SEC Charges Ex-MayfieldGentry GC in Pension Scheme
The Securities and Exchange Commission has accused Alicia Diaz, former general counsel of Detroit investment firm MayfieldGentry Realty Advisors, of aiding and abetting a $3.1 million theft from the Detroit police and firefighter pension fund.
The SEC complaint [PDF], filed Monday, alleges that Chauncey Mayfield, who is the founder, president, and CEO of Mayfield, illegally took the money from the pension fund in 2008 to purchase California shopping malls.
The complaint says Diaz and three other executives, all part owners of the investment firm, later learned about the theft, failed to disclose it, and tried to cover it up. They planned to sell the malls and to repay their largest client before the theft was discovered, but property values collapsed.
Diaz, who didnt return calls for comment, was also the firms chief compliance officer.
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, in a statement. 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 complaint specifically accuses Diaz, 50, of Grosse Point, Michigan, of engaging in affirmative efforts to conceal the theft. It states she attended pension fund board meetings in July and December of 2011, where she touted the funds portfolio performance and made a presentation discussing the funds properties.
The complaint states: At no point during her presentation did Diaz discuss the California properties . . . Nor did Diaz mention the difficulties [the company] had been having in selling the California properties, which had dramatically declined in value since being acquired in 2008.
The SEC filed the complaint in U.S. District Court in Detroit while settling its case, subject to court approval, against Mayfield and the firm on Monday. Without admitting or denying the charges, Mayfield agreed to repay the $3.1 million.
The SECs civil case against Diaz and the other three executives continues. The government seeks an injunction against future misconduct, disgorgement of any profits, and unspecified financial penalties.
The SEC said the theft only came to light when the investment firm informed the pension fund the day before the SEC filed a complaint against Mayfield and his firm in May 2012 for their participation in a "pay-to-play" scheme involving the former mayor and treasurer of Detroit.
In a parallel pay-to-play criminal case, Mayfield pleaded guilty in February and is awaiting sentencing.