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DETROIT — The fired chief financial officer of the Detroit Riverfront Conservation Association has been charged with criminal bank fraud and wire fraud for allegedly stealing $40 million, the U.S. Attorney’s Office announced Wednesday.
The investigation into William Smith, 51, stems from an alleged “multi-year scheme by Smith to misappropriate The Nature Conservancy’s funds for his own personal use,” U.S. Attorney Dawn Ison said in a press release announcing the criminal indictment unsealed in federal court on Wednesday. According to the indictment, Smith is accused of stealing nearly $40 million between November 2012 and March 2024.
“Smith used the embezzled funds for his own personal gain and enrichment, including for airfare, hotel and limousine expenses, household items, lawn care, clothing and jewelry,” the indictment states.
Smith was released on $10,000 unsecured bail and ordered not to enter into any loans or credit transactions after appearing before U.S. Magistrate Judge R. Steven Whalen in Detroit on Tuesday afternoon. Smith was handcuffed and shackled and wore a beige sweatsuit and a COVID-19 mask.
State prosecutors had sought to impose stricter bail conditions, including a GPS tether and a curfew, but Judge Whalen denied the requests, citing Smith’s lack of a criminal record. Smith’s lawyer, Gerald Evelyn, declined to comment.
A preliminary hearing is scheduled for June 26.
The FBI searched Smith’s Northville, Michigan, home early Wednesday. Agents wearing FBI T-shirts were seen emerging from the home with more than a dozen boxes, loading them onto a large trailer backed into the driveway and taking photos of the interior of a parked Ford F-150. More than a half-dozen vehicles were lined up along the street in the quiet, gated residential neighborhood.
According to the lawsuit, agents searched his conservancy office twice, on May 16, the day he was fired, and again on Friday.
“False and fraudulent representations”
The suit alleges that Smith opened an American Express Business Platinum card without The Nature Conservancy’s knowledge and issued four cards on the account, including for his wife and other family members. According to an accounting firm hired by The Nature Conservancy, approximately $14.9 million in credit card charges were made on the American Express card from The Nature Conservancy’s bank account between November 2012 and March 2024.
Federal agents said the suspects used the credit cards to buy airline tickets and pay for insurance, including $12,900.44 in charges at Draper Chevrolet Toyota in Saginaw in 2013, as well as $17,452.80 in shopping purchases at Louis Vuitton.
Most of the specific expenditures investigators cited in the complaint were from 2013, including $5,372 in charges from Scott Shaptrin Interiors Royal Oak, $7,417 from Home Depot and $649 from Wayfair on a card in Smith’s wife’s name.
Smith had sole control of the nonprofit’s Comerica bank account and “altered” bank statements to “falsely (inflated) account balances” and presented them to the nonprofit’s accountant, the suit states.
And with the embezzlement threatening to deplete the conservancy’s funds, Smith obtained a $5 million line of credit from Citizens Bank in 2023. To receive the funds, Smith sent a “letter of incorporation” purportedly signed by the nonprofit’s corporate secretary.
When federal agents questioned the woman, she told them the signature was not hers, she had not seen the document and that she was working off-site the day she signed it.
“The Citizens Bank credit facility was approved and funded based on false and fraudulent representations that Mr. Smith was authorized by the Conservancy to act independently on its behalf,” the complaint states.
Charge: Smith falsified bank statements to conceal payments
Additionally, the Nature Conservancy made payments to Smith’s company, Joseph Group and Associates LLC. The nonprofit’s auditing firm found $24.4 million in wire transfers from the organization’s Comerica account to Joseph Group between February 2013 and February 2024.
According to the complaint, he falsified bank statements to make it appear the money was paid to the state of Michigan, concealing some of the payments to his own company, with the Michigan Department of Transportation acting as general contractor.
Smith was fired by the nonprofit’s board of directors last week, with board chairman Matt Cullen saying an independent audit had found “evidence of financial misconduct” by Smith and estimated losses at more than $40 million. CEO Mark Wallace also resigned last week.
Smith was earning a salary of $242,000 with the organization as of 2022.
Cullen, in a news release Wednesday, praised the FBI and the U.S. Attorney’s Office for “launching a swift and thorough investigation.”
“We will continue to work with law enforcement to ensure justice is brought to this egregious scheme to misappropriate funds from one of the largest waterfront projects in the nation and subvert multiple layers of financial control,” Cullen said in a statement.
This article originally appeared in the Detroit Free Press: Ex-Detroit Riverfront CFO embezzles tens of millions of dollars: Feds
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