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Ex-Detroit mayor got free trips from pension fund broker, feds say

By the CNN Wire Staff
updated 3:12 PM EDT, Wed May 9, 2012
STORY HIGHLIGHTS
  • An SEC lawsuit names Kwame Kilpatrick and his former treasurer
  • The suit says they got free trips from a company that wanted to handle Detroit pensions
  • Kilpatrick resigned in 2008 and faces federal racketeering charges

(CNN) -- Ex-Detroit Mayor Kwame Kilpatrick and his former treasurer got more than $125,000 in free travel and entertainment from an investment firm that made $3 million handling city pension funds, federal regulators said Wednesday.

A lawsuit filed by the Securities and Exchange Commission accuses Kilpatrick and former city Treasurer Jeffrey Beasley of soliciting the gifts from MayfieldGentry Realty Advisors, which regulators say picked up the tab for trips to Las Vegas, Bermuda and Florida on private jets.

Beasley told the firm's owner, Chancey Mayfield, that his company was "in the doghouse" with Kilpatrick's administration after Mayfield backed Kilpatrick's opponent in the 2005 election, the lawsuit states, and Beasley offered to help Mayfield "clear the air" with the mayor.

"At the same time Mayfield and MGRA secretly provided these gifts, they were seeking approval from the trustees of the funds, including Kilpatrick and Beasley, for over $115 million in investments," the lawsuit states. "The failure by Kilpatrick, Beasley, MGRA, and Mayfield to disclose these gifts and the resulting conflicts of interest constituted a fraud on the pension funds."

There was no immediate response to the lawsuit from the defendants Wednesday afternoon. MayfieldGentry's phone was out of service, and the company's website was offline.

Kilpatrick was forced to resign in 2008 in a scandal over his attempt to cover-up of an extramarital affair. He served three months in jail for assaulting a police officer who was attempting to serve a subpoena on one of his friends, then served another 14 months in prison for violating probation. He still faces federal racketeering charges over what prosecutors call "a pattern of extortion, bribery and fraud" during his administration, particularly involving contracts with the water department.

Beasley was indicted on federal bribery charges in February, with prosecutors accusing him of taking kickbacks from companies with city pension fund business. According to the charges, Detroit's two pension funds lost more than $84 million as a result of the scheme.

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