Former Riverfront Conservancy CFO's Rivertown property could face foreclosure

Invest Detroit may foreclose upon an east Detroit riverfront building owned by the Detroit Riverfront Conservancy’s disgraced former CFO.

In a statement Tuesday, David Blaszkiewicz, president and CEO of Invest Detroit and a Riverfront Conservancy board member, said foreclosure “and additional remedies” are under consideration for William Smith’s 1977 E. Woodbridge St. building, which was to be converted into a cigar bar and lounge called Discretion using Invest Detroit funds.

Smith was charged in early June with embezzling at least $40 million from the Detroit Riverfront Conservancy over a dozen years, allegedly using some $14.9 million in conservancy funds to pay personal American Express credit card bills and transferring another $24.4 million to a company he owned, The Joseph Group & Associates LLC. He also allegedly took out a $5 million Citizens Bank loan on behalf of the conservancy but not authorized by the nonprofit. The bank and wire fraud charge is a 20-year felony.

The Detroit News first reported the possible foreclosure. 

 

Smith, who was also a member of the Invest Detroit Advisory Committee, received a pair of Invest Detroit loans for his Biltmore Development Group LLC that was to redevelop the property. The first acquisition and predevelopment loan was for $600,000 and was disbursed, Blaszkiewicz said in a statement, while a $2.4 million construction loan was not.

Blaszkiewicz said “there were no issues identified” during what he called an “extensive level of review” leading up to issuing Biltmore Development Group the loans. He also said it was determined there was no conflict of interest, in spite of Smith’s roles with both the conservancy as well as the Invest Detroit Advisory Committee.

“Invest Detroit has a rigorous, multi-tiered approval process for all loans, including several layers of staff approvals, full underwriting, internal financial reviews, third-party criminal background checks, conflict of interest checks, and review from an independent committee of business and finance advisers,” Blaszkiewicz said. 

Biltmore Development Group was awarded the Woodbridge site following a March 2019 Economic Development Corp. request for proposals to develop the small property west of St. Aubin Street into what the RFP described as “a destination retail or commercial location.”

In June, it was revealed in federal court filings that Smith had been attempting to sell off assets purchased during his alleged embezzlement, ranging from a home in Georgia, a condo in Mexico and a yacht. He also accumulated a small real estate portfolio in Detroit including single-family homes, land and commercial buildings.

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