Detroit Riverfront Conservancy’s former CFO William Smith, ousted in the aftermath of an alleged $40 million scheme that ran over the course of 11 years, has been charged with bank and wire fraud. The accusations include falsified bank statements, unauthorized wire transfers and usage of Conservancy funds to pay his credit card bills.
According to Click on Detroit, the money investigators found Smith used the misappropriated funds for airline tickets, hotels, limos, clothes and luxury goods. A plea deal could be in the works, and the FBI has instituted a lien on Smith’s $1.2 million home, per the Detroit News. Smith has subsequently been released on a GPS tether.
Smith, having held the CFO position for the Conservancy since 2005, was originally put on leave pending its board of directors’ investigation into apparent evidence of financial wrongdoing. The board handed the investigation to the Michigan State Police who, after establishing the complexity and nature of the situation, turned the case over to the Federal Bureau of Investigation.
Despite the presence of a 44-member board, many of whom were some of the region’s top business and civic leaders, the $40 million swindle went unchecked until 2024. Donna Givens Davidson, a nonprofit executive who runs the East Side Community Network in Detroit, told the Detroit Free Press, “What it feels like to me is the good old boys ... The good old boys network didn’t police itself and someone took money ... [The Conservancy] didn’t do enough to scrutinize [Smith] and allowed him to cross too many lines he shouldn’t have been allowed to cross and these are lines most nonprofit leaders wouldn’t be allowed to cross.”
Financial controls failure
Some of the lowlights of financial failure that have been revealed in the court proceedings, as reported by the Detroit Free Press, include:
- Smith was the only one with access to the nonprofit’s checking account. This control enabled him to alter bank statements to hide the Conservancy’s financial position.
- Advisory firm George Johnson and Co. had been the Conservancy’s independent auditor for more than a decade. The industry standard is to switch auditing firms every three to five years, according to Joan Harrington, assistant director of social sector ethics at the Markkula Center for Applied Ethics at Santa Clara University.
- A potential conflict of interest was introduced when a nonprofit investment firm Invest Detroit, which was governed by Matt Cullen, who is also the Conservancy chairman, permitted a loan for Smith’s personal business venture near the RiverWalk. Invest Detroit’s CEO Dave Blaszkiewicz is also a board member of the Conservancy.