Feds: Ex-CFO of Detroit Riverfront Conservancy orchestrated years-long scheme to steal millions

The 51-year-old former chief financial officer of the Detroit Riverfront Conservancy that was fired after millions of dollars was reported missing from the nonprofit has been charged with bank fraud and wire fraud.

William Smith embezzled nearly $40 million over a 12-year period from 2012 to 2024, the U.S. Attorney in the Eastern District of Michigan alleged. He appeared in federal court Wednesday afternoon and was given a $10,000 personal bond with standard conditions including no travel outside the Eastern District.

The alleged theft has shaken the nonprofit world in Detroit. The conservancy has been behind the restoration of the city's riverfront, turning it from a blighted shoreline into a popular attraction for local residents and visitors from out of town. 

How someone managed to steal so much money without anyone knowing is also being probed, according to media reports. 

Concerns of missing money were first brought to the conservancy board by its former CEO, who has since resigned. Soon after, the conservancy placed Smith on leave and requested Michigan State Police take over the investigation.

Due to the size of the investigation, the FBI is now handling the case. On May 31, Smith was fired

Attorney Dawn Ison announced in a news release on June 5 that Smith orchestrated the years-long scheme in two ways: by using conservancy funds to pay for charges to a family bank account and diverting conservancy money to a company he controlled. 

Neither form of expense was approved by the riverfront board, Ison said.

In order to cover up the theft, the U.S. Attorney said Smith doctored bank statements that were sent to the conservancy's accountant, which led to false financial information being entered into the nonprofit's books.

Then, in 2023, Smith obtained a $5 million line of credit on behalf of the conservancy. When asked for documentation that he had sole authority to obtain the line of credit, Smith provided Citizens Bank with a document that said as much.

The document used a forged signature of the conservancy's corporation secretary.

"This defendant is alleged to have abused the trust the Conservancy placed in him and to have carried out a fraud that is simply astonishing in scale. Today’s allegations are extremely serious ones, and my office is committed to pursuing anyone, regardless of their title, who fleeces taxpayers and charitable donors for their own private gain," Ison said.

In a statement sent to FOX 2, Matt Cullen, the chairman of the conservancy board commended the authorities for their "quick and thorough start to their investigation."

"We will continue to cooperate with law enforcement to ensure justice is brought against this nefarious scheme to subvert layers of financial controls and embezzle resources from one of the greatest waterfront projects in the United States," it read.

His next court appearance is June 26 at 1 p.m. for a preliminary exam. 

What did Smith embezzle funds for?

In the FBI's complaint, unsealed on June 5, they alleged Smith embezzled money, falsified documents, and fraudulently obtained $5 million in credit.

The complaint states Smith used the stolen cash for personal gain, spending it on airline tickets, hotels, limousines, household goods, lawn care, clothing, and jewelry.

A review of Smith's AmEx statements showed he spent the $4,850 on clothing from an outlet in Birmingham and $5,618 on jewelry from a shop in Southfield. He also spent more than $12,000 at a Saginaw car dealership and another $17,452 at Louis Vuitton. 

He also charged more than $22,000 of the conservancy's fund to his home, making purchases at Home Depot, Wayfair, Art Van Furniture, and other lawn care companies.

When did suspicions arise?

In March 2024, the accounting from Pricewaterhouse Coopers (PwC) was hired by the conservancy to review bank records. They found almost $15 million in Amex Epayments from the nonprofits Comerica account between Nov. 2012 and March 2024.

Further interviews with the conservancy board's chairman and its staff accountant confirmed The Joseph Group - one of the companies set up by Smith - was not an approved vendor for the Detroit Riverfront Conservancy. 

However, PwC's review of transactions with The Joseph Group uncovered $24.4 million in wire transfers from the conservancy's Comerica bank account and the company. 

Additionally, Smith concealed the transactions by providing paper statements to a staff accountant, who worked directly under the ex-CFO. The employee was tasked with recording transactions in the conservancy's database. 

When the employee asked Smith for direct access to Comerica's online banking portal so she could pull statements directly, he would ignore her requests and instead only give her paper statements, the criminal complaint reads.

That way, he was the only individual with the password to the conservancy's banking portal.

The scheme began to unravel when on May 8, personnel at the conservancy discovered a $5 million line of credit with Citizens Bank - something that wouldn't have been necessary to pay the operating costs and project fees overseen by the conservancy.

An internal search of Smith's email server found messages between the ex-CFO and the vice president and relationship manager at Citizens Bank. It included the question "Do you have documentation that supports you as sole signer for all things related to financing?"

Smith responded two hours later with an attachment that had been signed by the corporation secretary in 2022. The signature was a forgery, interviews with the secretary by the FBI revealed.