Former Detroit Mayor Kwame Kilpatrick and the city's ex-treasurer were sued by the U.S. Securities and Exchange Commission, which accused them of awarding pension-fund business in exchange for $125,000 worth of gifts from an investment adviser.
Former Detroit Mayor Kwame Kilpatrick and the city’s ex-treasurer were sued by the U.S. Securities and Exchange Commission, which accused them of awarding pension-fund business in exchange for $125,000 worth of gifts from an investment adviser.
Kilpatrick and former Treasurer Jeffrey Beasley, who were trustees of Detroit’s public employee pension funds, solicited private jet trips, hotel rooms and other gifts from an investment adviser seeking a $117 million investment in a real estate trust run by the firm, according to the lawsuit, filed in U.S. District Court in Detroit.
The SEC has been moving to crack down on misconduct in the state and local government pension fund and bond business. The regulators created a division to handle municipal cases, and in 2010 it settled with New Jersey for allegedly hiding from investors the size of its pension-fund shortfalls.
“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, the director of the SEC’s Division of Enforcement, said in a statement.
The SEC’s lawsuit also named as a defendant Chauncey Mayfield, the chief executive of the investment firm that won the city’s business.
James Thomas, an attorney for Kilpatrick, didn’t immediately return a phone call. Walter Piszczatowski, a lawyer for Beasley, also didn’t immediately respond to a message. Eric Yaffe, who represents Mayfield, declined to comment.
--Bloomberg News--
