The Detroit Riverfront Conservancy has filed a civil lawsuit against its former chief financial officer, William Smith, and three of his family members over the alleged $40 million embezzlement scheme.
Earlier this summer, Smith was charged with federal crimes of bank fraud and wire fraud in the alleged scheme that dates back to 2012.
The lawsuit filed in state court names Smith, his mother, his wife and sister as co-conspirators who benefited from his alleged embezzlement from the nonprofit that oversees the Detroit Riverfront, parks and other areas along the river.
WATCH BELOW: Ex-Detroit Riverfront Conservancy CFO charged with embezzling $40M dating back to 2012
According to the federal complaint, Smith orchestrated a scheme to embezzle millions as early as November 2012. Feds say he did it in two ways. First, he allegedly used Conservancy funds to pay for charges he and his family accrued on an American Express account. Second, feds say he diverted funds to a company he controlled called "The Joseph Group."
“On behalf of our vast community of Riverwalk lovers, we are seeking and seizing every stolen dollar possible from Smith and his co-conspirators,” Detroit Riverfront Conservancy Board Chair Matt Cullen said in a statement. “From the moment this scheme was discovered, we promised to investigate what happened, fix it, and make sure it can never happen again. The sweeping federal criminal investigation initiated by the Conservancy, together with the civil lawsuit filed today, represents another important step towards realizing those goals. Our investigation continues.”
The lawsuit was filed by Matthew Schneider, a former U.S. attorney for the Eastern District of Michigan and the leader of investigations at Honigman Law Firm.
“By falsifying bank records, fraudulently misrepresenting his authority, transferring DRFC finances into his own personal bank account, diverting additional funds to pay his own personal credit card and that of some of the other named defendants, and enlisting the other named defendants to help Smith advance or cover up his scheme. Smith stole approximately $40 million from the DRFC," the lawsuit reads.
Hear more from Matthew Schneider in the video below
The suit also alleges that Smith's mother, wife and sister used the Conservancy's money to purchase high-end interior design goods, beauty supplies, shoes, meals and more.
It also names two companies that were allegedly owned by Smith – William Smith & Associates LLC and The Joseph Group.
What the feds allege
Feds say between November 2012 and March 2024, Smith stole nearly $40 million through the embezzlement schemes.
According to the complaint, Comerica Bank statements from the conservancy show several payments to the AmEx account that Smith had allegedly used.
Those payments include:
- Nov. 5, 2012 - $89,339.43
- Nov. 30, 2012 - $47,231.21
- Feb. 12, 2013 - $60,330.55
- March 14, 2013 - $96,002.12
Other purchases listed in the complaint show purchases for airline tickets, insurance premiums, clothing, jewelry, Louis Vuitton and more.Some of the purchase on the AmEx account include:
- $4,850 for men’s clothing
- $5,618 for jewelry
- $12,900.44 at a Toyota dealership
- $17,452.80 at Louis Vuitton
In June 2012, feds say the American Express statements showed that Smith used $22,000 in Conservancy funds for his home, including purchases at an interior store, Art Van, The Home Depot and more.According to the complaint, the payments to American Express using Conservancy funds continued until March 2024.
In the complaint, the feds say the accounting firm Pricewaterhouse Coopers found there were approximately $14.9 million in AmEx payments made from the Conservancy’s Comerica Bank account.
When it comes to The Joseph Group, feds say that Smith allegedly wired funds from the Conservancy’s account to The Joseph Group. Smith allegedly former The Joseph Group about in late 2012, and the payments began in February 2013.
Those payments include a $95,000 wire transfer on Feb. 4, 2013, and another $75,000 wire transfer a week later.
In all, feds say bank statements found 259 wire transfers to The Joseph Group between 2013 and 2024 totaling nearly $24.4 million.
According to the complaint, Smith doctored bank statements provided to the nonprofit's accountant, which led to erroneous financial information being entered into the Riverfront Conservancy's books, which concealed the fraud.
He doctored the bank statements by falsely inflating the available balance in the account, and replacing the transactions involving the American Express payments and the wire transfers to The Joseph Group with other fictitious information, according to the complaint.
For instance, the feds say that a July 2023 statement that Smith gave to the accountant showed a beginning balance of $2,058,892.17 on July 1 2023 and an ending balance of $2,302,164.85 on July 31, 2023.
Actual statements from Comerica show the true beginning balance of $21,064.87 on July 1, 2023, and an ending balance $134,161.66 on July 31, 2023. Below is a photo of the table that shows how Smith concealed the money, according to the complaint.
Also, feds say that Smith got a $5 million line of credit with Citizens Bank on behalf of the Conservancy that he was not authorized to take out. According to the complaint, they discovered the line of credit on May 8, 2024.
The complaint alleges that Smith tried to get the line of credit, and a bank manager at Citizens emailed on Smith on March 29, 2023 asking, "Do you have documentation that supports you as sole signer for all things relating to financing?"
Feds say Smith responded two hours later with a "Corporate Certificate of Authority" that said Smith was fully authorized to get the loan dating back to a conservancy board meeting. However, feds say that document was false.
Citizens approved and funded the line of credit on March 31, 2023 for $3.5 million, and an additional $2 million was approved on March 18, 2024, according to the complaint.
On May 14, the DRC announced they placed Smith on leave after they found discrepancies with their financial documents. They hired a private law firm to investigate, who then turned it over to Michigan State Police. MSP then passed along the investigation to the FBI because it was too complex.
