endowment funds for
New York University and the University of Miami. He further claimed he had the
backing of Cohen and other well-heeled investors.
Days before the hearing in West Palm Beach, Smerling sent
Silicon Valley Bank $15 million and promised to repay the remaining $80 million
by April 30, Kubiliun said during the March hearing.
Given Smerling’s efforts to return the money, he appealed to
U.S. Magistrate William Matthewman to allow the money manager to be released on
bond.
Matthewman refused. Married to a Brazilian woman, Smerling
could take the $80 million and flee to the South American country, which
doesn’t have an extradition agreement with the United States.
Further, given that Smerling is facing charges that could
send him to prison for the rest of his life, he would have strong incentive to
leave the country, Matthewman said.
However, if Smerling made good on his promise to repay the
bank, Matthewman said he might reconsider his decision.
Those who testified on Smerling’s behalf described him as a
generous man and a devoted father who enjoyed watching his two daughters ride
horses and taking them to visit his mother in Boynton Beach.
Kubiliun said Smerling has given back to the community. He
served on an entrepreneurship advisory board for the University of Miami’s
business school. He also supported the Boys Club and Girls Club of Palm Beach
and Dreyfoos School of Arts, he said. Those nonprofits didn't return emails for
comment.
He lived large, prosecutors said. In addition to the homes
he owns in suburban Lake Worth Beach, Wellington and Brazil, he owns a Porsche,
a Ferrari, a Corvette, a Harley-Davidson motorcycle, a Mercedes van and a Ford
truck, prosecutors said.
Law enforcement officials said Smerling engaged in fraud to
line his own pockets.
“As alleged, Smerling engaged in illegal practices in order
to benefit his interests,” William Sweeney Jr., assistant FBI director, said in
a statement after the indictment was returned. “Today he’s learned the
consequences of his alleged actions.”
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