Former Salt Lake City Councilman Eric Jergensen was sentenced to 59 months in prison by a federal judge Friday for conspiring to defraud a New York company of $2.5 million.
His prison sentence will be followed by three years of supervised release. Jergensen also must pay $2.5 million in restitution to victims, by order of U.S. District Judge Brenda K. Sannes.
He was taken into custody following the sentencing in Syracuse, New York.
Jergensen, 58, and co-defendant Debashis Ghosh, 53, of Chicago, were convicted in October 2017 of wire fraud conspiracy following a seven-day trial in U.S. District Court for the Northern District of New York.
“Jergensen stole $2.5 million from investors trying to bring an innovative business and jobs to Plattsburgh [New York], and then tried to cover up his theft with years of lies,” said U.S. Attorney Grant C. Jaquith in a prepared statement Friday. “Today’s sentence holds Jergensen accountable for his greed and treachery.”
Jergensen and Ghosh were co-chief executive officers of Verdant Capital Group, LLC, based in Chicago. According to the federal indictment, Plattsburgh, New York-based Laurentian Aerospace Corporation retained Verdant to raise funds for the construction of an airplane maintenance, repair and overhaul facility to be built at the former United States Air Force base in Plattsburgh.
“Jergensen and Ghosh abused their investors’ trust, as well as their money,” said FBI Agent Vadim D. Thomas, in a prepared statement. “The FBI is dedicated to investigating these crimes because of their lasting impact on the lives of the victims and our community as a whole.”
According to court documents, Jergensen and Ghosh asked Laurentian to invest $2.5 million as seed money for the project. They agreed the money would remain in a Wells Fargo account and could not be moved without the authorization of Laurentian.
Laurentian wired $2.5 million into the Wells Fargo account on December 3, 2010. Five days later, Jergensen and Ghosh began transferring the money out of the account without Laurentian’s authorization. By March 18, 2011, they had transferred all of the $2.5 million out of the account, the indictment said.
Jergensen and Ghosh used Laurentian’s $2.5 million to pay Verdant’s expenses, including employees and contractors, and to pay others, including payments totaling $1.75 million to a now-defunct wind turbine company, where Ghosh was a minority owner, according court documents.
They also transferred $96,500 to Jergensen’s company, Contour Composites, Inc. of Utah; gave a $55,000 “loan” to a friend that was never repaid; and made payments totaling $14,500 to an Arizona man who was promising them access to union pension funds.
After Jergensen and Ghosh had spent the money, they spent several years falsely assuring Laurentian and its investors that their money was safe and secure, with Jergensen going so far as to forge a memorandum of understanding that purported to show that Laurentian’s money was in a secured bank account at Wells Fargo,” according to government documents.
They were indicted in August 2016.
The victim investors included a retired United States Air Force colonel, a former New York City deputy mayor, a retired lawyer, and several retired executives from the financial and airline industries.
Laurentian has been unable to build the airplane facility in Plattsburgh, court documents said.
Jergensen’s attorney, Lisa A. Peebles, did not respond to a request for an interview. However, in court pleadings, she asked the judge for leniency and suggested her client be granted probation and be ordered to pay restitution of $2.5 million.
Jergensen did not divert the money for personal enrichment. Instead, Jergensen transferred the funds to satisfy mounting business obligations,” she wrote. “In doing so, he fully believed the money would be replaced and the clients would suffer no harm.”
Further, Peebles said that with probation, Jergensen could start a new job in Utah at Zenith Land Partners as project director for construction of residential units in Tooele. He would be salaried at $7,000 a month, she said, which would allow him to pay $2,000 per month in restitution.
Jergensen, who represented Salt Lake City’s Council District 3 from 2002 through 2009, will remain incarcerated in central New York until the federal Bureau of Prisons determines where he will serve out his sentence, said Michael Barnett, spokesman for the U.S. Attorney’s Office. The bureau endeavors to place inmates within 500 miles of their homes, he said.
Ghosh is scheduled for sentencing on April 2.
