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Federal government buys more time to charge former Detroit Riverfront CFO amid plea talks

Vaseline August 24, 2024

A judge on Friday gave the government more time to investigate Detroit Riverfront Conservancy’s former chief financial officer, William Smith, and the alleged theft of nearly $40 million before attempting to obtain a grand jury indictment against the lender.

U.S. District Judge David Grand has extended the deadline for federal prosecutors to file charges from Monday to Sept. 26. The move is intended to accommodate ongoing negotiations between prosecutors and lawyers for the conservancy’s former executive director that could result in a plea agreement.

The order is the latest legal development involving Smith, 51, who was arrested in early June and accused of stealing nearly $40 million in what has been characterized as one of the largest fraud schemes in Detroit history. Smith is accused of stealing the money since November 2012 from a nonprofit led by some of the region’s top financial and business professionals and funded by southeast Michigan’s leading philanthropies.

“An additional 30-day investigation also provides the parties with an opportunity to further discuss a potential resolution of this matter without the need for a grand jury indictment,” prosecutors and Smith’s attorneys wrote in a court document Friday.

The alleged theft has raised questions about the leadership of a nonprofit group created to provide access to Detroit’s international riverfront and redevelop a five-mile stretch from the Ambassador Bridge nearly to Belle Isle.

The criminal complaint alleges that Smith used an American Express Platinum credit card to make $14.9 million in illegal purchases, including airline tickets, clothing, jewelry, furniture and $17,453 at Louis Vuitton.

Smith is also accused of transferring $24.4 million from an account at a conservation group to one of his companies, the Joseph Group & Associates.

“The charges in this case involve allegations of misconduct spanning a significant period of time. Investigating allegations of this magnitude necessarily requires reviewing a significant volume of documents and potentially discoverable materials,” prosecutors and Smith’s attorneys wrote in Friday’s filing. “The parties have worked diligently to review and analyze that material but require a brief additional period of time (30 days) to continue that process.”

Smith has been released on bail while the criminal case proceeds and the river patrol is trying to recover some of the approximately $40 million.

Earlier this month, prosecutors and Smith’s attorneys said they were pursuing the sale of several of Smith’s assets, including his Southfield nightclub.

In early August, U.S. District Judge Kay Behm signed an order authorizing the U.S. Marshals Service to enter Duo Restaurant & Lounge to inspect, photograph and appraise the property.

The potential sale is part of a broader, controlled liquidation of assets that could raise money for the conservancy and potentially reduce the time Smith would spend in federal prison if he is convicted of criminal charges. He is accused of bank and wire fraud, crimes that could send him to federal prison for up to 30 years.

Smith had amassed a vast real estate portfolio and operated a series of side jobs, according to public records and federal prosecutors. Those assets included a $1.3 million home in Novi, a condo in Mexico, a 36-foot yacht called the “SS Duo,” a party store in Michigan’s “Black Eden,” several rental properties in Metro Detroit, real estate in Texas and a home in southwest Atlanta that was listed for sale for $799,900.

Federal prosecutors in June put more pressure on Smith by placing a lien on his Novi home. The lien indicates that FBI agents are investigating Smith for theft or bribery involving federal funds and money laundering.

Meanwhile, Conservatory officials last month charged Smith, his mother, wife, sister and the best man at his wedding last month in a lawsuit detailing a conspiracy to steal nearly $40 million from the nonprofit.

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