Detroit Riverfront Conservancy’s former CFO pleads guilty

Detroit Riverfront Conservancy’s former CFO pleaded guilty Friday to wire fraud and money laundering for embezzling more than $40 million from a nonprofit in a multi-year scheme.

Smith, 52, agreed to pay at least $44.3 million in restitution for his efforts to “divert millions from conservation funds” over a decade that helped support what prosecutors described as his lavish lifestyle. according to The Detroit Free Press.

U.S. District Judge Susan DeKlerk will sentence Smith at a hearing set for March 20, according to court documents.

Assistant U.S. Attorney John Neal said sentencing guidelines indicated Smith could receive 15.5 to 19.5 years in prison, but added that Smith and his attorneys disagreed with that estimate, the Free Press reported .

Friday’s guilty plea comes after a similar hearing three weeks ago was disrupted after Smith’s attorney said he discovered a problem with the plea agreement, which was not disclosed.

Smith was indicted in June with bank and wire fraud by U.S. Attorney Dawn N. Ison on charges that he orchestrated a scheme back in November 2012 to siphon millions from a nonprofit conservation organization focused on promoting and revitalizing the International Riverfront.

A criminal complaint was filed a few days after the conservation announced Smith’s dismissal and the resignation of longtime executive director Mark Wallace. Conservancy Board Chairman Matt Cullen also authorized two investigations led by former U.S. Attorney Matthew Schneider – one by the auditing firm PwC and the other by the law firm Honigman.

According to the complaint, Smith used the conservation funds to pay for expenses he and his family had accumulated in an American Express account. Federal authorities said he also diverted conservation funds to a company he controlled called The Joseph Group. The company was not an approved supplier of the conservation council and did not provide any conservation services.

In early 2013, Smith used the credit card to purchase airline tickets for himself and others, pay insurance premiums and make large purchases of clothing and jewelry, including $4,850 in men’s clothing from Revive in Birmingham and $5,618 in jewelry from Diamonds Direct in Southfield. Other expenses ranged from more than $12,000 at a Chevrolet dealer to more than $17,000 at Louis Vuitton.

Bank statements showed that on March 14, 2013, Smith transferred $96,000 from a Comerica bank account to his American Express account.

Federal authorities say he used more than $22,000 in security at his home in June of that year, including lawn care services and merchandise from The Home Depot, Art Van Furniture, Wayfair and Scott Shuptrine.

To cover up his actions, Smith falsified bank statements, which he later accused of giving to the conservation fund’s accountant to input into the nonprofit’s accounting software.

Smith is accused of obtaining a $5 million line of credit from Citizens Bank in 2023 on behalf of the conservancy — a line of credit he was not authorized to take out.

The bank asked Smith to provide documentation proving that he, as CFO, had sole authority to obtain the line of credit on behalf of the conservancy. Smith is accused of providing the bank with a false, forged document claiming that the conservation agency’s Board of Directors had authorized him to obtain the lines of credit.

Smith served as the conservancy’s finance director from 2011 until he was fired in late May. The non-profit organization is funded by public and private dollars.

Wayne County Prosecutor Kim L. Worthy said the case was initially brought to her office on May 14. Worthy’s office contacted Ison, who immediately agreed to take on the case.

Smith was initially placed on paid security leave on May 10, and by May 17 he had stopped receiving security compensation. He was released on May 31.

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