We talk a lot about fiduciary responsibility, and sometimes that means paying attention to the basics: Don’t steal money from your clients.
It seems Detroit just can’t catch a break.
Detroit was once a world-class city, and maybe it can become so again. But industry has moved away, and so have many people — shrinking its tax base. The city has debts of $17 billion and may have to file for bankruptcy.
Former Mayor Kwame Kilpatrick has been convicted of charges including racketeering and bribery. The city is now being run by an emergency manager. One-third of city council seats are empty. And investigations into corrupt city government practices have turned up a problem for the Detroit Police and Fire Retirement System.
According to the SEC, Chauncey Mayfield, CEO of MayfieldGentry, allegedly stole $3.1 million from the Detroit pension fund. That money was used to purchase shopping centers in California — which then could not be sold in order to pay the money back without anyone noticing.
A rising market can cover a lot of sins, but, as Warren Buffett noted, when the tide rolls out, you see who is swimming naked.
Loretta Clodfelter is a contributor to Institutional Real Estate, Inc.
