BOSTON – A case that strikes at the very heart of professional trust and fiduciary responsibility has rocked the legal and business communities in Massachusetts. David Smerling, a 74-year-old attorney from Lexington, Massachusetts, who also served as a bookkeeper for three local companies, has been arrested and charged with wire fraud, accused of embezzling a staggering sum, exceeding $2.5 million, from his clients. The alleged scheme, spanning four years, has left many questioning how such a betrayal could occur and what safeguards can be implemented to prevent similar breaches of trust in the future.
The Allegations: A Calculated Deception
According to the complaint filed by the U.S. Attorney’s Office for the District of Massachusetts, Smerling’s alleged embezzlement was not a crime of opportunity but a carefully orchestrated scheme carried out between January 2016 and May 2020. Court documents paint a picture of a calculated individual who exploited his position of trust to systematically siphon funds from the companies’ bank accounts into his own. The details are particularly damning. Smerling didn’t just directly transfer funds. He employed a more complex method, routing money through an intermediary account – an account belonging to one of the very victims he was defrauding – before it finally landed in his personal accounts. This layering of transactions was likely designed to obscure the origin and destination of the funds, making it harder for any potential audits or investigations to uncover the trail of illicit money.
Further adding to the alleged deception, Smerling is accused of altering the mailing address for the companies’ bank statements. Instead of being delivered to the businesses themselves, where they might be subject to scrutiny by other employees or owners, the statements were allegedly rerouted to Smerling’s home address. This seemingly minor detail would have granted him exclusive control over the financial records, effectively concealing the discrepancies created by his alleged fraudulent transfers. It allowed him to create a fabricated sense of normalcy, ensuring the victim companies remained oblivious to the hemorrhaging of their funds.
The Accused: A Pillar of the Community?
David Smerling’s age and profession add another layer of complexity and intrigue to this case. At 74, he is not a young, inexperienced individual who might be viewed as succumbing to youthful indiscretion. He is a seasoned attorney, a profession that demands the highest ethical standards and carries a significant weight of public trust. Attorneys are sworn to uphold the law and act in the best interests of their clients. The legal profession is built upon a foundation of integrity, and any breach of this trust by an attorney is particularly egregious. Smerling would have had decades of experience in law. He would have held licenses and certifications and a career that would be beyond reproach, as he would have represented numerous individuals and companies during this time.
Prior to his arrest, Smerling likely enjoyed a respected standing in his community. Lexington, known for its historical significance and affluent population, is the type of place where reputation matters. It’s probable that Smerling was seen as a pillar of the community, a trusted legal advisor, and perhaps even a friend or confidante to the owners of the businesses he served. This makes the alleged betrayal even more profound. The victims were not faceless corporations; they were likely individuals who placed their trust, both personal and financial, in Smerling’s hands.
The Charges: Wire Fraud and its Implications
Smerling faces a single count of wire fraud, a serious federal offense that carries severe penalties. Wire fraud is defined as any scheme to defraud using electronic communications, such as the internet or telephone. In this case, the transfer of funds between bank accounts would qualify as the “wire” element of the crime. The potential consequences for Smerling are significant. If convicted, he could face up to 20 years in prison, a hefty fine of up to $250,000, or potentially double the amount of his ill-gotten gains (which could amount to over $5 million in this case). He would also be subject to three years of supervised release following any prison term. In addition to these federal penalties, Smerling’s reputation would be destroyed. He would most likely be disbarred and never be allowed to practice law again. He would lose friends, colleagues and probably all his assets, due to the lawsuits that would be brought against him.
The severity of the potential sentence reflects the seriousness with which the federal government views white-collar crimes like embezzlement. It underscores the understanding that such crimes are not victimless; they can have devastating financial and emotional consequences for individuals, businesses, and the broader economy. Furthermore, the case is being handled by the Securities, Financial & Cyber Fraud Unit of the U.S. Attorney’s Office, indicating the high priority placed on combating this type of sophisticated financial crime.
