A federal judge sentenced William Smith, 52, to 19 years in prison for stealing at least $44.3 million from the Detroit Riverfront Conservancy, concluding a staggering case of theft that went undiscovered for more than a decade under the noses of some of the region’s most powerful business and government leaders.
The nonprofit’s ex-chief financial officer pleaded guilty late last year to one count each of wire fraud and money laundering for the elaborate embezzlement scheme that spanned from 2012 through early last year. Smith faced a maximum of 20 years in prison; prosecutors had requested he be sentenced to an 18-years, while defense attorneys sought 12½ to 15½ years.
“My actions were wrong, plain and simple,” Smith told U.S. District Court Judge Susan DeClercq before she announced his sentence. “I recognize I allowed selfishness, pride and poor judgment to lead me down a destructive path.”
He stood and read from prepared remarks, adding, “Some day I hope to be able to earn back the trust that I lost and make a meaningful contribution to the riverfront.”
DeClercq also ordered Smith to pay $48.1 million in restitution — $43.1 million to the conservancy and $5 million to Citizens Bank. He was permitted to remain out on bond, with plans that he report to prison at a later date.
In handing down the sentence that exceeded prosecutors’ recommendations, DeClercq situated Smith’s theft from a Detroit nonprofit in the context of the city’s decline and post-bankruptcy rebound.
“You stole from an organization dedicated to serving a city that had already felt the sting of corruption and the loss of jobs, people, and businesses,” DeClercq said, adding that the rebuilding of the riverfront stands above other initiatives for its universal benefit to Detroiters.
“Detroit’s nonprofit community will be feeling this loss for a long time,” she said. Victim impact statements submitted by prosecutors said the conservancy has faced greater difficulty fundraising. Recent donations to help the organization recover from the theft meanwhile represent dollars that “had to be diverted from other nonprofits and initiatives,” DeClercq said.
Smith’s lawyer, Gerald Evelyn, urged the judge to show some mercy to his client.
While it was a “terrible crime (Smith) committed,” Evelyn noted the former CFO had no prior criminal record, cooperated with federal investigators and was a positive influence to young people and employees at his former restaurant, as reflected in more than two dozen character letters from friends and former employees.
“They’re all meaningful steps toward rehabilitation, and it is a bit more than just an apology,” Evelyn said. “I understand the conservancy wants vengeance because they feel betrayed, but your sentence can’t be based on vengeance.”
The nonprofit requested DeClercq issue the maximum 20-year penalty in a victim impact statement submitted this week, arguing Smith’s theft harmed donors, staff and, more broadly, Detroit’s reputation.
Federal prosecutors have accused Smith of embezzling to support a lavish lifestyle, with spending that includes $3.7 million in wire transfers to a mistress, $500,000 in Pistons floor tickets, and nearly $200,000 to charter a private jet and yacht.
In court Thursday, Assistant U.S. Attorney John Neal called the case “one of the most serious economic crimes we’ve seen in this jurisdiction in quite some time,” noting the scale of the theft and that it involved involved “hundreds and hundreds” of actions and “daily lies.”
“He didn’t have to do this,” Neal said. “The only explanation is greed for a lifestyle beyond the one he had, which most people would be more than comfortable with.”
Smith earned about $200,000 per year as CFO of the conservancy, a role to which he was promoted from fiscal analyst in 2011.
DeClercq noted her 19-year ruling matches the number of years Smith was at the organization.
In issuing it, she highlighted the apparent needlessness of his actions, saying he lacked the desperation of other defendants she’s encountered.
“As far as I can tell, you’ve always had everything,” DeClercq told Smith. “You grew up in a supportive household and your needs were always met.
“Looking at the breakdown of all of your assets and how the riverfront money was spent is appalling,” she added.
DeClercq’s April 24 ruling comes just over a year after leaders of the nonprofit discovered financial irregularities amidst a cash shortfall and commissioned an external audit. The findings were forwarded to federal authorities, leading to Smith’s June arrest and a criminal complaint that outlined the stunning scope of his theft from a nonprofit whose work is largely supported by philanthropic and public dollars.
Smith’s scheme involved transferring funds from a secondary conservancy checking account to a bank account in the name of an LLC he registered shortly after his promotion to CFO, authorities said. He allegedly covered up the theft by doctoring records and taking out an unauthorized line of credit for $5 million to keep the nonprofit solvent.
In that time, he amassed millions in assets, including numerous properties throughout the country and in Mexico, a yacht, and the restaurant through which a lawyer for the conservancy alleged he laundered $4 million.
Prosecutors have said they expect to recoup up to $3 million from Smith’s seized assets. Efforts by the conservancy to retrieve additional funds are ongoing, including via a civil suit against Smith’s mother, wife, sister and the best man at his wedding, who the conservancy says benefited from Smith’s largesse.
In court Thursday, three conservancy members including board chair Matt Cullen pleaded for DeClercq to issue Smith the maximum possible sentence, highlighting the organization’s difficulty dealing with a cash crunch he caused.
Karen Slaughter Duperry, a former longtime GM employee who helped set up the conservancy and remains there, spoke of employees who feared layoffs or loss of benefits, contractors not paid for months, and project delays and mounting costs.
Growing tearful, she said Smith could have “put the organization out of business and our staff on the streets.”
Cullen spoke of the “unprecedented levels of cooperation” between public, private, and philanthropic leaders that over the past 20 years allowed approximately five miles of walkable riverfront to sprout from the largely abandoned warehouse district that was there before.
“What we didn’t realize was that in that vast coalition, we had one snake” who “only cared about himself,” Cullen said.
He went on to declare Smith “one of the worst guys in the history of the city of Detroit – a guy who wants to dress up in ridiculous trappings” rather than help the people “in his own community.”
Even a maximum possible 20-year sentence for the former CFO, Cullen said, was not enough.
In statement issued after sentencing, the conservancy said it is “incredibly grateful to U.S. District Judge Susan DeClercq for imposing a sentence commensurate the damage Will Smith inflicted.”
Violet Ikonomova is an investigative reporter at the Free Press. Contact her at vikonomova@freepress.com.