Former Detroit Mayor Kwame Kilpatrick is once again under scrutiny as the U.S. Securities and Exchange Commission filed a civil suit Wednesday alleging the exiled Kilpatrick, former city Treasurer Jeffrey W. Beasley and the investment adviser to Detroit’s public pension funds were involved in an unethical investment scheme involving lavish kickbacks in exchange for influence over the city’s investments.
According to the SEC, Kilpatrick and Beasley solicited and received $125,000 worth of private jet travel and other perks from investment adviser MayfieldGentry Realty Advisors in return for their commitment to recommend that the city’s pension funds invest approximately $117 million in a real estate investment trust (REIT) controlled by the firm. The funds ultimately voted to approve the REIT investment, and MayfieldGentry received millions of dollars in management fees.
“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,” Robert Khuzami, director of the SEC’s Division of Enforcement said in a statement.
According to the complaint, the kickbacks also included extensive non-business travel including the following trips:
—In April 2007, MayfieldGentry paid for Kilpatrick, Beasley and their associates to travel by private jet to Las Vegas, where they enjoyed luxury hotel accommodations, two concerts, three rounds of golf, meals and massages. The Las Vegas trip cost more than $60,000.
—In July 2007, MayfieldGentry paid more than $24,000 for a private jet to take Kilpatrick, Beasley’s son and others to Tallahassee, Florida, where Kilpatrick had a second home.
—In October 2007, MayfieldGentry 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.
Just months ago, A Michigan parole board increased Kilpatrick’s restitution payments by 200 percent after the board learned that he spent more than $300 per month on cable television. In August, Kilpatrick, his wife and three sons moved into a 5,016-square-foot home valued at $338,400 in Grand Prairie, Texas.
Kilpatrick served as mayor of Detroit from 2001 to 2008, and he already faces several federal charges for alleged criminal acts committed under his official capacity as mayor.
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(Photo: Bill Pugliano/Getty Images)
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