Feds Seeking $16 Million in Restitution From Corrupt Ex-Detroit Pension Trustee


Federal prosecutors are seeking $16.8 million in restitution – to be paid out to pensioners and beneficiaries of Detroit’s public retirement systems – from an ex-pension trustee who spearheaded the kickback scheme that led to corrupt pension investments.

Paul Stewart, who has already been convicted of public corruption, ran a pay-to-play scheme in which he accepted bribes in exchange for approving investment deals.

The Detroit Police and Fire Retirement System and the city’s General Retirement System lost $95 million in the corrupt deals, according to prosecutors.

More details from Detroit News:

Federal prosecutors want former Detroit pension fund trustee Paul Stewart to pay more than $16.8 million in restitution to the victims of his crimes, including pensioners, beneficiaries and employees who paid into Detroit’s retirement system.


In a restitution memo filed Jan. 11 in Stewart’s case, prosecutors say Stewart caused $14.25 million in losses from a Texas land deal and $1.18 million in losses from a deal tied to ICG Leaseback. Stewart also caused losses by voting in favor of a 33 percent salary increase to Zajac, the memo says.

In the memo, Assistant U.S. Attorney David Gardey wrote his office is not using Stewart’s gain as a basis for restitution — as federal prosecutors in Detroit had done when seeking restitution from disgraced former Detroit Mayor Kwame Kilpatrick for his conviction on public corruption charges.

Judges from the 6th Circuit vacated the $4.5 million restitution Kilpatrick was ordered to pay the Detroit Water and Sewerage Department, saying the figure was incorrectly calculated.

Instead, Gardey wrote, his office is asking only for a restitution award in three areas where the amount of the losses can be “directly and proximately attributable to Stewart’s criminal conduct.”

Some background on the case:

Stewart was a trustee on the city’s Police & Fire Pension fund from 2005-11.

During that time, businessmen pitching investments to the pension funds paid bribes and kickbacks for his vote totaling $63,750, including a Christmas basket with hidden cash, a $5,000 casino chip, trips to Florida for Stewart, limousine rides, drinks, meals and entertainment, prosecutors said.

In return, the bribe payers received $5.2 million from money-losing investments approved by Stewart that cost cops, firefighters and beneficiaries more than $47 million, prosecutors said.


In 2014, Stewart was convicted in a public corruption case alongside former Detroit Treasurer Jeffrey Beasley and ex-pension fund lawyer Ronald Zajac, who has since died.

Two Detroit pension funds lost more than $95 million in the deals, weakening a pension system that faced takeover during the city’s landmark bankruptcy case.

Last year, Stewart was sentenced to 5 years in prison for his role in the scheme.


Photo by jypsygen via Flickr CC License


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