Dive Brief:
- The Detroit Riverfront Conservancy is suing its former CFO, William Smith, after he was charged by federal prosecutors with stealing about $40 million from the nonprofit in a years-long embezzlement scheme.
- Smith transferred DRC funds into his own personal account, falsified bank records and financial statements, and enlisted family members to help cover up the scheme, according to the complaint, filed Wednesday in Michigan’s Third Circuit Court for the County of Wayne. The nonprofit requested the full amount of monetary relief that it is entitled to receive.
- In a separate but related criminal proceeding sought by the conservancy board, the U.S. Attorney’s Office has charged Smith with bank and wire fraud and placed liens on real estate owned by him and his holding companies.
Dive Insight:
The DRC suit names Charlotte Smith, Kimberly Smith and Jennifer Smith — the former finance chief’s mother, wife and sister, respectively — as co-conspirators. They are accused of using conservancy money to purchase high-end interior design goods, beauty supplies, shoes, restaurant meals, and other luxury items.
William Smith himself allegedly spent DRC money to pay for items such as NFL tickets, limousines, hotel stays, airfare, jewelry and clothing. The ex-CFO breached his fiduciary duty as a high-ranking executive officer of the conservancy and caused the organization “enormous financial devastation,” according to the complaint.
The nonprofit also claims that Smith’s close friend, local businessperson Darrell Greer, attempted to help hide assets from authorities once the conspiracy was uncovered.
“This suit is just one piece of our framework for accountability,” DRC Interim CEO Ryan Sullivan said in a Wednesday press release. “We will be relentless in pursuing our claims and seizing the money stolen by Smith and his co-conspirators.”
The suit marks the latest twist in a scandal that has rocked the Conservancy, a 501(c)(3) with a mission to develop access to the Detroit International Riverfront which includes a rivers walk with plazas, pavilions and green spaces.
Federal prosecutors last month charged Smith, 51, with bank and wire fraud in connection with an embezzlement scheme through which he is alleged to have stolen nearly $40 million from the DRC while working as its finance chief between November 2012 and March 2024.
According to the government, Smith carried out his embezzlement scheme by using DRC funds to pay for charges that he and his family accrued on an American Express account and by diverting conservancy funds to a company he controlled called “The Joseph Group.”
Neither of these sets of expenditures were authorized or approved by the DRC’s board, according to prosecutors.
“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,” U.S. Attorney Dawn Ison said in a June 5 press release announcing the criminal case.
After the charges were filed, U.S. District Judge Linda V. Parker issued a temporary restraining order freezing up to $39.3 million in Smith’s assets, as previously reported by CFO Dive.
Smith and his co-defendants could not immediately be reached for comment.
