Detroit Advisor to Return Millions to City Pension
A Detroit-based investment advisor agreed to give back $3.1 million that U.S. regulators allege he stole from a pension fund for the city's police and firefighters, the U.S. Securities and Exchange Commission said on Monday.
Chauncey Mayfield, who is the head of MayfieldGentry Realty Advisors, took the money so he could buy two strip malls in California, the SEC said.
He and his firm agreed to settle the SEC's civil charges without admitting or denying them.
The city of Detroit faces a possible bankruptcy as the state-appointed emergency financial manager Kevyn Orr is meeting with creditors this week.
Mayfield pleaded guilty in February in a parallel criminal case to conspiring with former Detroit Treasurer Jeffrey Beasley to pay him bribes in exchange for more business from the pension fund and is scheduled to be sentenced on July 23.
He faces up to five years in prison, plus a $250,000 criminal fine.
This was the latest federal action stemming from corruption charges against the administration of former Detroit Mayor Kwame Kilpatrick.
In March, two former Detroit city pension officials were indicted for corruption, a week after Kilpatrick was convicted for similar offenses.
Last year, the SEC also charged in a civil suit that Kilpatrick, Beasley and Mayfield devised a secret exchange of lavish gifts to influence the pension fund's investments.
In Monday's settlement, the SEC accused Mayfield and his firm of siphoning money from the Police and Fire Retirement System of the City of Detroit.
His firm devised a plan to secretly repay the pension fund by cutting costs and selling the strip malls, but the plan fell apart when they could not raise enough capital to return the stolen $3.1 million, the SEC said.
The SEC also charged four executives at the firm with misleading the pension fund and helping to hide the theft. The executives are Chief Financial Officer Blair Ackman, Chief Operating Officer Marsha Bass, Chief Investment Officer W. Emery Matthew and Chief Compliance Officer and General Counsel Alicia Diaz.
Calls to defense attorneys for the five by Reuters were not immediately returned.