SEC Says Money Manager Stole $3M From Detroit Pensions

(April 23, 2010) — The US Securities and Exchange Commission (SEC) is charging investment adviser Roy Dixon, Jr. and his company Onyx Capital Advisers LLC of stealing $3.1 million from public pension plans in the Detroit-area. Mike Farr, a former Detroit Lions receiver, is accused of helping Dixon.

The civil lawsuit filed Thursday in U.S. District Court in Detroit claims private equity manager Dixon misappropriated $3.1 million combined invested by three Detroit-area public pension funds to pay for personal and business expenses that included the construction of his multimillion-dollar house and mortgage payments on rental properties. The suit alleges that Dixon raised millions of dollars for a start-up private equity fund and then illegally withdrew money invested by the pension funds, often to cover overdrafts in his bank accounts. According to the suit, Farr diverted money to a company he owned and gave it to Dixon, while keeping some for himself.

The SEC alleges that the three public funds — the $2.4 billion Detroit General Retirement System, the $3.4 billion Detroit Police and Fire Retirement System and the $335 million Pontiac (Mich.) General Employees’ Retirement System — invested $23.8 million in the private equity fund managed by Mr. Dixon between June 2007 and June 2009, Pensions & Investments reported.

“These public pension funds provided seed capital to the Onyx fund, and Dixon betrayed their trust by stealing their money,” said Merri Jo Gillette, director of the SEC’s Chicago regional office, in a news release. “Farr assisted Dixon by making large bank withdrawals of money ostensibly invested in Farr’s companies, and together they treated the pension funds’ investments as their own pot of cash.”