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.
Jeffrey Beasley, 45, the former city treasurer, was convicted last week following a two-month jury trial.
His co-defendants — Ronald Zajac, 70, the former general counsel of Detroit’s two pension systems for more than 30 years, and Paul Stewart, 57, a trustee of Detroit’s police and fire retirement system — were also found guilty.
The jury convicted all three of conspiring to defraud the city’s pensioners. Beasley was also convicted of two counts of extortion and one count of bribery. He was acquitted on three other counts of extortion.
The DOJ said 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,” the DOJ said.
Beasley forced investment sponsors and consultants to pay “hundreds of thousands of dollars in exchange for his support of their proposed pension investments,” the DOJ said.
Kilpatick, the former mayor, was convicted last year on 24 federal felony counts, including mail fraud, wire fraud, and racketeering. He’s serving a 28-year prison sentence.
As part of the conspiracy, Zajac organized so-called “birthday parties” for Beasley, Stewart, and other trustees.
At the parties, the DOJ said,
. . . 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.
Beasley, Zajac, and Stewart each face up to twenty years in prison for conspiring to engage in honest services, mail, and wire fraud.
Beasley faces an additional twenty years in prison for each of his two convictions for extortion, and an additional ten years in prison for his bribery conviction.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.