May 23, 2014 at 11:52 pm

SEC seeks $390K from Kilpatrick, $130K from ex-Detroit treasurer

Former Detroit mayor Kwame Kilpatrick (Robin Buckson / The Detroit News)

More legal woes cropped up Friday for former Detroit Mayor Kwame Kilpatrick.

In a motion filed in federal court, the Securities and Exchange Commission is seeking $390,000 from Kilpatrick and $130,000 from former city treasurer Jeffrey Beasley for what the agency says was “deliberate or reckless disregard” of regulatory requirements while they sat on two city employee pension boards.

The commission said Kilpatrick and Beasley received more than $122,000 in free travel from Mayfield Gentry Realty Advisors during a pay-to-play scheme the former officials ran while on the Police and Fire Retirement and the General Retirement boards.

“At the same time as it was plying Kilpatrick and Beasley with lavish gifts, MGRA was recommending that the pension funds buy more than $115 million in securities from an entity controlled by MGRA,” the motion alleges. “Despite pending board votes on massive investments by the pension funds with MGRA, neither Kilpatrick nor Beasley told their fellow trustees that they were receiving tens of thousands of dollars in free travel and entertainment from MGRA.”

Beasley is awaiting a trial in October for bribery, conspiracy, fraud and extortion.

Kilpatrick was convicted in 2013 on 24 counts, including racketeering, extortion, bribery and tax evasion. He is serving a 28-year prison sentence.

Among the free travel were trips to North Carolina, Florida and Bermuda, according to the commission.

In one instance in April 2007, Kilpatrick, Beasley and friends along with MGRA founder Chauncey Mayfield took a private jet from Pontiac to Las Vegas for a three-day vacation where the SEC said they received massages, attended Toni Braxton and Prince concerts and played golf. No business was conducted during the trip, the SEC alleged.

A month after the trip the SEC said the police and fire pension board voted to increase its business with Mayfield and MGRA “without the knowledge that their advisers had just wooed Kilpatrick and Beasley with a $60,000 vacation.”

The violations corrupted the integrity of the pension funds’ investment process and could have caused a catastrophic loss for pensioners, the SEC wrote.
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Jeffrey Beasley