Robert Snell,Kalea HallThe Detroit News
Detroit — Federal prosecutors have slapped liens on the bulk of former Detroit Riverfront Conservancy CFO William Smith’s real estate empire, including his $3 million luxury cigar bar development in Detroit and properties owned by relatives, moves that could recoup money FBI agents say was stolen from the nonprofit.
New Wayne County property records offer the most complete picture of the government’s behind-the-scenes attempts to find assets while FBI agents hunt for the balance of the $40 million that Smith is accused of embezzling since 2012. So far, prosecutors have filed liens on at least 14 properties in Wayne and Oakland counties worth at least $2.6 million, according to paperwork that indicates the properties have been linked to fraud, bribery/theft and money laundering and might be subject to forfeiture.
The liens were added to the Wayne County Register of Deeds database two weeks after Smith was arrested and charged in what prosecutors have described as one of the largest frauds in Detroit history. Experts said the liens could help the conservancy recoup millions of dollars allegedly taken from the organization over more than a decade.
“It’s 100% good for the conservancy because the desired goal is to restore or make the conservancy whole again,” said defense lawyer Anjali Prasad, a former federal prosecutor and owner of Prasad Legal in Bloomfield Hills.
"It's a long process. It's going to take years. But this is good for the conservancy because the government's thinking long term: How are we going to (get) the money for the conservancy?"
Smith's criminal defense lawyer, Gerald Evelyn, did not respond Friday to a message seeking comment. There was no immediate comment Friday from the U.S. Attorney's Office.
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Marc Pasco, spokesman for the conservancy, declined to comment Friday on the liens, citing "the multi-pronged investigation that was initiated" by the conservancy's board.
Only Smith has been accused of criminal wrongdoing, but the alleged embezzlement has tarnished the reputation of a blue-chip nonprofit and undermined confidence within the philanthropic and civic communities that finance the conservancy with donations and tax dollars.
The Smith scandal also has forced the departure of longtime conservancy CEO Mark Wallace, prompted Smith's firing and left a nonprofit overseen by civic and business leaders strapped for cash while trying to continue revitalizing a miles-long stretch of Detroit's riverfront from Belle Isle to the Ambassador Bridge.
Prosecutors filed the liens on real estate worth a lot of money, and a little. That includes Smith's 3,704-square-foot home in Novi that he bought for $812,109 in August 2013, approximately nine months after the FBI says he started stealing from the conservancy.
On June 10, Smith's attorney and the U.S. Attorney's Office in Detroit divulged in a court filing that they were discussing a possible plea deal while federal prosecutors slapped its first lien on Smith's Novi home. The home in a gated community is worth an estimated $1.27 million.
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Side hustles targeted
The liens also target Smith's side hustles. That includes a Detroit industrial building near the Detroit River that Smith planned to redevelop into a luxury cigar bar named Discretion, taking advantage of work done by the conservancy to create the RiverWalk pathway that draws 3.5 million visitors annually.
In July 2019, Smith's company, Biltmore Development Group, reached an agreement with the Economic Development Corporation of Detroit to purchase and develop the brick carriage house built in 1883.
The carriage house at 1977 Woodbridge is two blocks north of the RiverWalk and steps from the Dequindre Cut Greenway, two central pieces in the renovated riverfront that has been transformed by the conservancy and other groups. The Economic Development Corp. noted that the area was targeted for more than $100 million in residential and commercial developments in coming years.
Biltmore agreed to buy the carriage house for $500,000 and spend an estimated $3.3 million developing it into a 4,757-square-foot commercial space, cigar bar and small barbershop, according to a letter Smith wrote to Detroit City Council in May 2022.
The financing came from a familiar source: Invest Detroit.
Matt Cullen, chairman of the Riverfront Conservancy who has headed the nonprofit while FBI agents say Smith was looting its bank accounts, is also chairman of Invest Detroit, a group that supports real estate and business projects that otherwise have trouble obtaining traditional financing. Invest Detroit's President/CEO is Dave Blaszkiewicz, a conservancy board member.
Invest Detroit financed $3 million in purchase and construction loans for Discretion, according to mortgages filed in Wayne County, but the money has not resulted in a cigar bar.
Blaszkiewicz and Invest Detroit have not responded to multiple inquiries from The News over the past two weeks about the loans to Smith.
Smith's cigar bar project suffered delays caused by the COVID-19 pandemic, according to Economic Development Corporation records, and while finalizing financing terms with Invest Detroit.
In a May 2023 deposition stemming from a civil lawsuit in a failed business deal, Smith said he owned 15 properties, including a commercial building on McNichols Road "and some single-family homes."
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Liens entangle Smith's family
Prosecutors also are targeting properties Smith transferred to his wife and others this spring as investigators uncovered the alleged embezzlement.
That includes a $224,000 ranch-style home on Ross Drive in Redford Township, which is listed in a new lien filed in Wayne County.
Property records filed last month show Smith and his wife transferred the home to a new company, Ross Drive LLC, for $10. Ross Drive LLC was organized in late April by Smith's wife, Kimberly Smith, state business records show.
The paperwork was filed in late May, five days after Michigan State Police investigators searched Smith's office at the conservancy and seized unspecified documents, according to a federal court affidavit.
Liens were also filed against three vacant lots on Six Mile and rental homes on Biltmore Street in northwest Detroit. That includes a brick bungalow on the east side of the street at 16510 Biltmore near Six Mile and the Southfield Freeway.
The home was transferred in late May to "William Smith III," whose address on the quit claim deed is two doors down the street. Public records show that address is owned by Smith's parents, 83-year-old William Smith and Charlotte Smith, 77.
Their names appear on another lien filed by federal prosecutors for a home near West Grand River and Schaefer Highway in Detroit.
The criminal case alleges Smith used the nonprofit’s American Express platinum credit card to make $14.9 million in illegitimate purchases, including airline tickets, clothing, jewelry, furniture and $17,453 at Louis Vuitton.
Smith also is accused of wiring $24.4 million from a conservancy account to one of his companies, the Joseph Group & Associates.
“Best case is the government turns over the assets, or turns a substantial part of the assets over, to the conservancy, and in that best case, they might get 10 cents on the dollar back,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “Real estate, which you can't hide, the government can seize. But I wouldn’t be surprised if it's really hard to find the jewelry that was allegedly bought with the money. … Even in the best case, the conservancy is not going to be made whole.”
If the properties with liens on them sell, the government would be entitled to a portion of the proceeds of the sales, or all the proceeds up to the amount of restitution if the only owner is the indicted person, legal experts said.
If the lien on the properties scares off buyers, the government can move to forfeit the property and it would go to the highest bidder, Prasad noted. The indicted person must be criminally convicted before the properties can be forfeited.
rsnell@detroitnews.com
@robertsnellnews
Politics Editor Chad Livengood contributed.
