Detroit — Federal prosecutors have placed mortgages on much of former Detroit Riverfront Conservancy Chief Financial Officer William Smith’s real estate empire, including his $3 million luxury cigar bar in Detroit and properties owned by relatives, in a move that FBI agents say could recoup money that agents say FBI files were stolen from a nonprofit organization.
New Wayne County property records provide the fullest picture of the government’s behind-the-scenes efforts to find the assets as FBI agents hunt for the rest of the $40 million Smith is accused of embezzling from 2012. So far, prosecutors have filed liens on at least 14 properties in Wayne and Oakland counties worth at least $2.6 million, according to records showing the properties have been linked to fraud, bribery/theft and money laundering and could be subject to forfeiture .
The liens were added to the Wayne County Registry of Deeds database two weeks after Smith was arrested and charged in what prosecutors described as one of the largest frauds in Detroit history. Experts say the liens could help the conservancy recover millions of dollars allegedly taken from the organization over more than a decade.
“This is 100 percent beneficial to the conservatorship because the desired goal is to restore or realign the conservatorship,” said defense attorney Anjali Prasad, a former federal prosecutor and owner of Prasad Legal in Bloomfield Hills.
“It’s a long process. It will take years. But it’s good for conservation because the government is thinking long-term: How are we going to get money for conservation?”
Smith’s criminal defense attorney, Gerald Evelyn, did not respond to a message seeking comment Friday. U.S. Attorney Dawn Ison had no immediate comment Friday.
More: Detroit Riverfront fires CFO William Smith’s crony amid $40 million scandal. He explains his side
Marc Pasco, a spokesman for the conservancy, declined to comment on the liens on Friday, citing a “multi-pronged investigation initiated” by the conservancy board.
Only Smith was charged with a crime, but the alleged embezzlement tarnished the reputation of the leading nonprofit and undermined trust in the philanthropic and civic communities that fund conservation through donations and taxes.
The Smith scandal also forced the departure of longtime environmental CEO Mark Wallace, resulted in Smith’s firing and left the nonprofit overseen by civic and business leaders cash-strapped as it tries to continue revitalizing a mile-long stretch of Detroit’s waterfront from Belle Isle to the Ambassador Bridge .
Prosecutors filed liens on properties worth a lot of money and then some. That includes Smith’s 3,704-square-foot home in Novi, which he purchased for $812,109 in August 2013, about nine months after the FBI said he began stealing from the reservation.
On June 10, Smith’s attorney and the U.S. attorney’s office in Detroit disclosed in a court filing that they were discussing a possible settlement while federal prosecutors placed a first lien on Smith’s Novi home. The home in the gated community is estimated to be worth $1.27 million.
More: “He can easily hide or dispose of assets”: in William Smith’s waterfront business empire
Side pursuits are targeted
The pledges also cover Smith’s side businesses. This included an industrial building in Detroit near the Detroit River that Smith planned to renovate into a luxury cigar bar called Discretion, taking advantage of the work done by the preservationist to create the RiverWalk, which attracts 3.5 million visitors a year.
In July 2019, Smith’s company, Biltmore Development Group, reached an agreement with the Economic Development Corporation of Detroit to purchase and expand the brick coach house built in 1883.
The Coach House at 1977 Woodbridge is two blocks north of the RiverWalk and steps from the Dequindre Cut Greenway, two centerpieces of the renovated riverfront that has been transformed by conservation and other groups. Economic Development Corp. noted that more than $100 million of residential and commercial development is planned for the area in the coming years.
Biltmore agreed to buy the carriage house for $500,000 and spend an estimated $3.3 million to convert it into a 4,757-square-foot retail space, cigar bar, according to a letter Smith wrote to the Detroit City Council and a small barbershop.
The financing came from a well-known source: Invest Detroit.
Matt Cullen, president of the Riverfront Conservancy, who headed the nonprofit while FBI agents say Smith was robbing its bank accounts, is also president of Invest Detroit, a group that supports real estate and business projects that would otherwise have difficulties in obtaining traditional financing. The president/CEO of Invest Detroit is Dave Blaszkiewicz, a board member of the conservation organization.
Invest Detroit financed $3 million in acquisition and construction loans for Discretion, according to mortgages filed in Wayne County, but the money did not result in a cigar bar.
Blaszkiewicz and Invest Detroit did not respond to numerous inquiries from The News over the past two weeks about loans to Smith.
Smith’s cigar bar project has suffered delays due to the Covid-19 pandemic, according to the Economic Development Corporation and while financing terms with Invest Detroit are being finalized.
In a May 2023 deposition stemming from a civil lawsuit over a failed business deal, Smith said he owned 15 properties, including a commercial building on McNichols Road “and several single-family homes.”
More: Detroit Riverfront CFO William Smith released assets after an alleged $40 million scheme was revealed
Liens embroil Smith’s family
Prosecutors are also looking into assets that Smith transferred to his wife and others this spring after investigators uncovered the alleged embezzlement.
That includes a $224,000 ranch-style home on Ross Drive in Redford Township that is listed in a new lien filed in Wayne County.
Property records filed last month show Smith and his wife transferred the house to a new company, Ross Drive LLC, for $10. Ross Drive LLC was formed in late April by Smith’s wife, Kimberly Smith, state business records show.
The documents were filed in late May, five days after Michigan State Police investigators searched Smith’s office at the conservatory and seized unspecified documents, according to a federal court filing.
Liens were also filed on three vacant lots on Six Mile and rental homes on Biltmore Street in northwest Detroit. That includes a brick bungalow on the east side of the street at 16510 Biltmore near Six Mile and the Southfield Freeway.
In late May, the house was transferred to the ownership of “William Smith III,” whose address on the quitclaim deed was two floors away. Public records show the address is owned by Smith’s parents, William Smith, 83, and Charlotte Smith, 77.
Their names appear on another lien filed by federal prosecutors on a home near West Grand River and Schaefer Highway in Detroit.
The criminal case alleged Smith used the nonprofit’s American Express platinum credit card to make $14.9 million in illegal purchases, including airline tickets, clothing, jewelry, furniture and $17,453 at a Louis Vuitton store.
Smith is also accused of transferring $24.4 million from the savings account of one of his companies, Joseph Group & Associates.
“At best, the government will put the assets or a significant portion of them into a conservation fund, and at best they can get back 10 cents on the dollar,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “Properties that cannot be hidden can be seized by the government. But I wouldn’t be surprised if it was really difficult to find jewelry that was allegedly bought with money. (…) Even in the best case scenario, the reserve will not be comprehensive.”
If the properties subject to the lien are sold, the government will be entitled to a portion of the sale proceeds or all of the proceeds up to the restitution amount if the accused person is the sole owner, legal experts say.
If a lien on properties deters buyers, the government may decide to confiscate the property and the property will go to the highest bidder, Prasad noted. Before property can be confiscated, the accused person must have been convicted of a crime.
[emailprotected]
@robertsnellnews
Political Editor Chad Livengood contributed.
