SEC sues ex-Detroit mayor for influence peddling

May 9, 2012 - 7:25 PM
SEC-Kilpatrick

FILE _ This June 15, 2011 file photo shows former Detroit Mayor Kwame Kilpatrick in Wayne County Circuit court in Detroit. On Wednesday, May 9, 2012, the U.S. Securities and Exchange Commission filed a civil suit against Kilpatrick, saying he and ex-city treasurer Jeffrey Beasley received $125,000 in private jet travel and other perks from an investment firm. The SEC says that was in exchange for getting the city's pension fund to make an investment favoring the firm. (AP Photo/Paul Sancya, File)

WASHINGTON (AP) — Former Detroit Mayor Kwame Kilpatrick is facing federal civil charges of taking part in an influence-peddling scheme involving the city's public-employee pension funds.

The Securities and Exchange Commission says Kilpatrick and ex-city treasurer Jeffrey Beasley received $125,000 in private jet travel and other perks from an investment firm. The SEC says that was in exchange for getting the city's pension fund to make an investment favoring the firm.

Kilpatrick and Beasley violated federal securities laws, the SEC alleged in a civil lawsuit filed Wednesday in federal court in Detroit.

Kilpatrick says he's innocent of these charges and separate criminal charges brought previous by the Justice Department.

"I truly believe that all of the entities involved in these 'so-called' investigations know that I have done absolutely nothing wrong," Kilpatrick said in a Facebook message to The Associated Press.

MayfieldGentry Realty Advisors, the investment firm, asked the pension funds' trustees to invest $117 million in a real estate investment trust controlled by the firm, the SEC said.

Kilpatrick and Beasley were among the trustees in 2006 and 2007. The SEC says the two should have told the other trustees that they received perks from the investment firm.

The SEC also accused the investment firm and its CEO, Chauncey Mayfield, of taking part in the influence-peddling scheme in violation of federal securities laws. It said the firm received millions of dollars in management fees from the pension funds' decision to invest.

Lawyers for Beasley and Mayfield didn't return phone calls seeking comment. Peter Zeidenberg, a lawyer representing MayfieldGentry, declined to comment.

Kilpatrick and his father are accused of taking kickbacks and bribes to steer city business to certain contractors. Their corruption trial is set for September in federal court in Detroit.

Beasley was indicted in January on federal criminal charges of extortion, attempted extortion and conspiracy related to investments by the city employee pension funds.

In its court filing, the SEC said Kilpatrick, Beasley, Mayfield and the firm engaged in "brazen influence-peddling and betrayal of the public trust."

The agency said Kilpatrick and Beasley "secretly solicited and received lavish gifts" from Mayfield and his firm, including a trip by private jet to Las Vegas with luxury hotel accommodations, concerts and rounds of golf.

The SEC is seeking unspecified fines and restitution from the four defendants, and an injunction barring Kilpatrick and Beasley from participating in any decisions involving investments by public pensions

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Associated Press writers Ed White and Corey Williams in Detroit contributed to this report.