The Motivation: Unanswered Questions
While the complaint lays out the mechanics of the alleged scheme, it does not explicitly address Smerling’s motivation. This leaves a crucial question unanswered: Why would a seemingly successful, established attorney, at the later stages of his career, risk everything by engaging in such a brazen criminal act?
Several possibilities exist, though none can be confirmed without further investigation or Smerling’s own admission:
- Financial Difficulties: Despite outward appearances, Smerling might have been facing hidden financial pressures. Gambling debts, bad investments, or an unsustainable lifestyle could have created a desperate need for money, leading him down a path of criminal activity.
- Greed: Simple, unadulterated greed could be a factor. The opportunity to amass a substantial sum of money, coupled with a belief that he could get away with it, might have been too tempting to resist, even for someone with an already comfortable life.
- Psychological Factors: Underlying psychological issues, such as a sense of entitlement, a thrill-seeking personality, or even a cognitive decline associated with aging, could have played a role.
- Revenge or Resentment: Perhaps Smerling harbored some resentment towards his clients or felt undervalued or mistreated. Embezzlement could have been a way to “get back” at them, even if it was self-destructive in the long run.
The Broader Context: White-Collar Crime and its Impact
The Smerling case, while shocking in its details, is not an isolated incident. It serves as a stark reminder of the prevalence and impact of white-collar crime in our society. White-collar crimes, typically non-violent offenses involving deceit, concealment, or violation of trust for financial gain, are often perpetrated by individuals in positions of authority or trust. These crimes can range from small-scale embezzlement to massive corporate fraud, like the Enron scandal. They can destroy businesses, ruin lives, and erode public trust in institutions. The economic cost of white-collar crime is staggering, estimated to be in the hundreds of billions of dollars annually in the United States alone.
Protecting Against Embezzlement: Lessons Learned
The Smerling case highlights the need for robust internal controls and oversight within organizations, regardless of their size. Several measures can help mitigate the risk of embezzlement:
- Segregation of Duties: No single individual should have complete control over financial processes. Different people should be responsible for tasks like authorizing payments, recording transactions, and reconciling bank statements.
- Regular Audits: Independent audits, conducted by external firms, can help detect irregularities and deter potential fraudsters.
- Mandatory Vacations: Requiring employees in sensitive financial positions to take mandatory vacations can help uncover hidden schemes, as someone else will be performing their duties during their absence.
- Background Checks: Thorough background checks, including credit checks, should be conducted on all employees who handle finances.
- Whistleblower Programs: Creating a safe and confidential channel for employees to report suspected wrongdoing can be crucial in uncovering fraud early on.
- Cybersecurity Measures: Strong cybersecurity protocols are essential to protect against unauthorized access to financial systems and data.
The Road Ahead: Justice and Restitution
As the case against David Smerling progresses, the focus will be on determining his guilt or innocence beyond a reasonable doubt. The prosecution, led by Assistant U.S. Attorney Kristen A. Kearney, will need to present compelling evidence to support the allegations outlined in the complaint. Smerling’s defense team will undoubtedly scrutinize the evidence and challenge the prosecution’s case. If convicted, the court will then determine the appropriate sentence, taking into account the U.S. Sentencing Guidelines, the defendant’s history, and the impact of the crime on the victims. Restitution to the victimized companies will likely be a significant part of any sentence. However, recovering the full $2.5 million might prove challenging, depending on how much of the money Smerling has already spent or hidden.
A Cautionary Tale
The David Smerling case serves as a cautionary tale, a reminder that even those we trust the most can betray us. It underscores the importance of vigilance, strong internal controls, and a healthy dose of skepticism, even in seemingly secure professional relationships. The case also highlights the devastating impact of white-collar crime, not just on the immediate victims, but on the broader fabric of trust that underpins our society and economy. As the legal proceedings unfold, the case will undoubtedly continue to generate discussion and debate about the nature of trust, the allure of greed, and the ongoing battle against financial crime in the 21st century. It is a story that will leave a lasting impression on the Massachusetts legal community and beyond, serving as a stark reminder of the fragility of trust and the enduring need for integrity in all our dealings.
