The Harder They Fall; investigative feature on ... - Ethan Brown

n October 27,2002, a private jet carrying Jay-Z and Beyoncdsat motionless sn the runway at Teterboro Airport in NewJersey waiting for Gabriele Smith, afinancial adviser whoseboyfriend, Michael Kyser, then vice president of promotionat Def Jam, was among those onboard. She was running hoursbehind, and the holdup was threateningto make Jay late fora major appearance at TD BankNorth Garden. Smith wasn'treally expectingthem to stick around for her, especially since she and Kyserhad argued heatedly that day about her chronic lateness. "So when I pulledup and saw the jet was still there, I knew something was strange," she says.// lnfact, she was abouto have the most incredible evening of her life. Justas Jay'show got under way in Boston, Smith, 36, recalls, Kyser pulled her asidebackstage. 'tl need to talk to you," he said, smiling, and then he dropped toone knee. As he popped the question, 5'mith broke into tears. <strong>The</strong>y'd been datingsince the mid-'90s, and she had long prayed for this moment.Smith croaked out a "Yes." Just then, Jay Jam president Kevin Liles, claiming she hadlooked over to Kyser from center stage and bilked them out of millions of dollarssilendymouthed, "k itdone?" Kysernodded. through her financial services company, PremierBusiness Management."My friend Mike justproposed tohis girlfriend,Gaby!"Jay announced to the Boston Smith is now facingotherlawsuits as well.partrer Richard Ford (aka Skane), andJasmineYoung:Trinidad, a former DefJam exec andmanager ofDMX's Bloodline label. Young-Trinidad alleges that Smith stole $r5o,ooofrom her and even created a fictitious moneymarket account called A*T Financial tocover her tracks. "Gabriele got comfortablewith her lifestyle," Young{rinidad says angrily,"and then stole everyone's money."Smith maintains that she is not guiltyofthese accusations, and, further, that shewas merely a "face person" for Premier, notinvolved in the company's day-to-day operations."It looks like I had a lot more to dowith the company than I actually did," shesays. "It's unfortunate, and it's somethingI really want to apologize to the victimsfor." Smith's longtime friend Mark Pitts,who comanaged the Notorious B.I.G. andis now a senior vice president with the ZombaLabel Group, compares her predicamentto parents who are held legally responsiblefor the actions oftheir children. "Gabrieleput way too much in someone else'shands," he says, adding, "it's not in her"lt looks like I had a lot more to do with the company than I actually did. lt'sunfortunate, and it's something I really wanto apologize to the victims for."crowd. "Everybody say congratulations!Mike, come on out here." Kyser venturedover, nervously picked up the mic, and startedimprovising a songthat began, "I love you,I love you..." as Smith remained in thewings, in total shock. "Beyonc6's pushingme, 'Go out there, go out there,"' Smithremembers. As she inched herway onstage,Jaylaunchedinto "'o3 Bonnie & Clyde."Andthen, to top it off, asJay rapped the chorus-All I nudin this lfe ofsinis mt andry girniendmulticoloredballoons floated down into thearena. "It was one of the best nights of mylife," Smith says.Itwas also the final peakofgood fortunein a life that was about to plunge into a spectacularfreefall.Justmonths later, in mid zoo3, Smithwashitwith the firstofthree lawsuits filed in NewYorkbvorominent clients such as formerDef'rW'e allege that Gabriele convinced my clientsshe could manage business affairs, but thenengaged in fraud and outright theft," saysattomeyJohn T. McGuire, who, at press time,is representingDJ Clue, Desert Storm Recordscharacter to steal."Priorto the lawsuits, inJanuary zoo3,federalagents raided Smith's firm's 38th Streetoffices in Manhattan as part ofawider searchfor evidence connecting DefJam's <strong>The</strong> Inc.iiai:t::liCAN YOU SAY trCHEESE'?5mith flashes d smile at aVMA after:party in August2002 with then Def Jam prezKevin Liles.156 UIBO

