The Waterford Files : Part two of a three-part series; A Suspicious Death
Naples Daily News (FL) - Monday, July 1, 2002
Edition: FinalSection: A Section
Lauri Smith's death in a San Diego hotel room of a cocaine overdose launched a struggle for control of Waterford Mortgage Bank Corp., between her longtime partner, Jack Pentz, and Lauri's family. Jack won. Secretly, Jack diverted nearly $7 million out of Waterford 's bank accounts in the months after Lauri's death, leaving IOUs to replace the cash.
By GINA EDWARDSWhen Officer T.C. Lee of the San Diego Police Department entered room 1517 at the luxurious Hyatt Islandia Hotel, everything pointed to suicide.
He saw a lifeless Lauri Smith, the hard-charging workaholic partner at Naples-based Waterford Mortgage Bank Corp., on the bed on her back. She wore a pink knit shirt with shoulder pads and matching pink stretch pants on her petite frame. Empty beer bottles and white pills littered the room. Officer Lee found an empty bottle of Klonopin, a prescription anti-anxiety drug.
That morning, April 27, 1998, Lauri's death seemed straightforward.
Lauri's boyfriend of about a year, Larry Goethals, said he found her face down on the bed. He turned her on her back to check for vital signs and then went downstairs to the lobby to call police.
Later, Goethals called Lauri's longtime business partner, Jack Pentz, who called Lauri's sister, who called her mother to say Lauri was dead.
Another detective called Lauri's mother and said he suspected suicide.
"All I knew was that there were pills all over and Lauri was dead," says Bobbi Dunn, Lauri's mother. "I paged Larry I don't know how many times, and he didn't call me back for a day and a half."
Lauri's family wouldn't learn the full details of her death for weeks until San Diego medical examiners issued their completed autopsy report.
The autopsy report catalogues Lauri's injuries: A cut marked her right palm. A 31/2- by 11/2-inch bruise extended from the side of her right eye up into her forehead.
Bruises caused by hair pulling covered much of her scalp.
She had a bruise on her right cheek and another one on her left ear. She had a bruise on her right breast, right arm and right knee. Bruises marred both thighs and both shins.
A 11/2- by 1-inch bruise stretched out from the right corner of Lauri's mouth.
"There was so much bruising," Lauri's mother says now.
Goethals told San Diego investigators that he was hired to drive a car from Naples to Southern California. Lauri flew out to meet him. Lauri was depressed that night. She'd had an abortion three days earlier. The two drank with friends in the hotel bar that night.
Later they went back to their room, 1517.
Goethals told investigators this: Lauri became angry after Goethals told her that his ex-wife and son were involved in a rape case. Lauri accused him of still loving his ex-wife and threw a beer bottle at him. She cut her hand in the fight.
Lauri then tried to fling herself off the balcony, and Goethals stopped her, he told police. Because of Lauri's mental state, he left her around 3:30 a.m. and went to spend the night at a friend's house, Goethals said. The next morning, he returned and found her dead. Curiously, he went downstairs and telephoned 911 at 8:48 a.m.
Goethals told police Lauri was a pill popper. But medical examiners found no pills in Lauri's system. Instead, they found cocaine, a wad of it in her stomach. Lauri had to have swallowed the cocaine that killed her. The overdose wasn't a smuggling trick gone bad: the medical examiner didn't find a transport balloon in Lauri's stomach.
There was no note, no signs of cocaine use in the hotel room, only the pills scattered around the room. And Lauri's violent injuries.
For Lauri's family, April 27, 1998, would become a day shrouded in pain and mystery: Did someone want Lauri dead?
For the lawyers and accountants unraveling a suspected $14 million fraud at Waterford , April 27, 1998, would become a point of demarcation: What did Lauri know? What did Jack do?
For FBI and IRS investigators on an international money hunt for the millions of dollars that evaporated from Waterford Mortgage Bank Corp. in the months after Lauri's death, the details of her demise would add to the mystery of her life.
After Lauri's death, her parents and siblings felt numb.
Jack, the tall southerner with a homespun charm, sent for Lauri's body and personal belongings in San Diego. He made the funeral arrangements in Naples, including for Lauri's cremation. He insisted that Waterford pay the expenses.
When Jack and Lauri met waiting tables at the Vineyards Country Club in the late 1980s, they had bigger plans. They founded Waterford together in 1991 so it seemed fitting that Waterford pay a final tribute to the woman who nurtured the business from infancy.
