Former Detroit Police Union Vice President Sentenced for Fraud

detroitCorruption ran rampant in Detroit during the tenure of Mayor Kwame Kilpatrick, now serving a 28-year sentence in federal prison. Many people as well as Kilpatrick have paid a high price. One of them was Paul Stewart. On September 29, Stewart, former vice president of the Detroit Police Officers Association and trustee of the police pension fund, was sentenced in U.S. District Court for the Eastern District of Michigan to 57 months in prison and three years of supervised release for conspiracy to commit honest services fraud through bribes and kickbacks. He also must pay restitution of a sum yet to be determined. Stewart had been convicted by a jury last December. The actions follow a joint probe by the FBI, the IRS, and the U.S. Labor Department’s Office of Labor-Management Standards and Office of Inspector General.

Union Corruption Update described the details of this case early this year. When Kwame Kilpatrick was mayor – he was elected in November 2001 and took office the following January – scandal usually was in session. And it eventually claimed him. Son of then-Congresswoman Carolyn Cheeks Kilpatrick, D-Mich., Mayor Kilpatrick resigned in September 2008, having pled guilty to state charges of perjury, obstruction of justice, and assault, the latter offense related to a civil case. In December 2010, by then out of office for more than two years, he was indicted on a wide range of federal corruption charges. Kilpatrick would be convicted by a jury in March 2013 on various charges. More than three dozen other individuals, including Paul Stewart, eventually were convicted on charges resulting from a larger federal investigation into corruption in Detroit government.

According to a 13-count superseding indictment handed down in March 2013, Stewart, a longtime member of the Detroit police force, vice president of the Detroit Police Officers Association and a trustee of the Detroit Police and Fire Retirement System, conspired with several persons during January 2006-April 2009 to defraud current and retired public employees of their right to receive honest services from the City. Stewart and another individual, former Detroit City Treasurer Jeffrey Beasley, who oversaw operations at both the Police & Fire Retirement System and the General Retirement System (and served as a trustee for both), received cash and noncash bribes from pension lawyer Ronald Zajac in return for favorable votes. Stewart’s cut of the action totaled about $48,000. Stewart and Beasley voted to approve, and persuaded fellow pension board members to approve, outsized pay increases for Zajac. Even more egregiously, they steered more than $200 million worth of pension funds into investments that wound up losing a combined $97 million. Beasley and Zajac, like Stewart, would be convicted on conspiracy charges. Beasley got an 11-year prison sentence on September 21; Zajac died this July of natural causes at age 71, only a few weeks before his scheduled sentencing of up to 20 years. Influence-peddling was a bad deal all the way around, for the guilty parties as well as for thousands of unsuspecting Detroit municipal employees.


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