DETROIT (WWJ) – Two city of Detroit officials have been indicted on charges of bribery and taking kickbacks involving $200 million and investments in the city’s pension funds.
Ronald Zajac, General Counsel of Detroit’s two pension funds, and Paul Stewart, a former trustee to the city’s Police and Fire Retirement System, were both indicted on 13 counts of alleged corruption.
Federal prosecutors say that, between January 2006 and April of 2009, Zajac and Stewart conspired with other individuals to defraud current and retired city employees.
The indictment alleges Stewart literally got away with baskets of cash, and that Zajac forced people who had business with the pension funds to pay thousands of dollars to benefit pension trustees.
“Allegedly, they took money, trips, improperly spent money — all kinds of corruption, pay-to-play … and this is just the next phase of public corruption that the government is going after,” said WWJ Legal Analyst Charlie Langton.
Prosecutors say Stewart received a $5,000 casino chip, a Christmas basket stuffed with money, $2,500 during a trip to New York City, $2,500 during a trip to Florida, and free vacations with his mistress.
Stewart also allegedly pocketed a $5,000 “birthday present” during a hotel party, according to the indictment.
Said FBI Special Agent in Charge Robert Foley, “Those who are fortunate enough to serve in positions of public trust are expected to act with honesty and integrity at all times. The FBI is committed to holding these individuals accountable for abuses including acts of bribery, kickbacks and other serious crimes.”
Langton said this latest case does have ties to that of imprisoned former mayor Kwame Kilpatrick, who awaits sentencing on a racketeering conviction.
“We already saw it with Jeff Beasley, the treasurer of Detroit and a friend of Kwame Kilpatrick, whose responsibility is to oversee the pensions. And now we’re seeing it with these two other people — including the attorney that was to provide legal counsel for loans, et cetera, for the pension board,” Langton said.
Mayor Dave Bing issued the following statement on this matter on Wednesday:
“Since taking office in 2009, restoring trust and integrity to city government has been a top priority and of utmost importance to me personally. Detroiters deserve to be represented by those who adhere to the highest ethical standards, and when the public trust is betrayed, justice must prevail.”
Zajac’s attorney says he will fight the charges. There was no immediate response from Stewart.