SEC v. MayfieldGentry Realty Advisors et al., Case No. 2:13-cv-12520 NGE MAR (E.D. Mich.). On June 10, 2013, the SEC announced it filed a complaint against Chauncey C. Mayfield for taking $3.1 million from the Police and Fire Retirement System of the City of Detroit without obtaining permission. The SEC also charged other MayfieldGentry executives for helping Mayfield to try to cover up the theft. The other executives are chief financial officer Blair D. Ackman, chief operating officer Marsha Bass, chief investment officer W. Emery Matthew, and chief compliance officer and general counsel Alicia M. Diaz. According to the SEC, Mayfield took the money from a trust account for the pension fund in 2008. The SEC alleges that Mayfield informed the other defendants over time. According to the SEC, during a budget meeting with fund trustees in 2011, Diaz emphasized MayfieldGentry’s success in generating a cash return for the pension fund. Diaz did not tell the trustees that the cash remittance would be reduced by more than 60 percent once the stolen money was taken into account. At the same meeting, Matthews touted a 6.8 percent return for the pension fund without disclosing that the return would be impacted by the $3.1 million theft. The SEC further alleges that MayfieldGentry and its executives continued to cover up the theft until they finally informed the pension fund on the evening 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. Upon learning of the theft, the pension fund promptly terminated its relationship with MayfieldGentry.
Without admitting or denying the allegations of the complaint, Mayfield and his firm agreed to settle the charges by paying back the stolen money and being enjoined from future violations of Sections 206(1) and 206(2) of the Investment Advisers Act. The SEC’s complaint alleges Ackman, Bass, Matthews, and Diaz aided and abetted Mayfield’s violations. In a parallel criminal matter, Mayfield is awaiting sentencing in connection with his guilty plea for participation in the pay-to-play scheme.