Macomb County prosecutor, others charged with scheme to embezzle $600K
Michigan Attorney General Dana Nessel has filed charges against Macomb County Prosecutor Eric Smith and three others in relation to the office's usage of forfeiture funds, accusing one of the county's top elected officials of racketeering as part of a scheme to embezzle $600,000 in taxpayer funds.
Collectively, the four individuals stole about $600,000 from the county in "an elaborate scheme of public profiteering motivated by what appears to be unfettered self-interest," Nessel said in a video statement Tuesday.
Smith, 53, a Democrat who was first elected prosecutor in 2004, was charged Tuesday with 10 counts, including conspiracy to commit forgery, embezzlement, tampering with evidence and criminal enterprise, according to court records. He faces up to 20 years in prison if convicted of conducting a criminal enterprise, which would be one of the longest sentences ever given to a Metro Detroit public official.
Also charged were Benjamin Liston, Smith's former chief assistant, who faces four counts, including conducting a criminal enterprise and embezzlement; and Smith's chief of operations, Derek Miller, charged with conspiracy.
Businessman William Weber also was charged with crimes ranging from forgery to aiding and abetting.
"We have been working and cooperating with the Michigan Department of Attorney General since last year while it continued to investigate politically motivated allegations about how our client, Macomb County Prosecutor Eric Smith, managed Macomb County’s forfeiture fund," defense lawyer, Martin Crandall of the Clark Hill law firm, said in a statement. He is representing Smith alongside attorney John Dakmak.
"We are shocked and dismayed to learn only through the media of the filing of charges by the attorney general" Crandall added. "Regardless, we will vigorously defend Mr. Smith against these baseless allegations. We look forward to Mr. Smith’s day in open court, whenever that may be."
Nessel noted in her statement that removal of Smith hinges on action from Gov. Gretchen Whitmer or the Macomb County Board of Commissioners, whose chairman is Bob Smith, Eric Smith's brother. Nessel, Whitmer and Bob Smith all are Democrats.
“In order for citizens to maintain trust in the institutions of government, public officials must, at all times, conduct themselves in accordance with the laws of our state,” Nessel said. “When public officials fail to do so, the people must have confidence that they will be held to account, fairly, and without any special treatment based upon their status as a public official.”
Peter Henning, a Wayne State University law professor and former federal prosecutor, said the charges are a tremendous blow for Macomb County.
“This undermines people’s faith in government,” he said. “This is a complete betrayal of trust where you have the top law enforcement official in the county basically putting money into his own pocket. This is disastrous for the county.”
The charges Tuesday weren't a surprise to Macomb County Executive Mark Hackel, who forwarded the case to Nessel's office after an audit and subsequent internal investigation found "inappropriate" expenditures for "personal gain."
The allegations are a stumbling block to public trust, Hackel said, but he hoped the county's and attorney general's actions to crack down on the activity help to restore residents' faith in government.
He stopped short of calling on Smith to step down.
"There’s a court of law, but there’s also the court of public opinion," Hackel said. "That question of trust is still there. How much more damage will this bring to that office knowing that those charges are there?"
Nessel's investigation allegedly found Smith and the others charged used the forfeiture money for security for Smith's home; garden benches, flowers and make-up for staffers; retirement relocation expenses for Liston, checks to various Catholic churches in the "tens of thousands of dollars," iPads for kids who attended school with Smith's children, campaign expenditures; and "country club catering for parties."
The account functioned as a campaign "slush fund" utilized by Smith to build up goodwill in the communities in which he campaigned, Nessel said.
Weber, owner of Weber Security Group, produced false invoices for $28,000 as part of the scheme, Nessel said in a statement.
Forfeiture funds usually are used for department training, equipment or victim restitution and controlled by the county treasurer, Nessel said.
But Smith allegedly had four accounts called "bad check restitution," "OWI forfeiture," "Warren drug court," and "drug forfeiture" that he maintained on his own without county treasurer oversight.
“As attorney general, I take no responsibility more seriously than protecting the public trust,” Nessel said. “The reason is simple: Without public trust, government fails. Without public trust, justice stands no chance against reckless abuses of power.”
After an audit and internal investigation revealed inappropriate spending in 2018, Hackel and county Treasurer Lawrence Rocca pressed Smith for access to the forfeiture accounts until Smith finally closed the accounts and delivered four checks totaling $233,764 to Rocca, according to the charging document. Since then, the funds have been under the oversight of the county treasurer.
Michigan State Police raided Smith's office in April and his home in May as part of an investigation into his use of forfeiture funds.
On Monday, Smith said in a statement that he fully cooperated with police and will continue to cooperate with them. But he stood by earlier statements maintaining that the forfeiture funds were spent legally.
