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.”