News
CFO stays silent amid financial scandal at Detroit Riverfront Conservancy
The Detroit Riverfront Conservancy was unable to directly contact its chief financial officer due to concerns about potential financial mismanagement and the possibility that tens of millions of dollars were missing.
Two sources familiar with the situation told the Detroit News that the conservancy has not communicated with William A. Smith since April 19. This comes amid a federal investigation this month into the organization’s finances, as four sources close to the situation told The News they fear how up to $40 million may have been stolen.
On Friday, the guardianship clarified that there had been some communication between the parties through their lawyers.
“In fact, as is standard for a criminal investigation, the guardianship attorney, Matthew Schneider of the Honigman Law Firm, contacted Smith’s attorney, and they exchanged letters and emails,” the spokesperson wrote. guardian Marc Pasco told The News in an email. “Additionally, Matthew received Smith’s keys and ID. There are standard forms of contact.”
The financial scandal in the riverfront came to public light this month after the conservancy’s chairman, Matt Cullen, expressed concerns about the accuracy of management reports and financial statements presented to the conservancy’s board. This led to Smith being placed on unpaid leave, ordering an independent forensic audit by PwC and a request for the Michigan State Police to investigate. That investigation has since been turned over to the FBI, which has declined to comment on the matter.
David Egner, CEO of the Ralph C. Wilson Foundation, warned that the $40 million figure allegedly lost in the scandal is a “guesstimate.” The conservancy has about $170 million in total assets.
Efforts by The News to reach Smith at his Northville home and by phone were unsuccessful. Two vehicles were in the garage of his duplex on Thursday afternoon. Neighbors who spoke to The News on Thursday were unaware of Smith or activity at his home.
Detroit Regional Chamber President and CEO Sandy Baruah, a trustee board member, said Thursday that he is among those who have not recently heard from Smith.
“I always liked him. He’s obviously a very sociable guy. … We all liked him, but I haven’t heard from him and I certainly wouldn’t expect to hear from him,” Baruah said.
Neither the conservancy’s external auditor, George Johnson & Co., nor the conservancy’s CEO, Mark Wallace, reported the discrepancies to the board. Wallace was not implicated in any of the alleged improprieties.
Baruah said he is, however, concerned about the guardianship staff, especially Wallace.
“I worry about him because I think he has been a transformational leader. But this will be very difficult,” he said.
“The riverfront will continue to thrive because there is a lot of support for it. This is a hurdle. This is a huge hurdle,” Baruah said. “And I think the biggest impact this will have, frankly, will not be on the riverfront, but on our other nonprofits, like the one I run, which will have to take a lot of time . , they look very seriously at themselves. And we are already planning that.”
Baruah said other nonprofits are already starting to do this.
“You know if this can happen to Mark Wallace and the riverfront, if this can happen to the Kresge Foundation and the riverfront, if this can happen to Matt Cullen — no one is immune,” he said.
Baruah said Cullen and the board are waiting to see what the FBI investigation reveals and what third-party auditors reveal when it becomes public.
“I can say we are anxious, but I am also realistic that an investigation of this size, both legal and forensic, we know will take time.”