The Detroit Riverfront Conservancy is struggling to come up clean from a scandal following the revelation of significant financial mismanagement. In response, the conservancy board fired Chief Financial Officer of Detroit Riverfront Conservancy, William Smith, and also announced the resignation of CEO Mark Wallace. The decision was taken amid allegations that Smith was involved in misappropriating more than $40 million from the organization.
On May 31 Friday, the board voted to terminate Smith and appointed Ryan Sullivan as the interim CEO of the organization. Wallace, who already resigned, will continue to serve as a transitional adviser to Detroit Riverfront Conservancy. As the CEO and founder of Watershed Horizons, Sullivan brings a wealth of experience and has formerly held prominent positions, including CEO of Xenith and vice president of development at Rock Ventures.
This change in leadership called for an investigation which was initiated after The Detroit News reported a potential loss of up to $40 million. The Conservancy confirmed that the financial discrepancies came into light through audits conducted by PwC and the Honigman Law Firm. The findings indicated a loss exceeding $40 million which significantly impacted the organization known for its transformative efforts on Detroit’s downtown riverfront.
Previously, Smith had been on unpaid leave following the board’s disclosure of an investigation into his financial conduct. A few allegations against Smith include falsifying bank records, securing loans under pretenses, and investing in private ventures using conservancy funds over a decade. Despite the gravity of these allegations, Smith is yet to be charged with a crime formally.
The Conservancy board, comprising influential personalities from Metro Detroit, vowed to navigate through this crisis. Matt Cullen, the board chairman, expressed his optimism, highlighting the quick support from funding partners who are forming a coalition to stabilize the conservancy. This collaborative spirit reflects the community’s commitment to preserving the integrity of the riverfront project.
Karen Slaughter-DuPerry, a longtime executive at Detroit Riverfront Conservancy and recently retired executive of General Motors Co., will oversee ongoing construction activities at the organization. She will particularly focus on the new 22-acre Ralph C. Wilson Centennial Park that is set to open in 2025. Through her leadership, Karen is expected to ensure the momentum of the key projects of the Conservancy.
The board of the Conservancy issued a resolution emphasizing their misplaced trust in existing financial safeguards. This resulted in the urgency to address the discovered fraud. The board is now considering civil litigation against Smith to recover the misappropriated funds and is also working on fortifying its financial oversight to prevent future misconduct.
The financial mismanagement surfaced when Cullen noticed irregularities in financial statements in March. This prompted dual investigations by PwC and the Honigman Law Firm. Former U.S. Attorney Matthew Schneider, leading the Honigman investigation, confirmed the suspicions by mid-April and also escalated the issue to the FBI.
Smith, who had been working at the firm since 2005 and served as CFO since 2013, allegedly altered bank statements to cover up his activities. A letter from Schneider to Smith’s attorney detailed the cause behind his termination of employment.
Amidst this financial misconduct, the conservancy has secured new financial support, with significant pledges from the Ralph C. Wilson Jr. Foundation and the Kresge Foundation. David Egner, president and CEO of the Ralph C. Wilson Jr. Foundation, and Rip Rapson, president and CEO of the Kresge Foundation, expressed steadfast support for the conservancy. Their renewed funding highlights the importance of the riverfront project to the community and their collective resolve to overcome this crisis.
Despite the setback caused by an unprecedented financial scandal, Detroit Riverfront Conservancy is determined to protect its financial integrity and continue its mission to enhance Detroit’s riverfront.