Family members and dozens of people from the real estate business attended the memorial service held at the beach on Park Shore. Lauri's sister made a collage of pictures of her younger sibling. The family had planned to spread Lauri's ashes on the beach. But they couldn't bring themselves to do it. There were so many unanswered questions.
Employees were told only that Lauri died suddenly. There was no mention of suicide. More than two years after the fact, Jack's own mother still thought Lauri died of a sudden heart attack and said so in a court deposition.
Lauri's boyfriend, Goethals, attended her funeral in Naples. At the time, Lauri's family had no idea they'd fought the night of her death. They didn't see the completed autopsy report for weeks. And Lauri's family didn't know Goethals had a criminal past and wouldn't until years later.
The day of the funeral, Jack went to Lauri's condo with Nicole Young. Young was a former Waterford employee who left the business. Lauri didn't have many friends, but she counted Young as one of them.
With movers and a truck in tow, Jack and Young cleaned out Lauri's home office and carted off her file cabinets and all her Waterford records. Cathy Scherer, Lauri's older sister and employee of Waterford since its earliest days, was at the condo at the time. She knew Jack, her boss, and let him in.
Lauri's mother was furious that Jack took the business records. She became suspicious.
"He cleared that condo out of any Waterford documents," Dunn says now. Even the briefcase Lauri had with her in San Diego was returned to her family empty.
Jack recalls a different version of events. He said Lauri's family told him to keep the business running, do what it takes to keep people employed. To do so, he needed Waterford records.
"The estate gave me the ability to run the company," Jack told the Daily News. "The estate comes in and says do the best job you can."
Sorting out Lauri's finances and divvying up her assets soon became a messy and complex affair governed by the probate court.
Even the gold-framed picture that Jack had given Lauri for Christmas one year became a point of contention in the estate contest.
Dunn knew her daughter had some type of ownership stake in Waterford . She thought Lauri and Jack were equal partners.
"We had no way of knowing what Waterford was worth," says Dunn, who became the personal representative charged with dividing Lauri's assets. "I wasn't getting any answers from Jack except total lies."
Years later, Jack would renounce Waterford ownership. Now, in the throws of the FBI and IRS probe, Jack says he was merely an employee of Waterford when Lauri died. Lauri's family didn't know it.
Jack assumed total control of Waterford after Lauri's death. He didn't bother to tell Lauri's heirs that she owned Waterford outright at the time of her death. That information didn't surface until many months into the probate fight, Lauri's mother says.
Jack says now that Lauri's mother attempted to wreck the business.
"They just wanted to grab assets and go away," Jack told the Daily News.
Lauri's sister continued to work at Waterford . Pregnant and worried about money, Cathy Scherer tried to stay neutral, Dunn says. Without Jack, Waterford would be worthless, Dunn says Scherer told her.
Not long after Lauri's death, Jack moved Young into Lauri's Walden Shores condo. To Lauri's mother, it appeared that Jack and Young -- Lauri's friend -- had stolen Lauri's primary asset.
More than a year later as part of the probate fight, Jack produced a deed showing Lauri had transferred ownership of the condo before her death to a company controlled by Young. Dated in 1997, Jack's attorneys at Sparkman & Quinn didn't record the condo deed transfer in the official courthouse records until November 1999, more than 18 months after Lauri died.
Waterford money paid for the condo, Jack said. After Lauri's death, he offered it to Young as a perk to entice Young to return as an employee and straighten out Waterford 's affairs.
Office gossip buzzed that Young and Jack had a romantic tie. But Jack denies that he and Young ever dated.
Whatever the tie, Young received a windfall of perks after Lauri's death. The Walden Shores condo was only the beginning.
Jack later admitted that secretly -- behind the backs of Lauri's heirs and the probate court -- he drained Waterford 's bank accounts of nearly $7 million dollars in the fall of 1998 and early 1999.
The missing money
Details of Jack's transactions wouldn't emerge until 2000 -- after Ron Brown, a Naples multimillionaire who bankrolled Waterford in its infancy, realized he'd lost $14 million.
Brown's civil lawsuit would put Waterford 's history -- and Jack's behavior after Lauri's death -- under a microscope. One thing became clear: After Lauri died Jack steered Waterford far afield of the mortgage business.
By the latter half of 1998, after Lauri's death, Waterford 's accounts had fattened with Brown's stolen money, court-appointed accountants and Brown's lawyer says.
In October 1998, Jack transferred $2.5 million from Waterford 's accounts offshore to a Channel Islands company called Trinity Project Management Ltd. as part of a high-risk junk bond investment. The Channel Islands, located in the English Channel and northwest of France, are renowned as an international banking secrecy haven.
