Kilpatrick pal gets 11 years in city pension scandal

Robert Snell
The Detroit News

Detroit — Former Detroit Treasurer Jeffrey Beasley was sentenced to 11 years in federal prison Monday for betraying the trust of 30,000 retirees and pocketing bribes while serving on the city’s pension funds.


Beasley, fighting back tears as he was sentenced on his 24th wedding anniversary, apologized to his family but insisted he did not extort anyone or intend to rip off city retirees.

“I never once extorted anybody or took a bribe,” Beasley, 46, told U.S. District Judge Nancy Edmunds. “Did I do the right things? Absolutely not.”

The sentence is the third longest handed out to 38 people convicted during a years-long federal investigation of public corruption in Detroit, behind former Mayor Kwame Kilpatrick, 28 years and contractor Bobby Ferguson, 21. Federal prosecutors sought at least a 15-year sentence.

Beasley was the lead defendant in a widespread corruption case that provided insight into a system of businessmen bribing pension trustees for their vote on investments that were supposed to raise money for retiree benefits.

Instead, two Detroit pension funds lost more than $95 million in corrupt deals, weakening a retirement system that faced takeover during the city’s landmark bankruptcy case.

A severe sentence was necessary, in part, to deter other public officials from violating their duty to safeguard retiree benefits, the judge said.

Calling him hard-working and industrious, the judge said Beasley got lost after joining the administration of Kilpatrick, his fraternity brother and good friend.

He joined a pension system rife with wining and dining among trustees and business people. While serving on two city pension funds, Beasley received more than $200,000 in all, including trips, golf clubs and $9,000 stuffed in an envelope.

“I don’t think (Beasley) sold a vote” Edmunds said, “but it happened in an illegal way nonetheless.

“Mr. Beasley is an honest and good man who lost his sense of direction,” the judge added. “I don’t think a slap on the wrist is the appropriate punishment.”

Beasley a former trustee on the city’s pension funds and Kilpatrick fraternity brother at Florida A&M University, was convicted last fall following a three-month trial that also ended with guilty verdicts against former pension trustee Paul Stewart and pension fund lawyer Ronald Zajac.

The trio were charged in a high-profile case alleging they defrauded the bankrupt city’s pension funds by accepting kickbacks and bribes in exchange for approving $200 million in corrupt deals.

Any losses were unintended, Beasley’s defense lawyer Walter Piszczatowski argued. He said it is impossible to determine how much of pension funds were lost through corrupt acts, given the impact on investments by the economic recession and other market forces.

The trial late last year was dominated by the shadow of Kilpatrick and tales of free private jet flights, expensive gifts and cash handed from businessmen to pension fund officials. The imprisoned former Detroit mayor was an unindicted co-conspirator because pension fund businessmen were pressured to donate money to Kilpatrick’s nonprofit group, which acted as the mayor’s personal slush fund.

Beasley was found guilty of two extortion charges and a bribery count. He was acquitted of three other extortion charges.

Beasley didn’t merely make a few mistakes, Assistant U.S. Attorney David Gardey told the judge.

“This was two-and-a-half years of criminal conduct,” Gardey said.

During the case, federal prosecutors spoke with city retirees who hoped Beasley would be severely punished.

“They want other pension systems to recognize that this conduct is wrong, criminal, unlawful and will be punished severely,” Gardey said.

On Monday, Beasley tried to distance himself from Kilpatrick.

“I’ve always been under the shadow of Kwame Kilpatrick,” Beasley told Edmunds. “I ask that you look at me as Jeff Beasley, and who I am. I am not part of the (Kilpatrick) administration.”

The city’s bankruptcy also loomed over the trial.

The trial helped explain how money that was awarded to businessmen was handed out following a Wall Street deal backed by Kilpatrick that helped push the city into bankruptcy in 2013.

Federal prosecutors alleged city pension officials started approving a series of shady transactions with businessmen in January 2006, six months after a Wall Street debt deal started injecting $1.44 billion into the Detroit pension funds.

Flush with cash, pension fund trustees loaned more than $200 million to businessmen accused of paying bribes and kickbacks between January 2006 and April 2009, according to federal prosecutors.

On Monday, the judge said it is unfair to blame Beasley for contributing to Detroit’s bankruptcy or its economic woes.

Beasley, however, breached his fiduciary duty to retirees and their beneficiaries, the judge said.

“The problems with the pension funds and with doing business with the pension funds go back far beyond Mr. Beasley’s participation as a trustee,” Edmunds added. “It was not unusual for those who wanted to do business with the pension funds to wine and dine trustees. Give them cash gifts. It was business as usual for the pension funds for a long time.”

Beasley was allowed to remain free on bond and report to prison at a later date. The father of five wants to serve the sentence in Florida, where his family moved following his conviction last fall.

Four others convicted of crimes related to the pension funds, including Stewart, will be sentenced later this month and in October.

Zajac, the former pension fund lawyer, won’t be among those sentenced by the judge.

He died in July while facing up to 20 years in federal prison.

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