The SEC just announced that it was filing criminal corruption against former Detroit mayor Kwame M. Kilpatrick, former city treasurer Jeffrey W. Beasley. Apparently Beasley told the CEO of MayfieldGentry Realty Advisors LLC, Chauncey Mayfield, that he was “in the dog house” for supporting Kilpatrick’s opponent during the election.
Mayfield wanted $117 million of the city’s pension fund invested in his own firm’s real-estate investment trust (REIT). Kilpatrick and Beasley were both members of the board that would handle the city’s investments.
So to get out of ‘the dog-house’ and get his hands on the $117 million, Mayfield Gentry started buying Kilpatrick and Beasley a much more lavish lifestyle than civil servants normally get.
From the SEC’s news-release:
- In April 2007, MayfieldGentry paid for Kilpatrick, Beasley, and their associates to travel by private jet to Las Vegas, where they enjoyed luxury hotel accommodations, two concerts, three rounds of golf, meals, and massages. The Las Vegas trip cost more than $60,000.
- In July 2007, MayfieldGentry paid more than $24,000 for a private jet to take Kilpatrick, Beasley’s son and others to Tallahassee, Fla., where Kilpatrick had a second home.
- In October 2007, MayfieldGentry paid more than $34,000 for a private jet to fly Kilpatrick and his wife to and from Bermuda, and Kilpatrick’s father and his girlfriend back from Bermuda.
Obviously, Mayfield, Kilpatrick, and Beasley never disclosed any of this to the rest of the pension board.
“It is a disappointing day when pension fund trustees such as ex-Mayor Kilpatrick and others corrupt the investment process by selling out hardworking police officers, firefighters and other municipal employees for the price of a few vacations and paltry extras like concert tickets and rounds of golf,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
The SEC is going to bring the hammer down. According to their statement, the agency “seeks disgorgement of ill-gotten gains, penalties, and permanent injunctions, including an injunction against Kilpatrick and Beasley to prohibit them from participating in any decisions involving investments in securities by public pensions.”
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