Prominent South Florida builder faces trial on charges of ripping off Covid loan program

As the COVID-19 pandemic tanked the economy, South Florida developer Eric Sheppard turned to the U.S. government for help and received about $900,000 in fraudulently obtained loans that his business really did not need or qualify for, a prosecutor said during opening statements in his Miami federal trial Monday.

Sheppard used the emergency loans for personal expenses, such as the mortgage on his Bal Harbour home, his American Express card and jewelry bills, after submitting bogus applications to a U.S. loan program approved by Congress after the pandemic struck in March 2020, prosecutor Ana Martinez told jurors. The economic relief program was intended to help small businesses meet payroll and survive during the public health disaster — not wealthy developers like Sheppard, she said.

Martinez said Sheppard’s loan applications not only contained false information, many of the supporting documents such as corporate tax returns were fabricated — including some forged with the name, title and signature of other people without their knowledge.

“The defendant did not commit this crime because he needed money,” Martinez said. “He committed this crime because he wanted more money.”

Sheppard — the first South Florida real estate developer ever to be charged with COVID-19 loan relief fraud — is charged with nine counts of wire fraud and five counts of aggravated identity theft between April 2020 and March 2021. If convicted at the end of his scheduled two-week trial, each of the wire fraud counts would carry up to 20 years in prison and each of the identity theft counts would carry a two-year sentence.

Sheppard, who records show lives in a $4.2 million home in Bal Harbour, first drew attention as a real estate developer 15 years ago when he renovated the historic Carillon Hotel in Miami Beach and turned it into an upscale resort complex with a pair of condo towers and the Canyon Ranch spa. The Collins Avenue project put Sheppard and his company, WSG Development, atop Miami Beach’s real estate world.

Sheppard’s defense attorney, Jayne Weintraub, painted a starkly different portrait of the developer, saying he was a self-made millionaire and family man whose business was broadsided by the pandemic — focusing on a shopping center that he developed off Alafaya Trail near the University of Central Florida campus in Orlando.

She urged the 12-member jury to travel back in time to establish some context during the onslaught of COVID-19, noting that Sheppard used the federal loans to pay employees and buy materials to rebuild a vast space left vacant by the bankruptcy of anchor tenant Toys ‘R Us to accommodate another major retailer, Burlington Coat Factory.

“Eric Sheppard used every penny that his company was given for the right reasons,” Weintraub told the jurors, pointing out that he didn’t blow the federal relief loans on Lamborghini sports cars or Rolex watches or exotic trips. “The money went to workers and supplies like it was supposed to.”

Weintraub said he didn’t forge anyone’s signatures on his series of loan applications, either.

“He did not create companies to get loans,” she argued. “He had real companies that did real business.”

The indictment, which was filed in June and revised in August, charges Sheppard with scheming to defraud the Small Business Administration through its Paycheck Protection Program and another disaster relief program.

Prosecutors say his loan applications for three different companies — HM Management and Development, HM-UP Development Alafaya Trails and HM Four — were “false and fraudulent” and that he used the nearly $900,000 in proceeds “for his personal use and benefit.”

Sheppard “masked payments to independent contractors as wages to [full-time] W-2 employees” in order to qualify for the PPP loans, according to the indictment.

The loan applications included “falsified documents,” such as Internal Revenue Service and Florida Department of Revenue forms, the indictment states. The applications also “misrepresented” the type of business as well as revenues, monthly payroll and number of employees.

“Some of the falsified documents” submitted by Sheppard also “contained the names and forged signatures of others, without the knowledge or consent of those individuals.”

The loan applications were in the $150,000 range and reviewed by three unidentified lenders under the Small Business Administration program and disbursed during the pandemic, according to the indictment. Sheppard received a total of six pandemic relief loans.

As the nation’s No. 1 fraud capital, South Florida has led the financial crime wave that followed Congress’ passage of the CARES Act during the pandemic. Starting in 2020, the legislation injected about $800 billion through the SBA’s Paycheck Protection Program into the national economy, with banks reviewing the loans for a fee and the U.S. government forgiving the loans as long as the money was used to pay employees or other overhead expenses.

About 200 South Floridians have been charged with defrauding the program, submitting hundreds of millions of dollars in applications deemed bogus by federal prosecutors. Among them: a businessman using PPP money to buy a $318,000 Lamborghini; a nurse alleged to have lied about his business to get $474,000 that was used in part to pay a Mercedes-Benz lease and child support; and a North Miami suburban couple that claimed to be farmers to qualify for $1 million in relief benefits.

Sheppard, who graduated with a bachelor’s degree in economics and finance from Florida State University, describes attaining a robust real estate development career on his LinkedIn page. He highlights developing and building commercial and residential projects in 13 different states, including hotels, condominiums and shopping centers “with values in excess of 1 billion dollars.”

Before his 40th birthday in 2008, Sheppard brought the Canyon Ranch resort to Miami Beach’s Carillon Hotel and built a reputation as a deep-pocketed and dependable philanthropist.

While Sheppard had never faced criminal charges before, he had a previous legal dispute with a private lender in the Carillon Hotel project and also was involved as an investor with notorious Ponzi schemer and disgraced University of Miami football booster Nevin Shapiro. Sheppard wound up being sued as part of the scandal.

The great recession hit the real estate and financial markets hard in 2008, including his high-profile Carillon project. Sheppard was sued by his company’s lender, Lehman Brothers, which accused him of failing to pay millions of dollars in loans for the redevelopment of the Collins Avenue hotel and resort. The dispute was settled confidentially. Sheppard no longer has a financial interest in the project.

But around the same time, Sheppard’s close relationship with Shapiro, a Miami Beach boyhood friend, brought controversy, financial losses and legal trouble, according to court records. Sheppard, according to court records, was sued by a trustee for Shapiro’s bankrupt company as the trustee tried to recover money for his investment victims.

One of South Florida’s most infamous con artists, Shapiro sold investors on the idea of buying groceries cheap in one part of the country and selling them in another part for a profit — a wholesale distribution business that collapsed at the same time that Sheppard had completed his signature resort project on Collins Avenue.

Sheppard lost roughly $2 million, including $1.3 million in investments with Shapiro’s business and an additional $700,000 in a settlement with the bankruptcy trustee tasked with recouping funds for victims of Shapiro’s $930 million Ponzi scheme. The settlement resolved a federal lawsuit that alleged Sheppard was not duped by Shapiro’s elaborate scam, but rather was an active participant in it.