By Hal M. Bundrick NEW YORK ( MainStreet)--An alleged bold embezzlement of pension funds and subsequent four-year cover-up has ended with SEC charges filed against a Detroit-based investment advisory firm.
The Securities and Exchange Commission claims that Chauncey C. Mayfield, founder, president, and CEO of MayfieldGentry Realty Advisors stole nearly $3.1 million from the Police and Fire Retirement System of the City of Detroit (PFRS) in order to purchase two California strip malls. Four other executives with the firm that became aware of the scheme over a period of time were also charged. "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." The other MayfieldGentry executives charged in the SEC's complaint are chief financial officer Blair D. Ackman, chief operating officer Marsha Bass, chief investment officer W. Emery Matthew, and chief compliance officer and general counsel Alicia M. Diaz. MGRA had managed assets of the PFRS since 2002. "During that time, MGRA and its principals have received millions of dollars from the PFRS in management and transaction fees," the complaint states. "The PFRS has consistently been MGRA's largest source of income. At the time, the PFRS paid uniformed retirees and their beneficiaries, on average, less than $30,000 each in annual retirement benefits. The stolen $3.1 million could have provided a year of benefits for more than 100 retired police officers, firefighters, and surviving spouses and children." The theft allegedly occurred in 2008 when Mayfield directed Ackman to wire money from the "PFRS Master Account" as a down payment on two California properties. "The PFRS, however, was not an investor in the California Properties and had not authorized MGRA or any of its principals to use (its assets) to fund MGRA's purchase of the California Properties," the complaint states. "The California Properties were not presented to the PFRS as an investment opportunity, and the PFRS did not otherwise seek to participate in any investment in the California Properties."