from having a lot to...." Hervoice trails off.Seeking more stability, Smith beganstudying for the Series 7 Securities LicensingExamination-required to work as a securitiesbroker, tradingstocks and bonds-andthe followingyear, she earned hercredentialsand attracted offers from financial powerhouseslike Morgan Stanley, where she beganas a financial adviser and worked herway upto associate vice president. In zoor, Smithwas named a vice president of investmentsat Prudential. Her'Wall Street career wasgoingwell.Before long, however, Smith found herselfinsome hotwater. Ormaybe, she jumpedin on her own. lfhile she was at Prudential,Smith says she started her own firm on theside, in direct violation of company policy.DVD film Crime Pqrtners, and they soughthelp setting up banking accounts and gettingtheir personal finances in order. "Isigned them up that day," Smith says. Nothingseemed unusual about the trio-"<strong>The</strong>ywere nice guys who had corne into this greatopportuniry" she says-but she wonderedwhy McGriff (who everybody called"Preme") was barred from being listed onany ofthe accounts.Thatfall, Smith began to understandwhyhe was an invisible partner: Friends told herof his r98os heyday running the multimillion-dollarcrack-dealing Supreme Team inSoutheast Qreens. Still, Smith shrugged itoff: "I was under the impression that, herewe are in zoo2, and he has a deal coming fiompeople I know and trust at DefJam. This mustroom and took hisphysical." Smith did finda spot for McGriff's weapon, she says, "inthe drop ceiling above my desk."In the weeks after the gun-stashingepisode, more ominous signs about PicturePerfect emerged: Smith says Ragin beganselling expensive, stainless-steel appliancesfrom home improvement chains to some ofher clients. (Ragin, an actor, would later beconvicted in a credit card scam; he testifiedat the Lorenzo brothers' trial that McGriffhad ordered the zooo shooting of5o Cent.)And, in December zooz, McGriffwas sentencedto prison for weapons possession."\Vhy are you still carrying a gun?" Smithrecalls asking McGriff at one point."'Because ofmy stature and notoriety fromthe r98os."' she remembers him saying,Smith tried to find a space to hide Supreme's gun while he went into aconference room. And she did-in the drop ceiiing above her desk.Srnith denies she broke any rules and saysshe and Prudential had r"mutual understanding"that her job there was "only ameans to an end." Nonetheless, in Octoberzoor, Smith left Prudential to focus on a boutiquefinancial services firm she named PremierBusiness Management.By the following spring, working out ofan office rented from famed entertainmentlawyer L. Londell McMillan, Smith hadbegun exploiting.her music business connections,landing Premier such clients asFabolous, DJ Clue, Kevin Liles, and Kanye'West. Yet the account she was gunning for-<strong>The</strong> Inc.-eluded her, since the Lorenzoswere loyal to their in-house accountant(who, ironically, ended up as the only stafferconvicted by the feds). But one day in summer2oo2, Smith got the call she had beenwaiting for. "Chris said they did a soundtrackdeal, and that they wanted me to handlethe account," Srnith recalls.<strong>The</strong> following daR three men-WayneDavis,Jon Ragin, and Kenneth "Supreme"McGriff-came to Smith's office. <strong>The</strong>ircompany,Picture Perfect, had struck a soundtrackdeal with DefJam for their straight-to-II{ BETTER DAYS:smitht ex-fian€6, MichaelKyser, has a laugh with qJclue, one of several industryfigures who plans to sue.all be in the past." Her doubts aboutMcGriffwere inflamed by an incident just before hewas to meet with a life insurance rep."supreme pulled me aside and said, 'Listen,I need to speakto you in your office,"'Smithsays. rMhen they stepped inside, he quicklysaid, "I got to hide this gun first before I gointo the conference room." Smith's instinctwas to be helpful, but this was pretty awkwardstuff. "I'm trying to seem unfazed," sheremembers. "I tried to find a space to hidehis gun while he went into the conference"'some ofthe younger kids would get stripesfor doing something to Supreme."'Looking back, she says, there were plentyof things "that should have set off alarms."And she admits.that by late zooz, she wasn'tclosely monitoring the accounts of Premierclients because she and Kyserwere busy planningtheir wedding, which was set to takeplace in Long Island on August t6, zoo3.ltwas to be an occasion every bit as theatricalas Kyser's proposal at TD BankNorth Garden:Kelly Price and Beyonc6 were to per-=g=158 vIEe