Later in March 1999, Jack transferred another $2 million from Waterford accounts to a junk bond investment by way of Continental Asset Management Corp., a Minnesota-based company.
At the time of the transfers, Jack wasn't technically the owner of Waterford , Lauri's heirs were. Later under oath as part of the Brown lawsuit, Jack admitted that he never told Lauri's family that he'd emptied the Waterford accounts and transferred the money to the junk bond investments offshore.
The millions of dollars in Waterford 's accounts belonged to Brown and Jack knew it, Brown's attorney says. Jack -- with help from Lauri and others at Waterford -- stole Brown's money and then transferred it offshore to launder it, Brown has alleged in his lawsuit.
Jack can't explain a lot about the transfers offshore. Under his own rambling explanation in an interview, he went behind the back of the estate and "borrowed" nearly $7 million from Lauri's company.
At another point in the interview, Jack said Lauri's family knew what he knew. "I'm not sneaking money offshore ... I borrowed the money. I gave them a note."
He now calls the junk bonds bad investments, but says they're covered by two separate insurance policies that no one has bothered to collect.
Under his explanation of events, Jack found millions of dollars in Waterford 's accounts after Lauri died. But he offers no explanation as to why the money was there.
Lauri traded millions of dollars back and forth with Brown, Jack says. She was making money on real estate transactions, too.
"There's no reason to think it's not her money," Jack says.
The trump card
Sometime after Lauri's death, Jack says he realized that Waterford 's state lending license had lapsed. To get around the glitch, Jack created a new mortgage company -- First Mortgage Corp. of Naples. The new company continued to use the Waterford name with the blessing of state banking regulators, Jack says.
Regulators from the Department of Banking and Finance suggested the arrangement, Jack told the Daily News. Michael Moore, an attorney for the department, says that statement is nonsense. Brown's attorney says Jack created First Mortgage and operated it under the Waterford name as part of the ruse to confuse Brown and the general public.
The company letterhead said Waterford . So did the sign on the office door.
After forming First Mortgage, Jack transferred $2.4 million from Waterford accounts to his new company. He called it a loan and left a promissory note, or IOU, to Waterford . Lauri's family says they didn't know about the millions of dollars Jack borrowed.
Eventually, Jack discovered that Lauri kept several boxes of Waterford documents at a house she owned in Michigan. Lauri's mother, Dunn, says Jack threatened her and ordered her to produce the records. Cursing and screaming, Jack banged on the door of her Estero condo one day, Dunn says.
When Dunn wouldn't produce the records, Jack lashed back with a lawsuit -- paid for by Waterford -- that claimed Dunn had defaulted on a car loan.
"Jack was filing fictitious suits against me to keep me distracted from finding out what was happening with Waterford ," says Dunn, who lives in Michigan and Estero.
Jack accused Dunn of improperly liquidating Lauri's assets and asked the probate court to remove her as head of Lauri's estate. He pointed to the gold-framed picture the estate gave him as an example.
In the bitter estate contest, Jack waited more than a year after Lauri's death to play his trump card -- a 1997 stock option agreement signed by Lauri that would allow him to buy Waterford for $100,000. It was a sweetheart deal for Jack: The Waterford stock purchase option allowed him to put $10,000 down and come up with the remaining $90,000 three years later.
It was a curious transaction: Why would Lauri agree to sell Waterford for $100,000 if she knew before she died about the millions of dollars in Waterford 's accounts?
During the probate court fight, Jack produced a promissory note that he said showed Lauri had borrowed $8 million from Waterford . Inexplicably, he later forgave the debt.
That note -- which appears to deflect responsibility for the theft to Lauri -- is just one of the strange pieces to the Waterford puzzle.
Jack says now that he owes Waterford more than $6 million -- pay back for the money he borrowed. But in another contradiction he told the Daily News: "If there are assets, I control them by virtue of the option agreement. Win, lose or draw, I own the assets if they're there."
Lauri's brother, Dan Scherer, says Jack wanted Lauri's family to go away.
But Dan couldn't just go away and neither could his mother.
Lauri told her brother something before her death. She said it more than once, sometimes while talking about Waterford and other times out of the clear blue.
"That burned in my mind," Dan Scherer says.
"Never trust Jack. Never trust Jack."
Coming Tuesday: Wealthy Naples retiree Ron Brown was missing millions and one of the people he trusted was dead. Enter lawyers, accountants and federal agents, who would begin to unravel a Waterford spending spree.
Index Terms: The Waterford Files
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