The former chief financial officer of the Detroit Riverfront Conservancy pleaded guilty Friday to fraud and money laundering for embezzling more than $40 million from the nonprofit in a years-long scheme.
Smith, 52, agreed to repay at least $44.3 million in his efforts “to divert millions in Conservancy funds,” which occurred over a decade and helped support what prosecutors say have characterized as his lavish lifestyle. according to The Detroit Free Press.
According to court documents, U.S. District Judge Susan DeClercq will determine Smith’s sentence during a hearing scheduled for March 20.
Assistant U.S. Attorney John Neal said the sentencing guidelines indicate Smith could face between 15½ and 19½ years in prison, but added that Smith and his attorneys disagree with that assessment, the Free Press reported.
Friday’s guilty plea followed the derailment of a similar hearing three weeks earlier, after Smith’s attorney said he identified a problem with the plea deal that had not been disclosed.
In June, Smith was indicted with bank and wire fraud by U.S. Attorney Dawn N. Ison on allegations that as early as November 2012 he orchestrated a scheme to siphon millions from the nonprofit organization aimed at promoting and revitalizing the International Riverfront.
The criminal complaint was filed just days after the conservancy announced Smith’s resignation and the resignation of former CEO Mark Wallace. Conservancy Board Chairman Matt Cullen also authorized two investigations led by former U.S. Attorney Matthew Schneider: one by accounting firm PwC and one by Honigman Law Firm.
According to the complaint, Smith used conservation funds to pay for expenses he and his family had accrued in an American Express account. Federal authorities have said he also funneled conservation funds to a company he controlled called “The Joseph Group.” The company was not an approved vendor with the Conservancy Board nor did it provide conservation services.
In early 2013, Smith used a credit card to purchase airline tickets for himself and others, pay insurance premiums and make significant clothing and jewelry purchases, including $4,850 worth of men’s clothing from Revive in Birmingham and $5,618 worth of jewelry from Diamonds Direct in Southfield. Other costs 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 made a $96,000 payment from the conservancy’s Comerica bank account to his American Express account.
In June, federal authorities allege, he used more than $22,000 in conservation financing for his personal home, including lawn care and items from The Home Depot, Art Van Furniture, Wayfair and Scott Shuptrine.
To cover up his actions, Smith forged bank statements that he then allegedly provided to the conservancy’s accountant for access to 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 conservation organization — a line of credit he was not allowed to take out.
The bank asked Smith for documentation proving that he, as CFO, had sole authority to obtain the line of credit on behalf of the conservation organization. Smith is the bank allegedly provided a false forged document claiming that he was authorized by the Conservancy’s Board of Directors to obtain lines of credit.
Smith was the conservation organization’s CFO from 2011 until he was fired at the end of May. The nonprofit is funded by a combination of public and private dollars.
Wayne County Prosecutor Kym L. Worthy has said the case was initially brought to her office on May 14. Worthy’s office contacted Ison, who immediately agreed to take the case.
Smith was initially placed on paid leave by the conservancy on May 10 and stopped receiving conservancy compensation on May 17. He was fired on May 31.