Headed to the slammer: Developer Eric Sheppard gets 1.5-year prison sentence

He was convicted of PPP fraud in January

Developer Eric Sheppard Going To Prison For PPP Fraud

Eric Sheppard (Photo Illustration by Steven Dilakian for The Real Deal with Getty)

Bal Harbour-based developer Eric Sheppard is soon going to federal lock-up for defrauding Covid-19 business relief programs. 

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

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

Bloom delayed action on whether Sheppard will have to forfeit any personal property to cover the $900,000 in restitution he has to pay the federal government. A forfeiture hearing is set for Aug. 23, court records show. 

According to prosecutors, the indictment and other court documents, Sheppard allegedly defrauded the Paycheck Protection Program and another Small Business Administration loan that were implemented to help companies stay afloat during government shutdowns to slow the spread of Covid. Between 2020 and 2021, Sheppard allegedly submitted fraudulent documents, including fabricated tax returns, to obtain the funding through four WSG affiliates, three of which were based in Bal Harbour, court records show. 

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Prosecutors presented evidence at trial that Sheppard grossly misrepresented the number of people employed by each affiliate, the revenue and monthly payroll expenses for each affiliate and the type of businesses the WSG-related entities were engaged in.

At the time of Sheppard’s 2022 arrest, WSG’s LinkedIn profile said the company was still in business, conducting acquisition, development and construction of commercial and residential projects in 13 states.

However, Sheppard’s development career took a major hit in the wake of the 2008 crash. A year later, he lost a majority of the units at his Canyon Ranch project to Lehman Bros. Holdings, an affiliate of then-bankrupt Lehman Brothers. The cratered financial firm acquired the units through a $301.2 million deed in lieu of foreclosure. 

The same Lehman affiliate also foreclosed on 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 rebranded the project as the Carillon Resort & Spa. The property is now the Carillon Miami Wellness Resort.

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

The complaint alleged that Sheppard, Shapiro’s childhood friend, provided loans with no formal 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 Shapiro victim, Sheppard agreed to pay back $700,000 as part of the settlement, court records show.