“During these extremely trying times of the COVID-19 crisis, the focus of our office continues to be the health and safety of our staff, partners in law enforcement and victims," Smith said. "We are continuing to ensure that the wheels of justice do not stop and those that commit crimes are held accountable.”
In early 2019, Jared Maynard, the former chairman of the Macomb County Republican Party, sued to obtain bank records for accounts set up by Smith that contained funds from forfeitures and bad checks.
Hackel also raised questions about the spending from those funds on donations to charities, churches, parties, trips and monthly security company bills ranging from $10,000 to $20,000.
Two of Smith's co-defendants have worked for him, while the other has done business with his office.
Miller, 36, of Warren is a former assistant prosecuting attorney who was elected to the Michigan House in 2014, then stepped down in 2016 to serve out a term as Macomb County treasurer following the death of predecessor Ted Wahby. Miller lost in a bid for an elected term when his temporary term expired and was hired back on as an assistant prosecutor.
Miller’s family is well-known in Macomb County: his grandfather, Art Miller, was Warren’s first mayor in 1957. His grandmother, Edna Miller, served as Macomb County clerk for 28 years and Miller’s father, Art Miller Jr., was in the Michigan Senate from 1977-2003.
Liston, 58, is a former assistant prosecutor who was a chief deputy assistant for Smith before retiring three years ago.
Weber, 38, of Macomb Township, is the owner-operator of the Weber Security Group in Mount Clemens, which received $162,000 in equipment sales and installation contracts with the prosecutor’s office and is believed to have set up home surveillance equipment at Smith’s home.
This past July, Weber was placed on one year of reporting probation after being charged with drunken driving, carrying a concealed weapon and a police badge in a September 2018 incident in Clinton Township. He pleaded guilty to a reduced charge.
Weber was arraigned Tuesday from the Michigan State Police North Metro Post via video in front of Judge Cynthia Arvant of Southfield’s 46th District Court. Weber was released on a $100,000 personal recognizance bond and ordered to have no contact with his co-defendants, surrender his passport to probation authorities within 48 hours and not travel outside the state.
A probable cause conference for Weber is scheduled for May 19 in Mount Clemens' 41-B District Court. Smith, Miller and Liston are scheduled to be arraigned by video from the same State Police North Metro Post at 10 a.m. Friday.
Smith is the latest Macomb County public official charged with corruption during a years-long crackdown by state and federal investigators. Since 2016, federal prosecutors have secured the convictions of 22 contractors and public officials, including former Clinton Township Trustee Dean Reynolds, trash mogul Chuck Rizzo and towing titan Gasper Fiore.
The federal corruption investigation is ongoing and focused on former Macomb County Public Works Commissioner Anthony Marrocco.
Before losing re-election in 2016, Marrocco repeatedly received $5,000 bribes from engineering firm owner Fazullah Khan, according to FBI files obtained by The Detroit News. Khan was sentenced to 11 years in federal prison in February. Marrocco has not been charged.
Marrocco’s aide, former Macomb Township Trustee Dino Bucci, is cooperating with the ongoing FBI investigation. Bucci was indicted on bribery, extortion, fraud, theft and money laundering charges in 2017.
Driven by greed: A database of corruption in Detroit
The Macomb investigations and convictions are part of a broader prosecution of corruption in Metro Detroit. In the last dozen years, more than 111 elected officials, bureaucrats, police officers and union leaders have been charged with corruption-related crimes.
Smith is the second Macomb County prosecutor to be charged with crimes in the recent past.
In April 2004, then-Macomb County Prosecutor Carl Marlinga was indicted on federal charges he traded legal favors for campaign contributions. Marlinga, currently a Macomb County Circuit judge, was acquitted in September 2006. Marlinga, who had served five terms as the county prosecutor when he was charged, did not run for re-election.
Smith was an assistant prosecutor under Marlinga for 11 years before winning election to the top job.
In another high-profile situation, Ingham County Prosecutor Stuart Dunnings III was charged in March 2016 with one count of pandering, a felony, and 14 misdemeanor offenses involving prostitutes and neglect of duty.
Dunnings went on medical leave and resigned in July 2016.
In August 2016, Dunnings pleaded guilty to one count of misconduct in office, a five-year felony, and engaging in the services of a prostitute, a misdemeanor. As part of a plea arrangement, other offenses were dismissed.
In November 2016, Dunnings was sentenced to three years of probation, with the first year served in jail. While he was serving his sentence, the Michigan Attorney Discipline Board formally disbarred him.
Dunnings was released from the Clinton County Jail in September 2017
eleblanc@detroitnews.com