U.S. Attorney's Office
Eastern District of Michigan
(313) 226-9100
December 8, 2014

Jury Convicts Former Detroit City Treasurer, Pension Officials of Conspiring to Defraud Pensioners Through Bribery

The former Treasurer of the City of Detroit and two former pension officials were convicted by a federal jury of conspiring to defraud retirees through bribery and kickbacks, U.S. Attorney Barbara L. McQuade announced today.

Joining McQuade in the announcement was Paul M. Abbate, Special Agent in Charge of the Federal Bureau of Investigation in Detroit, Jarod Koopman, Special Agent in Charge of the Internal Revenue Service, Criminal Investigations, and James Vanderberg, Special Agent in Charge, Department of Labor, Office of Labor Racketeering and Fraud Investigations, Chicago Regional Office.

Jeffrey Beasley, 45, of Chicago, Illinois, the former Treasurer of the City of Detroit, Ronald Zajac, 70, of Northville, Michigan, the former General Counsel of Detroit’s two pension systems for more than 30 years, and Paul Stewart, 57 of Detroit, a trustee of Detroit’s Police and Fire Retirement System, were convicted following a two-month jury trial before U.S. District Judge Nancy G. Edmunds. All three defendants were convicted of conspiring to defraud the city’s pensioners of the honest services to which they were entitled by accepting bribes. In addition, Beasley was convicted of two counts of extortion and one count of bribery. Beasley was acquitted on three other counts of extortion.

The evidence at trial showed that Detroit’s two retirement systems lost more $97 million on pension deals corrupted by bribes and kickbacks taken or paid by the defendants. Beasley, Zajac, and Stewart conspired with each other and with former Detroit Mayor Kwame Kilpatrick and others to take bribes and kickbacks in return for votes on investment decisions made by the boards of trustees of Detroit’s two pension systems.

Beasley forced investment sponsors and consultants to pay Bernard Kilpatrick hundreds of thousands of dollars in exchange for his support of their proposed pension investments. Beasley also accepted tens of thousands of dollars in cash from investment sponsors and consultants in exchange for his support of their pension deals.

As part of the conspiracy, Zajac organized so-called “birthday parties” for Beasley, Stewart, and another trustees. At the parties, people having business before the pension systems gave each trustee thousands of dollars in cash. Zajac also directed investment sponsors and pension consultants to give thousands of dollars in cash and entertainment to Beasley and Stewart. Zajac also demanded that an investment sponsor pay for a trip to London for Zajac and a pension trustee in exchange for a $10 million investment in Detroit pension money.

During the conspiracy, Stewart accepted more than $48,000 in cash, trips, meals, drinks and other things of value in return for his support on pension deals proposed by the givers of the bribes. Among other things, Stewart accepted a Christmas basket stuffed with cash, a $5,000 Greektown casino chip, and a $4,000 trip to the Ritz-Carlton in Naples, Florida.

McQuade said, “These defendants breached their duties to retirees by basing their investment decisions on bribes. Their greed cost retirees almost $100 million in losses to pension funds. In light of all of the sacrifices made by Detroit retirees, we are gratified that the jury has brought these corrupt pension officials to justice.” “The perpetrators in this case criminally conspired with one another to sell their influence over the city’s pension systems,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “Their breach of the public’s faith and their fiduciary responsibilities to Detroit retirees resulted in nearly $100 million in losses. The FBI, along with its law enforcement partners, will continue to aggressively pursue and bring to justice those who abuse the public’s trust and enrich themselves at the cost of our communities.”

Based on the jury’s guilty verdicts for conspiring to engage in honest services mail and wire fraud, Beasley, Zajac, and Stewart each face a maximum of twenty years in prison and a fine of up to $250,000. In addition, Beasley also faces an additional twenty years in prison and a fine of $250,000 for each of his two convictions for extortion, and an additional ten years in prison and a fine of $250,000 for his bribery conviction. Their sentences will be based on sentencing guidelines and other statutory factors.

In addition, a number of other defendants have been convicted in relation to the pension fund investigation, including:

  • Roy Dixon, an investment sponsor convicted of conspiring with Beasley, Zajac, and Stewart to pay bribes;
  • Monica Conyers, a former Trustee of the General Retirement System and former member of the Detroit City Council, for conspiracy to take bribes, including bribes relating to a proposed multi-million dollar pension fund investment in Wireless Resources and a $10,000 extortion payment relating to the Police and Fire Retirement System’s investment in the Romulus Deep Injection Waste Well;
  • Samuel L. Riddle, Conyers’ Chief of Staff, for conspiracy to commit bribery and extortion relating to the Wireless Resources and Romulus Deep Injection Well investments;
  • DeDan Milton, a former Trustee of Detroit’s two pension funds;
  • Andrew Park, an owner of Asian Village, who paid a bribe to obtain a $2.75 million loan from Detroit’s General Retirement System;
  • Derrick Miller, former Chief Information Officer of Detroit, who accepted the bribe from Park and who took a kickback of more than $500,000 on a $44 million investment by Detroit’s two pension funds;
  • Chauncey Mayfield, for conspiracy to commit bribery with Treasurer Beasley by supplying Beasley and Kwame Kilpatrick with tens of thousands of dollars in hotel, entertainment, and private jet flights, as well as a job for Beasley’s paramour and significant contributions to the Kilpatrick Civic Fund, all in return for maintaining Mayfield’s position as an investment advisor controlling more than $200 million in pension fund money; andGeorge Stanton, the former Chief of Staff of a pension trustee, who accepted a $15,000 cash bribe from Dixon relating to a proposed investment in the Turks and Caicos Islands.

The case was investigated by agents of the Federal Bureau of Investigation, the Internal Revenue Service, and the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations. It is being prosecuted by Assistant United States Attorneys Robert Cares, David A. Gardey, and Stephanie Dawkins Davis.

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