DETROIT (WXYZ) — The former Chief Financial Officer for the Detroit Riverfront Conservancy has pleaded guilty to federal charges in a "scheme' to embezzle over $40 million.
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William Smith entered guilty pleas to one count of wire fraud and one count of money laundering in federal court in Detroit on Friday. Each count carries a statutory maximum term of twenty years in prison.
“William Smith admitted today to perpetrating a financial crime that is astonishing in its scope and impact,” said United States Attorney Ison in a news release. “Smith stole over $40 million dollars from the Detroit Riverfront Conservancy – a non-profit organization dedicated to creating beautiful public spaces that Detroit’s residents and visitors can use and enjoy. Smith not only betrayed the Conservancy’s trust, but he betrayed the trust of the whole community, all so that he could enjoy the trappings of wealth and comfort. I remain shocked at the scale of the fraud and the harm it has caused, and today’s guilty plea is an important step towards holding Mr. Smith accountable for his outrageous conduct.”
Smith served as CFO of the Conservancy from 2011 through May 2024. Officials say that as part of his job, he "enjoyed substantial discretion in overseeing and managing" the Conservancy's finances.
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According to the plea agreement Smith entered into, beginning no later than November 2012 and continuing until this May, Smith "orchestrated" the scheme to embezzle millions. According to the agreement, Smith's embezzlement took three forms:
- First, Smith diverted Conservancy funds from the organization’s bank accounts to a bank account in the name of “The Joseph Group, Inc.,” an entity owned and controlled by Smith. The Joseph Group was not an approved vendor for the Conservancy and provided no goods or services of any kind to the organization. However, between February 2013 and May 2024, Smith transferred approximately $24.4 million from the Conservancy’s bank accounts to an account in the name of the Joseph Group.
- Second, Smith maintained an American Express account in the name of another of the many entities he owned and controlled, this one called “William Smith & Associates LLC.” There were four American Express credit cards issued on this account. Between November 2012 and May 2024, Smith used approximately $14.9 million in Conservancy funds to pay off purchases made on this account. None of these expenditures were authorized by the Conservancy, which maintained other credit card accounts for Conservancy purchases. Smith used the American Express account to purchase furniture, designer clothing, handbags, lawn care services, airline tickets, and other consumer goods and services for himself and his family.
- Third, Smith used Conservancy funds to purchase cashier’s checks from various financial institutions. These cashier check purchases were unauthorized, and Smith used the cashier’s checks for his own purposes without the knowledge or approval of the Conservancy’s Board of Directors.
According to officials, Smith covered up his activities by falsifying bank statements he provided to the Conservancy's bookkeeper, altering or deleting unauthorized transfers to keep them off the books, and using forged documents to take out a line of credit on behalf of the Conservancy which he was not authorized to do by the Board of Directors. Officials say Smith used the funds for the line of credit, which eventually totaled $5 million, to replace the funds he had taken to cover up the embezzlement.
According to the plea agreement, Smith also covered up the origin of the funds he took by transferring them through intermediate entities.
Officials say in the plea agreement that the financial losses resulting from Smith's embezzlement are difficult to quantify precisely. As part of the agreement, he has agreed to pay no less than $44.3 million in restitution.
Smith is set to be sentenced on March 20, 2025.