form, the bride was to be styled by JuneAmbrose, and Kyserwas talkingto ReverendRun about officiating. "In that period," SmithsayS ofthe latte r part of zooz,"the most moneywasstolen from the clients' accounts"-notby her, she reiterates, butby employees, noneofwhom have been charged with a crime.Yet Smith kept a lid on her apprehensionsaboutMcGriffand herbusiness until the endofzooz, when she and Kysdr vacationed inSt. Bart's withJay-Z andBeyonc6. It shouldhave been a fabulous time-Jay flew his privatechef down, and they were invited to aNew Year's party hosted by Mariah CareybutSmith was clearly anxious and depressed.One nightshe dreamed thatthe fedshadraid--edher office.Just before Carey's party, shebegan crying so hard she couldn't leave theONE FAt[ DAY lN 2OO5, more than two anda half years after the raid at Premier, Smithfrets considerably at her upstate New Yorkhome as she awaits the start of<strong>The</strong> Inc. tri.al. <strong>The</strong> sparselyfumishedhouse is beautifullysituatedon a hilltop sunounded byathicketoftrees where deer often gather. "This trialcoming up is bittersweet for me," Smith says."It's bitter in that I don't want to testifragainst anyone, however, it's sweet in thatit's the ending of a long, life-changing periodfor me." Smith doesn't look anything likethe blingy networker she once was. Simplydressed in a blacksweatsuit, she pulls herdarkbrown-highlighted hair back in a ponytail.She mentions that it's not just legal problemsthat have humbled her, but also a brutalprofileofher in Tlte Neu YorkTimeslast Augost,to call Kevin Liles to the stand to rebutSmith, had she testified.Smith's concems about hermedia imageare trumped by her need to resolve thepending lawsuits and her wish to patchthings up with the Lorenzos. Since she neverwas called to testiry at their trial, she'shopeful they'll understand the predicamentshe faced and forgive her. And she feels hercooperation with federal prosecutors willhelp her out ofher own legal jams, and that,with their assistance, she may someday beable to prove "that someone else wasresponsible" for her troubles.<strong>The</strong>re's no sign that her legal opponentsare backingoff though. Liles's attorney, BrianMaas, confirms that his client's lawsuitis going forward. "Ms. Smith was involvedSmith savs there were plentv of things "that should have set off alarms"and alleges that her firin's employeel were responsible for her troubles.room. "Mike was so upset. He said,'Everyoneis waiting fo r you-Jay-Z,Kein [Liles],"'Smith says. But she was unmoved and causedKyser to miss the party. She had a heart-toheartwithhim abouttheirrelationship, afterwhich the pairagreed to startattendingchurchand make family a higherpriority. "Itwas thedeepest conversationwe had the whole timewe were together," she says.OnJanuary z,zoo3, Smith retumed to herhome-a sprawling ranch-style house inPomona, N.Y., that she'd bought for morethan halia-mil in zooo-convinced she wasgoing to start anewwith both Kyser and Premier."<strong>The</strong> oldperson died,"Smith says, "anda new person v/as reboin." She was right butnot inanywayshe couldhave imagined: <strong>The</strong>next moming, federal agents raided both<strong>The</strong>lnc. and Premiefs offices. In just a few months'time, shewouldbe indicted, face lawsuits fromher former clients, and her engagemen toKyserwould end. (Contacted byVIBE at hisAtlantic Records office, lnr: emphaticallydeclined to comment forthis story.)<strong>The</strong> networkofhip hop and finance that she had builtfrom herdays as a lowlyAtRassistant atJivein the early'9os lay completely in shambles.in which she feels she was characterized as amusic-business washout who stole fromfriends and clients.As it tumed out, although her.cooperationwith the feds was critical in buildingtheir case against <strong>The</strong> Inc.-which centeredaround the accounts she maintained forMcGriff's venture-Smith wasn't called as awitness, presumably because her credibilitywouldhave been attacked on cross-examination.Indeed, a source close to the Lorenzostells VIBE that their lawyers plannedin an elaborate fraud," says Maas. "And.Mr.Liles suffered substantial losses as a resultof her actions." And shifting blame to heremployees could be a shaky strategy forSmith. Presumably, if there was strong evidence,they would've been named in theindictment. Nor does her deal with the fedsend the possibility of prison time. Nevertheless,Smith expresses hope. "This is temporary,"she says. "I promise you. Comebaek a year from now and things will bemuch different."trf;II IiIiIiIIIIt II&flSCOTT FREE:Smith says she hopes theLorenzo brothers (lrv, right,and Chris) will forgive her, nowthat they've been acquitted.{I160 UTBG