FBI: Ex-Detroit Riverfront CFO tried to sell secret yacht, Mexico condo. Judge freezes assets
A judge has frozen up to $39 million in assets potentially held by the Detroit Riverfront Conservancy's ex-finance officer as newly unsealed court filings bring to light the extent of his lavish spending with allegedly stolen nonprofit funds, including on a condo in Mexico, a yacht, and multiple properties in Georgia, Texas and Michigan.
The restraining order issued by Judge Linda Parker on Monday came after federal authorities alleged in court filings that William Smith had begun selling or attempting to sell properties and other assets since coming under investigation for alleged embezzlement. He was charged earlier this month with wire and bank fraud stemming from an alleged scheme that for more than a decade went undetected by the nonprofit governed by some of the region’s top business, philanthropic and civic leaders.
"The Government has a strong likelihood of establishing by a preponderance of the evidence that (Smith) is alienating or disposing of property, and intends to alienate or dispose of property ... including transferring assets to family members or his corporate entities for nominal amounts, and attempting to sell real estate and his yacht to third parties," Parker's order states. "There is a strong likelihood of irreparable injury to Smith’s victims, including the Conservancy, Comerica Bank, and the Conservancy’s donors and financial partners, unless this order is issued."
The Conservancy has said it's exploring avenues to recoup the nearly $40 million Smith is accused of stealing from the organization from November 2012 through March 2024. It applauded Parker's decision in a Monday statement.
“We are thankful for the swift action taken by the government and law enforcement to retrieve the money stolen from the Conservancy,” said Matt Cullen, Board Chair of the Detroit Riverfront Conservancy. “This is a crucial step in ensuring that no one will get away with stealing from the Conservancy and the people of Detroit."
The filings unsealed Monday signal additional charges, including money laundering, are possible for Smith, as the investigation continues.
"It appears that Smith has used the millions he defrauded from the Conservancy and Citizens Bank — along with a more limited amount of his own funds — to amass and/or improve a substantial amount of real property in the states of Michigan (including Northville, Redford, Detroit and Idlewild), Texas, Georgia, and the country of Mexico," Special FBI agent Timothy Hoff writes in an affidavit unsealed Monday, adding: "His efforts are facilitated by numerous LLCs under his direction and control."
Hoff went on to state: "Smith's fraud scheme .... involved electronic transfers of approximately $39.3 million ... Those allegations will not be repeated here, other than to summarize the high likelihood of multiple money laundering violations."
The U.S. Attorney's Office declined to comment on the new filings. Smith's lawyer, Gerald Evelyn, did not return calls for comment.
According to the government, Smith used his job with the conservancy to line is own pockets for more than a decade, allegedly using stolen nonprofit funds to pay for — among other things — interior design renovations, airline tickets, hotels, limousines, household goods, lawn care, clothing and jewelry. That includes allegedly spending Conservancy funds to pay nearly $15 million in American Express credit card bills for himself and his family members.
And he was careful not to get caught, the government alleges.
"Smith appears to have knowingly conducted transactions using the proceeds of his fraud in transactions designed to conceal the nature, location, source, ownership and control of those proceeds," the affidavit states.
The government says this is how Smith moved money around:
The affidavit states, on Sept. 1, 2016, Smith wired $85,000 in Conservancy funds to The Joseph Group. The next day, he transferred $65,000 from The Joseph Group account to another account.
"Based upon my training and experience, I know that the movement of funds obtained from unlawful activity through multiple accounts is a technique used in money laundering," Hoff writes.
FBI: Smith hiding assets
According to the latest filing, Smith had notice that he was being investigated months ago, when the Conservancy became concerned about bookkeeping and requested additional explanations of sources and uses of Conservancy funds from Smith. Before the federal government even became involved, the FBI says, Smith was told that the case was being referred to law enforcement.
But the FBI says it would soon learn that Smith was engaging "in an ongoing effort to transfer assets that would otherwise be available to repay his victims."
For example, the FBI says it discovered a nearly $800,000 home in Atlanta that Smith controls. He bought the home in 2020 for $665,000 and transferred the property by quit claim deed to YBE Investments, LLC, an entity under his control.
According to a Zillow listing, the house has been listed for sale since May 28, less than two weeks after Smith was placed on unpaid leave.
A condo in Mexico, and a 36-foot yacht
According to the government, Smith also appears to control a two-bedroom, two-bathroom condo in Mexico currently listed for sale. A document dated Nov. 3, 2021, located in Smith’s office at the Conservancy, shows Smith, on behalf of Alter Ego Properties, granting a power of attorney to an individual tied to a condo unit in Los Cabos, Baja California Sur, Mexico.
As of June 21, the condo was listed for sale for $385,000, according to a public website.
While investigating Smith, the FBI says it also discovered that Smith owns a 36-foot yacht and is trying to sell it. It's a 2021, Cruiser 35 Express named the "SS Duo." According to the FBI, Michigan records show that Smith purchased the yacht on May 21, 2021.
On June 6, the FBI made contact with the attorney for the entity that originally sold the boat to Smith, who advised that the for-sale listing had recently expired, but that it would not be extended because of the notoriety related to Smith. The vessel was listed for sale during the period that Smith was notified that he was under investigation.
Similar yachts appear to be listed for sale online at prices ranging from $300,000 to $375,000. The yacht is believed to be dry-docked at a metro Detroit marina.
The FBI questioned how Smith could afford such luxuries, noting in its filing:
"Given that Smith obtained $39.3 million in fraud proceeds over 12 years, while making less than $3 million total in that timeframe from his Conservancy salary, and his pattern of transferring criminal proceeds to LLCs in his control or spending them on his own pursuits, the United States alleges that Smith obtained or improved the great majority of his numerous assets with fraud proceeds."
"This is particularly obvious in the case of the Georgia home, the Mexico condo, and the Cruisers 35 Express yacht, in that these are high-value luxury assets purchased during the fraud period."
Meanwhile, the government is hoping to stop Smith from selling his Georgia home, condo in Mexico and yacht, arguing they were bought with illegal proceeds, so any money derived from their sale would be considered illegal.
The government also is scrutinizing Smith's recent transfer of his marital home.
According to court records, in May, Smith purported to transfer his longtime marital residence in Redford. Although not currently his primary residence, Smith has owned the home since 2003 with his wife, Kimberly Smith, via warranty deed. But on May 6, Smith and his wife purported to transfer the property by quit claim deed to Ross Drive, LLC, for $10.
The deed lists Kimberly Smith as the “Sole Member” of Ross Drive LLC. The mailing address for Ross Drive LLC is the same UPS store mailbox used by William Smith’s other entities.
The government also cites Smith's recent transfer of various Detroit properties.
For example, on April 23, Smith purported to transfer property on Biltmore Street in Detroit from “William Anthony Smith” to “William Smith III” for the sum of $10 by quit claim deed. Public real estate websites estimate the true value of the home between $93,600 and $114,000.
That quit claim deed was recorded May 21 — four days after the Conservancy placed Smith on unpaid leave.
Contact Tresa Baldas: [email protected]
This article originally appeared on Detroit Free Press: Judge freezes up to $39M in ex-Detroit Riverfront CFO’s assets
