Businessman pleads guilty in Detroit corruption trial
Detroit — A Georgia businessman accused of bribing former Mayor Kwame Kilpatrick and several pension fund officials pleaded guilty Tuesday minutes before standing trial Tuesday in a high-profile public corruption case and could get more than eight years in federal prison.
Roy Dixon admitted bribing former Detroit Treasurer Jeffrey Beasley with $2,000 and a free family trip to the Turks & Caicos islands in 2007. In return, Dixon said he wanted favorable treatment from Beasley, who sat on the city's two public pension funds.
The guilty plea caps a two-year prosecution and flips Dixon from a co-defendant to a potential star witness for the government. Dixon has agreed to testify against Beasley and two former pension officials during a trial that resumes Thursday in federal court.
Dixon is the third person to plead guilty to a federal crime in the corruption case and the latest during a years-long corruption probe that has netted 35 convictions, including Kilpatrick.
"I plead guilty," Dixon, 51, said after hanging his head in front of U.S. District Judge Nancy Edmunds.
The plea prompted Edmunds to delay opening statements until Thursday. The break gives lawyers time to potentially reach another plea deal with Beasley, former Detroit pension Trustee Paul Stewart or pension fund lawyer Ronald Zajac.
In an unusual move, Stewart, his lawyer and one of Zajac's lawyers attended Dixon's sentencing Tuesday, prompting speculation about another potential plea deal.
Dixon was one of four people charged with looting Detroit's pension funds along with Beasley, who is Kilpatrick's fraternity brother.
Dixon pleaded guilty to conspiracy to commit honest services mail and wire fraud. The charge is a 20-year felony and carries a $250,000 fine but prosecutors have agreed to cap the recommended sentence at more than eight years.
If Dixon provides substantial cooperation, prosecutors will ask for less time in prison. Ultimately, Edmunds will decide how much time Dixon spends behind bars. Sentencing is set for Feb. 9.
"He wanted to do the right thing," defense lawyer Edward Wishnow told reporters. "He's a family man and he wanted to put this all behind him."
The guilty plea came minutes before the start of opening statements in the trial and days after the judge rejected several requests from Dixon to exclude from trial evidence, testimony and recorded phone conversations.
The rejected requests factored into Dixon's guilty plea, Wishnow said.
Dixon was charged with embezzling more than $3 million with the help of former Detroit Lions wide receiver Mike Farr and spending some of the cash on an $8.5 million mansion in Atlanta.
The two other guilty pleas in the pension fund case came from former City Council aide George Stanton and businessman Chauncey Mayfield. They are awaiting sentencing and expected to testify during the Beasley trial.
The surprise plea deal Tuesday is expected to shorten and streamline the pension fund trial. Edmunds called for a two-day break because "the entire shape of the case has been reconfigured at this point."
The underlying accusation against Dixon alleges he paid bribes and kickbacks to Kilpatrick, Beasley, three pension fund trustees and a city official. He paid the bribes to secure investment money from the pension funds, prosecutors said.
The money for those investments was available after Kilpatrick backed a controversial Wall Street deal that started injecting $1.4 billion into the city's pension funds in 2005.
In 2006, months after the Detroit City Council approved Kilpatrick's Wall Street deal, Dixon formed the private-equity firm Onyx Capital Advisers, which was based in Detroit.
Onyx wanted to act as a private equity firm and invest pension fund money in a real estate deal in the Turks and Caicos Islands and a Georgia company that sold automobiles to people with bad credit.
That company, Georgia-based Second Chance Motors, was owned by Mike Farr, the former Lions wideout (1990-92). His father is ex-Lion Mel Farr Sr., the "superstar" Detroit-area auto dealer who pitched cars in commercials while wearing a red cape and pretending to fly.
By June 2007, the Detroit pension funds and one in Pontiac agreed to invest $25 million in Onyx. That was exactly one year after Detroit received the final infusion from Kilpatrick's Wall Street deal.
To secure the investment, prosecutors allege Dixon paid bribes and kickbacks to Kilpatrick, Beasley, three other pension trustees and others. Dixon and an unnamed business partner also allegedly contributed $45,000 to Kilpatrick's nonprofit, the Kilpatrick Civic Fund.
In court documents, Dixon said Beasley and other pension officials extorted money and gifts from him — a claim that could be repeated if Dixon testifies during the trial.
The indictment and a probe by the U.S. Securities and Exchange Commission allege Dixon fueled a lavish lifestyle with money loaned on behalf of Detroit retirees.
In 2008, Dixon was building a stone mansion in Atlanta. The FBI and SEC analyzed bank and financial records and alleged that Dixon had Farr pay three construction companies $521,000 in pension fund cash, according to prosecutors.
"Why were you doing that?" SEC lawyer Robert Moye asked Farr during a December 2011 deposition.
"Mr. Dixon asked me to do that," Farr said. "It had something to do with his construction loan on — I don't know if he didn't have enough — there wasn't enough money in the loan that he had to finish the home."
The sprawling Craftsman-style home is beyond an imposing gate on 2 1/2 acres in the wealthy Buckhead neighborhood north of Atlanta.
The mansion has seven bedrooms, 10 baths and features a three-car garage, a dining room that seats 12 people, pool, exercise room, library and four fireplaces.
Dixon has since lost the home, which was facing foreclosure last year.
When Dixon was indicted last year, prosecutors said the Detroit pension funds had lost the entire $20 million investment in Onyx. Pontiac's public pension fund lost $3.8 million.
The pension fund corruption trial is the first major public corruption case since Kilpatrick was convicted and sentenced last year to 28 years in federal prison.
This corruption trial involves Beasley — the city's former Treasurer and Kilpatrick's fraternity brother at Florida A&M University — and three others who either worked for the city's pension funds or received millions in pension loans.
Kilpatrick is an unindicted co-conspirator in a complex criminal case that will attempt to explain what happened to money from a $1.4 billion Wall Street deal blamed for helping plunge Detroit into bankruptcy. Prosecutors allege the money ended up in the pockets of businessmen who bribed pension officials, including Beasley, with cash, exotic trips and a Christmas basket stuffed with cash.
The case spans 2006 through April 2009 and alleges pension fund corruption cheated retirees out of more than $84 million. The alleged corruption compounded the impact of a money-losing Wall Street deal Kilpatrick backed.
Federal prosecutors allege city pension officials started approving a series of corrupt investments with businessmen in January 2006, six months after the Wall Street deal.
Flush with cash, pension fund trustees loaned more than $200 million to businessmen accused of paying bribes and kickbacks, according to federal prosecutors.
Kilpatrick is an unindicted co-conspirator because Beasley, 45, of Chicago, allegedly pressured people to contribute money to the ex-mayor's nonprofit group in order to get pension fund loans.
The defendants deny being influenced by perks that allegedly flowed during business dealings and trips to Las Vegas, England and the Caribbean.
The remaining defendants are Beasley; Stewart, the former pension trustee and vice president of the Detroit Police Officers Association; and Ronald Zajac, 70, of Northville, former top lawyer for two Detroit pension funds.
If convicted, the men face 20 years in federal prison.
The criminal case against Dixon, Beasley and two others alleges a cozy relationship between the Atlanta businessman and pension officials.
In December 2008, Dixon allegedly paid for Stewart, and his "paramour" to vacation in Naples, Fla., according to prosecutors. While there, Stewart allegedly attended a New Year's Eve party at Dixon's $2.7 million vacation home.