The ex-chief financial officer for the Detroit Riverfront Conservancy was charged with bank and wire fraud in a criminal complaint unsealed Wednesday amid allegations he embezzled nearly $40 million over a dozen years.
U.S. Attorney Dawn N. Ison announced the charges, which arose out of what is alleged to be a yearslong scheme by William A. Smith to embezzle conservancy funds for his own use.
The complaint accuses Smith, 51, of orchestrating the plan as early as November 2012 to embezzle millions from the nonprofit conservancy focused on promoting and revitalizing the international riverfront.
“This defendant is alleged to have abused the trust the conservancy placed in him and to have carried out a fraud that is simply astonishing in scale,” Ison said in a news release. “Today’s allegations are extremely serious ones, and my office is committed to pursuing anyone, regardless of their title, who fleeces taxpayers and charitable donors for their own private gain.”
Gina Balaya, a spokesperson for Ison’s office, said Smith turned himself in. He appeared in federal court Wednesday with his attorney and was released on a $10,000 unsecured bond. He is barred from applying for any loans or new lines of credit, must surrender his passport and cannot travel outside the Eastern District of Michigan. A preliminary examination is set for June 26. Smith’s attorney could not be immediately reached for comment.
The criminal complaint comes days after the conservancy announced Smith’s firing and the resignation of longtime Chief Executive Officer Mark Wallace, who will aid the conservancy as a consultant. Conservancy Board Chair Matt Cullen also ordered two investigations led by former U.S. Attorney Matthew Schneider – one by the auditing firm PwC and another by the Honigman Law Firm.
In a Wednesday statement, Cullen commended the FBI and U.S. Attorney’s Office for the “quick and thorough” start to its investigation, which led to Smith’s arrest.
“We will continue to cooperate with law enforcement to ensure justice is brought against this nefarious scheme to subvert layers of financial controls and embezzle resources from one of the greatest waterfront projects in the United States,” Cullen said.
The criminal complaint alleges that Smith carried out his embezzlement scheme in two distinct ways: First, he is alleged to have used conservancy funds to pay for charges that he and his family accrued on an American Express account. Second, federal authorities allege he diverted conservancy funds to a company he controlled called “The Joseph Group.” The company was not an approved vendor of the conservancy board, nor did it provide any conservancy services.
According to the complaint, in January 2013 Smith used a credit card to purchase airline tickets for himself and others, pay insurance premiums and made significant clothing and jewelry purchases, including $4,850 worth of men’s wear from Revive in Birmingham and $5,618 in jewelry from Diamonds Direct in Southfield. Other charges in March 2013 ranged from more than $12,000 at a Chevrolet dealer and over $17,000 from 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.
That June, he allegedly used more than $22,000 of conservancy funding for his personal residence, including lawn care services and items from The Home Depot, Art Van Furniture, Wayfair and Scott Shuptrine, the complaint adds.
To cover up his alleged acts, according to the complaint, Smith doctored bank statements that he is then accused of providing to the conservancy’s accountant for entry into the nonprofit’s accounting software.
These false bank statements led to erroneous financial information being entered into the DRFC’s books, thereby concealing the fraud,” the Wednesday news release notes.
In 2023, Smith is alleged to have obtained a $5 million line of credit with Citizens Bank on the conservancy’s behalf – a line of credit he was not authorized to take out.
The bank asked Smith for documentation confirming that Smith, as CFO, had the sole authority to obtain such a line of credit on behalf of the conservancy. Smith is alleged to have provided the bank with a document purporting to establish that he was empowered by the conservancy’s Board of Directors to obtain such credit lines.
That document, according to the complaint, was false, and bore the forged signature of the conservancy’s corporation secretary.
Smith was CFO of the conservancy from 2011 until he was fired in late May. The nonprofit is funded by a combination of public and private dollars.
Wayne County Prosecutor Kym L. Worthy noted in the Wednesday release that the case was initially brought to her office on May 14. The prosecutor said the office was “quickly able to deduce that an enormous amount of money was allegedly embezzled and that there would be mountains of documents to examine.”
Worthy’s office then looped in Ison, who immediately agreed to take the case.
The federal complaint notes Smith was initially placed on a paid leave from the conservancy on May 10, and, by May 17, he stopped receiving conservancy compensation. He was terminated on May 31.
A criminal complaint is a formal charging document and not evidence of guilt.
Disgusting and vile
$40K maybe, $400K possibly but $40M! That’s is crazy. He certainly had confidence in himself. Also, the arrogance needed to do this is astonishing.
Christine I always wondered why the Riverfront Riverwalk looks so ratty now. In a majority ADOS City this CFO hurt us the most and should be thrown under the Jail. All skin Folk ain’t Kinfolk.
In accounting you have safe guards so things like this don’t happen, where were they??? Also I would think the CEO, Mark Wallace, should have had suspicions about this, I don’t think I would have him doing consulting in this situation. The auditors should be able to uncover all the theft.
This is exactly what I was thinking. There is no way they should have Mark Wallace in an Advisor position. I understand that the Board may want a smooth transition to a new CEO, but apparently Wallace didn’t do his job, so he may pass on some bad practices. Also, at the very least, the audit company should have caught this if they had done their due diligence.
Why is he allowed only $10,000 bond? The judge claims “first offense” – first offense? This was a continuing criminal operation since 2011- he went to work for this organization to steal from it! And where were the accountants? Can’t wait to see him and the others in prison.
I don’t see $40 million, The Conservancy has kept running, Janitorial services continued, new openings in the Ralph Wilson Park and the passage through the Uniroyal site. Bands continued to play on the Dequindre Cut. There was still money for services. I don’t understand how he got away with it for years. Did he dress flashy? Drive a flashy car? Live in a flashy house? I don’t understand how people didn’t notice. When a member of the Detroit Library board stole several million it caused the National Automobile History Collection to close, librarians laid off. Other services curtailed. When Woodlawn Cemetery’s funds were purloined the roads didn’t get fixed, the gravestones were covered in moss. I don’t know how this guy got so much. Surely there are others involved.
There is no way that this could have happened for so long if the Auditing Company was doing its job by requesting bank confirmations directly from the bank instead of taking them from Smith. Or if they were getting confirmations directly from Amex on what was paid and by who. Or by calling the CEO directly. SMH.