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Mount Clemens — A Macomb County judge denied an attorney's request Monday for background data related to forfeiture fund expenditures by county Prosecutor Eric Smith.

Jared Maynard, former chairman of the Macomb County Republican Party, sued the county under the Michigan Freedom of Information Act to obtain records for "secret bank accounts" Smith's office had set up to process tens of thousands of dollars in funds from forfeiture and bad check cases.

The Michigan Court of Appeals and Macomb County Circuit Judge Edward Servitto had ruled Maynard was entitled to the bank records. But Maynard's attorney, Frank Cusumano Jr., also wanted backup data that might explain the reasons behind expenditures for services, credit card payment, and purchases from what Cusumano has referred to as Smith's "slush fund."

"You are asking for an accounting ... an audit," Servitto told Cusumano. "That was not part of my order and I'm not approving it."

Joshua R. Van Laan, a Macomb County assistant prosecuting attorney, told Servitto his office had provided documents as instructed and assured the judge "there is going to be an audit." 

Last week, Macomb County Executive Mark Hackel and county Treasurer Larry Rocco requested that the Macomb County Board of Commissioners order a forensic audit of the forfeiture account to determine how funds were dispersed by Smith's office.

It is believed about $2 million has traveled through Smith's specially created accounts over the past decade without authorization of the county board, which is expected to take up the issue Feb. 20.

In an emailed statement sent by Derek Miller, the prosecutor's chief of operations, Smith defended his office's expenditures. 

“The fact is, I am proud of my record managing these criminal funds to assist victims and our local police,” Smith said.

A review by The Detroit News of hundreds of checks written from the account reveal sizable checks were made out by Smith to various Macomb County police agencies as their respective share of forfeitures in criminal arrests which took place in their community. But Hackel said some checks involve $500 payments to charities and churches and are "definitely" not permitted.

Other expenditures include monthly payments to a security firm ($10,000 to $20,000); DirectTV, $20,000 in furniture, a $927 refrigerator for a break room and more than $35,000 for Verizon services and wireless bills.

The county independently provides many of the same services or purchases them from different companies, according to Macomb County Corporation Counsel John Schapka, who said there are some questions that need to be resolved.

"Expenditures of county money require approval by the Board (of Commissioners)," said Schapka. "The board does so through its annual appropriation ordinance, which establishes the county's budget. The ordinance is broken down on a department-by-department basis, and within each departmental budget further appropriated to specific purposes (i.e., employee payroll, books, paper supplies, office equipment lease and maintenance, etc).

"... All forfeiture moneys must be accounted for in an appropriations ordinance," Schapka said. "Spending money which is not provided for in an appropriation ordinance constitutes a violation of the Uniform Budget and Accounting Act."

Drug forfeiture money is controlled by a state statute that provides that all drug forfeiture proceeds — cash or seized property believed from illegal activity — "shall be distributed by the court having jurisdiction over the forfeiture proceedings to the treasurer having budgetary authority over the seizing agency," Schapka said.

 Accordingly, drug forfeiture proceeds must be turned over to the county treasurer for inclusion in an appropriations ordinance, he said.

There are limitations on how the funds can be spent and according to the state ordinance:  "A seizing agency may direct the funds or a portion of the funds it would otherwise have received under this subsection be paid to nonprofit organizations whose primary activity is to assist law enforcement agencies with drug related criminal investigations and obtaining information for solving crimes."

"Only those organizations whose core reason for being is to (1) assist law enforcement with drug-related criminal investigations, and (2) obtaining information for solving crimes," Schapka said. "Any other use is unlawful."

Vehicle forfeitures fall under a separate state statue that states, after all payments are satisfied, "The balance ... shall be distributed by the court having jurisdiction over the forfeiture proceedings to the unit or units of government substantially involved in effecting the forfeiture. Seventy-five percent of the money received by a unit of government ... shall be used to enhance enforcement of criminal law" with the rest used to implement the state Crime Victim's Rights Act.

Enhancing enforcement of criminal laws is broad but could include witness travel expenses for trial, expert witness fees, office or courtroom technology, and public service advertisements featuring law enforcement messages. One of Smith's expenditures was $18,700 spent to make a "Teens Threat of Terrorism" TV commercial.

The Crime Victim's Rights Act puts significant duties on prosecutors and law enforcement agencies, including notifying victims of their offender's status — from trial to sentencing, to parole hearings and release dates.

Schapka said even where money is properly provided for in an appropriations ordinance, the county's contracting and purchasing ordinance requires competitive bidding and contracts for the acquisition of goods and services. All contracts must be signed by the county executive, and any contract of $35,000 or more must be approved by the Board of Commissioners.

In his email, Miller said under state laws, prosecutors don't need the county treasurer or commissioners to sign off on spending from forfeiture funds.    

"These funds are collected from repeat drunk drivers and drug traffickers and are not tax revenue," he said. "These statues guide the prosecutor to spend money on the enhancement of law enforcement and to (aid) victims. The laws do not require county board or treasurer approval for spending." 

He added: "The law requires the prosecutor to file annually with the State Office of Management and Budget, which our office has done every year and not once has an issue been raised by the state."

Miller also said under state law, "Contributions to churches and nonprofits that assist the homeless, many of which suffer from mental illness and addiction, are expressly permitted." 

Outside the courtroom on Monday, Van Laan said his office differs with some interpretations of the state statutes and does not have the background data requested.

Van Laan also said his office has discussed the forfeiture fund and its expenditures "for years" and at one point some county officials encouraged the prosecutor's office to spend the funds on staff salaries.

"That was never done because it would have been improper,"Van Laan told The News. "We have never been against an audit — we welcome it. In the end, we believe it will show everything has been done properly. We are in favor of transparency ... but we didn't feel we are required to provide support documents being sought by Maynard and the judge (Servitto) agreed."

mmartindale@detroitnews.com

(248) 338-0319

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