(June 11, 2013) – The CEO of a Detroit investment advisory has promised to repay $3.1 million it allegedly stole from its biggest client—the city’s police and fire pension fund—the US Securities and Exchange Commission (SEC) said.
Chauncey Mayfield, the founder and CEO of MayfieldGentry Realty Advisors, secretly withdrew the assets from one of the retirement system’s trust accounts in 2008, according to a complaint filed by the SEC. Mayfield purchased two “Starbucks-anchored” California strip malls with the money, yet failed to list the pension fund on the property deeds. Mayfield and his executives planned to flip the properties and quietly return the assets, the documents said. But, a few months after closing, the US housing market collapsed.
“Mayfield stole pension money from Detroit’s retired police officers, firefighters, and surviving spouses and children to buy strip malls,” said Andrew Ceresney, co-director of the SEC’s division of enforcement. “To make matters worse, other senior officers at the firm joined together with him to cover up his deceitful and grave betrayal of trust, all for the purpose of keeping the client.”
Staff at the Detroit pension fund first learned of the missing assets nearly five years later. According to published minutes from a May 2, 2012 trustees meeting, MayfieldGentry’s CFO faxed an undated letter “regarding certain misappropriations of police and fire funds, and informed the board that Chauncey Mayfield will relinquish his leadership position.”
The retirement system has received $1.1 million in restitution payments from its former adviser, trustee chairman Matt Gnatek told aiCIO. “The board has pending litigation involving the $3.1 million misappropriation of police and fire retirement system funds by the Mayfield Gentry companies. We are vigorously pursuing the full recovery of all board assets. Due to the pending ligation any further comment is inappropriate.”
Chauncey Mayfield and his firm settled the SEC’s fraud charges without admitting to or denying any wrongdoing.
However, he awaits sentencing in a separate SEC case. He pleaded guilty to participating in a pay-to-play scheme, funding Las Vegas golf trips and private jet travel for Detroit public pension trustees.
MayfieldGentry could not be reached for comment.