(CelebrityAccess MediaWire) — Business manager Gabriele Smith’s high profile clients are suing her for allegedly stealing over $3 million and using parts of the money to pay other investors while pocketing the rest.
Smith’s company, Premier Business Management LLC, represented hip-hop elite including Fabolous, Warner Music Group’s Kevin Liles, DJ Clue, and a list of music executives.
Many of her clientele are accusing Ms. Smith, a 35-year-old stockbroker and former talent scout, of running the elaborate scam, according to an article by the New York Times.
In lawsuits filed in New York Supreme Court in Manhattan, Smith former clients also named banks, including J.P. Morgan Chase and HSBC where she held accounts. The suit also shows that at least one former client is filing private claims against Smith’s former employers, Morgan Stanley and Prudential Securities, in the arbitration proceedings.
Smith has also been indicted on federal charges that mirror many of the allegations in the lawsuits. The charges are under seal, which is sometimes a sign that prosecutors may offer a deal for a defendant’s cooperation in another case.
Whether Smith possesses any information that authorities may find useful is a mystery. There is speculation in hip hop-industry circles that she may provide information in another federal inquiry, this one into suspicions of money laundering involving a convicted drug dealer, Kenneth McGriff, and the rap music label Murder Inc. Smith’s company managed a bank account from which it paid business and personal expenses “on behalf of” Mr. McGriff, according to the paper.
Meanwhile, Smith’s former clients are still trying to understand how she fooled some of the savviest businessmen in the industry.
Smith was very well respected in the music biz, being recently seen on vacation with Jay-Z and Beyonce in the Caribbean and previously dated former Def Jam VP of Promotion, Michael Kyser. Kyser is now an executive at Atlantic Records.
Smith’s lawyer, Kenneth A. Paul, told the Times, “I understand people who say they were victimized and say they lost money are upset. I don’t think it’s fair to attribute their losses to Gabriele Smith.”
Ms. Smith’s rise to popularity and wealth in the industry should have been a red flag to many, as she rose from entry level positions at Jive Records and Def Jam Recordings to trusted advisor to the stars.
“At one point she was one of the most trusted financial advisers in the business, and it’s painstakingly obvious that she’s ruined that,” Jasmine Young Trinidad, a former Def Jam executive and one of Smith’s former clients. “People in the business are feeling outraged and betrayed.”
Court documents also showed that several of her clients said she forged their signatures to make unauthorized withdrawals and fabricated account statements to cover transactions. Smith suffered another setback when federal authorities raider her offices as part of their investigation on Mr. McGriff and Irv “Gotti” Lorenzo’s Murder Inc.
“We’ve combed through thousands of pages of bank records to try and trace the money,” John T. McGuire, a securities lawyer representing Mr. Ford and several other former Premier clients, told the paper. “We have recovered several million dollars for people who were victimized from the financial institutions that were supposed to supervise her. We expect to have some success in recovering additional funds.”
Ms. Trinidad told the paper that she plans to sue, too, if only to help her understand what happened. “This was part of my nest egg,” she said. “I’m dying to know: Where did the money go?” –by CelebrityAccess Staff Writers