Developer Eric Sheppard goes to prison for PPP fraud

Bal Harbor-based developer Eric Sheppard will soon be incarcerated by the federal government for defrauding Covid-19-related business relief programs.

U.S. District Judge Beth Bloom on Friday sentenced Sheppard to a year and a half in prison, about a year less than prosecutors had requested, according to court records. In January, a federal jury in Miami convicted the 55-year-old builder on four of 12 counts of wire fraud and aggravated identity theft.

Sheppard is known for acquiring and remodeling the historic Carillon Hotel at 6901 Collins Avenue in Miami Beach shortly before the financial crash of 2008. His company, WSG Development, converted the property into a condo-hotel project that was called the then Canyon Ranch Hotel & Spa Miami Beach. WSG is at the center of its 2022 indictment for allegedly pilfering $900,000 in financial aid loans during the pandemic.

Bloom delayed a decision on whether Sheppard will have to forfeit any personal property to cover the $900,000 in restitution he must pay to the federal government. A forfeiture hearing is scheduled for Aug. 23, according to court records.

According to prosecutors, the indictment and other court documents, Sheppard allegedly defrauded the Paycheck Protection Program and another Small Business Administration loan that was implemented to help businesses stay in business. flow during government shutdowns to slow the spread of Covid. Between 2020 and 2021, Sheppard allegedly submitted fraudulent documents, including false tax returns, to obtain financing through four WSG subsidiaries, three of which were based in Bal Harbor, according to court records.

Prosecutors presented evidence at trial that Sheppard grossly misrepresented the number of people employed by each subsidiary, the monthly revenues and payroll costs of each subsidiary, and the type of businesses in which the WSG-related entities were engaged.

At the time of Sheppard’s arrest in 2022, WSG’s LinkedIn profile indicated that the company was still in operation, completing the acquisition, development and construction of commercial and residential projects in 13 states.

However, Sheppard’s developer career took a major hit following the 2008 crash. A year later, he lost the majority of units in his Canyon Ranch project to Lehman Bros. Holdings, a subsidiary of Lehman Brothers, then bankrupt. The cratered finance company acquired the units through a $301.2 million deed in lieu of foreclosure.

The same Lehman subsidiary also seized a West Palm Beach hotel property and development site owned by WSG, after the developer allegedly defaulted on more than $200 million in loans. In 2015, Z Capital paid $21.6 million for Canyon Ranch in a bankruptcy auction and renamed the project Carillon Resort & Spa. The property is now the Carillon Miami Wellness Resort.

In 2012, Sheppard settled a federal lawsuit that WSG allegedly diverted nearly $40 million to a company managed by Nevin Shapiro, a former University of Miami sports promoter who pleaded guilty in 2010 to devising a scheme Ponzi scheme of $930 million.

The complaint alleged that Sheppard, Shapiro’s childhood friend, made loans without official documentation to the accused Ponzi schemer’s company. Shapiro allegedly repaid Sheppard directly, including hundreds of thousands of dollars in fees at criminally usurious interest rates. While claiming he was also a victim of Shapiro, Sheppard agreed to repay $700,000 as part of the settlement, according to court records.