Jun. 06, 2024 at 12:37 am

Ex-Detroit Riverfront CFO embezzled tens of millions of dollars: Feds

June 6, 2024no commentaccess:metered MI ssts:news:nation sstsn:Nation tag:American Express tag:Citizens Financial Group tag:Crime & Justice tag:Detroit tag:Detroit RiverFront Conservancy tag:FBI tag:Legal tag:Local News tag:Louis Vuitton tag:Michigan Department of Transportation tag:Modular Story tag:N4N-News tag:News tag:Overall Negative tag:USAT nonstaff type:story

DETROIT — The ousted chief financial officer for the Detroit Riverfront Conservancy has been charged with bank fraud and wire fraud in a criminal complaint that alleges he stole $40 million, the U.S. Attorney’s Office announced Wednesday.

The investigation against William Smith, 51, stems from what is alleged to be “a years-long scheme by Smith to embezzle Conservancy funds for his own use,” United States Attorney Dawn Ison said in a news release, announcing the unsealed criminal complaint Wednesday in federal court. The complaint alleges that between November 2012 and March 2024, Smith stole nearly $40 million.

“Smith used the embezzled funds for his own personal gain and enrichment, spending the funds on airline tickets, hotels, limousines, household goods, lawn care, clothing, and jewelry,” the criminal complaint alleges.

Smith was released on a $10,000 unsecured bond and ordered not to enter into any loan or credit transactions following his appearance Tuesday afternoon before Federal Magistrate Judge R. Steven Whalen in Detroit. Smith was shackled and handcuffed, and wearing a beige sweatsuit and COVID-19 mask.

A state’s attorney sought to impose stricter bond terms including a GPS tether and curfew, but Whalen rejected the request, citing Smith’s clean criminal record. Smith’s attorney, Gerald Evelyn, declined comment.

A preliminary hearing is scheduled for June 26.

The FBI raided Smith’s Northville, Michigan, home early Wednesday. Personnel in T-shirts with FBI insignia were seen emerging from the home with more than a dozen boxes and loading them into a semi-truck backed into the driveway, as well as taking photos of the inside of a parked Ford F-150. More than a half dozen cars lined the street in the quiet gated subdivision.

Agents previously raided his conservancy office twice, on May 16 and Friday, when he was fired, according to the complaint.

‘False and fraudulent representations’

The complaint alleges Smith opened an American Express Business Platinum Card, without the conservancy’s knowledge, and that four cards were issued on the account, including for his wife and other family members. Nearly $14.9 million in credit card payments from the conservancy bank account were made on the American Express cards between November 2012 and March 2024, according to an accounting firm hired by the conservancy.

He used the credit cards to purchase airline tickets, pay insurance premiums, including a $12,900.44 charge from Draper Chevrolet Toyota in Saginaw in 2013, and to make a $17,452.80 purchase at Louis Vuitton, federal investigators said.

Most of the specific spending cited by investigators in the complaint was from 2013, including charges on the card in Smith’s wife’s name for $5,372 from Scott Shuptrine Interiors Royal Oak, $7,417 from The Home Depot and $649 from Wayfair.

Smith had sole control over the nonprofit’s Comerica Bank account and “altered” bank statements to “falsely (inflate) the available balance in the account” before showing them to a staff accountant at the nonprofit.

And Smith obtained a $5 million line of credit in 2023 from Citizens Bank after “his embezzlement threatened to exhaust the Conservancy’s cash.” To get the money, Smith sent a “Corporation Certificate of Authority,” that was allegedly signed by a corporation secretary at the nonprofit.

Federal investigators said they interviewed that woman, who told them it was not her signature, she hadn’t seen the document and that she was working off-site the day it was signed.

“The Citizens Bank line of credit was approved and funded based upon Smith’s false and fraudulent representations that he was authorized by the Conservancy to act independently on its behalf,” the complaint said.

Complaint: Smith concealed payments by altering bank statements

In addition, the conservancy made payments to Smith’s company, Joseph Group & Associates LLC. The nonprofit’s auditing firm found $24.4 million in wire transfers from the nonprofit’s Comerica account to the Joseph Group between February 2013 and February 2024.

The complaint said he concealed some of those payments to his company by altering bank statements to appear that money was going to the state of Michigan. The Michigan Department of Transportation serves as a general contractor.

Smith was fired last week by the nonprofit’s board and Board Chair Matt Cullen has said an independent audit found “evidence of financial wrongdoing” by Smith and that losses amount to more than $40 million. CEO Mark Wallace resigned as well last week.

Smith’s was earning a $242,000 salary at the organization as of 2022.

Cullen commended the FBI and U.S. Attorney’s Office for a “quick and thorough start to their investigation,” in a news release Wednesday.

“We will continue to cooperate with law enforcement to ensure justice is brought against this nefarious scheme to subvert layers of financial controls and embezzle resources from one of the greatest waterfront projects in the United States,” Cullen said in a statement.

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Tags :access:metered MI ssts:news:nation sstsn:Nation tag:American Express tag:Citizens Financial Group tag:Crime & Justice tag:Detroit tag:Detroit RiverFront Conservancy tag:FBI tag:Legal tag:Local News tag:Louis Vuitton tag:Michigan Department of Transportation tag:Modular Story tag:N4N-News tag:News tag:Overall Negative tag:USAT nonstaff type:story

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Ex-Detroit Riverfront CFO embezzled tens of millions of dollars: Feds

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