(May 10, 2012) — The Securities and Exchange Commission has charged Detroit’s former mayor Kwame Kilpatrick with accepting perks for pension contracts.
The lawsuit also includes former city Treasurer Jeffrey Beasley and MayfieldGentry Realty Advisors, a former adviser to the city’s police and fire pension fund, alleging their involvement in a secret exchange of lavish gifts to peddle influence over the funds’ investment process.
“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.
According to the SEC, Kilpatrick and Beasley, who were trustees to the pension funds, solicited and received $125,000 worth of private jet travel and other perks paid for by MayfieldGentry Realty Advisors LLC, an investment adviser whose CEO Chauncey Mayfield was recommending to the trustees that the pension funds invest approximately $117 million in a real estate investment trust (REIT) controlled by the firm. “Despite their fiduciary duties, neither Kilpatrick and Beasley nor Mayfield and his firm informed the boards of trustees about these trips and the conflicts of interest they presented,” a statement by the US regulator says. “The funds ultimately voted to approve the REIT investment, and MayfieldGentry received millions of dollars in management fees.”
As outlined by the regulator’s complaint, the non-business travel took place in April 2007, when MayfieldGentry paid for Kilpatrick, Beasley, and their associates to travel by private jet to Las Vegas, where they had luxury hotel accommodations, two concerts, three rounds of golf, meals, and massages. The Las Vegas trip cost more than $60,000.
In July 2007, according to the SEC, 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.
Additionally, in October 2007, MayfieldGentry allegedly 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.