Former Detroit Pension Fund Trustee Charged for Kickbacks

March 21, 2013 (PLANSPONSOR.com) – Two individuals connected with Detroit pension funds have been charged with participating in a bribery and kickback conspiracy.

The office of United States Attorney Barbara L. McQuade announced Ronald Zajac, general counsel of Detroit’s two pension funds, and Paul Stewart, former trustee of Detroit’s police and fire retirement system are charged with taking part in bribery and kickbacks totaling more than $200 million. Zajac and Stewart were added as defendants in a superseding indictment that had already charged former city Treasurer Jeffrey Beasley and investment sponsor Roy Dixon with the bribery and kickback conspiracy. 

According to the 13-count indictment, between January 2006 and April 2009, Zajac and Stewart conspired with others to defraud current and retired Detroit city employees. Stewart is said to have accepted thousands of dollars in cash, trips, entertainment and other items of value from those seeking investments from the police and fire retirement system. Zajac is said to have solicited and collected cash from those having business before the boards of trustees of the city pension funds. 

Also during the conspiracy, Zajac sought to curry favor with Beasley and former Mayor Kilpatrick by raising more than $70,000 for the Kilpatrick Civic Fund. Zajac directed and forced people having business before the pension funds to spend thousands of dollars to entertain trustees of both pension funds. Zajac forced one trustee to pay more than $10,000 for limousines for trustees during a trip to New York City.  

Soon after giving Beasley, Stewart, and a third trustee thousands of dollars in cash at their “birthday parties,” the trustees voted to give Zajac a substantial raise as General Counsel of the two pension funds. As a result of the raise, Zajac was receiving over $400,000 in compensation per year from the pension funds.   

Zajac served as the general counsel of Detroit’s two pension funds, the General Retirement System and the Police and Fire Retirement System, from 1982 through 2012. In November 2012, the Board of Trustees of the Police and Fire Retirement System terminated Zajac as general counsel. He still serves as the General Counsel of the General Retirement System.  

Stewart was a City of Detroit police officer for more than 30 years and served as a trustee of the Police and Fire Retirement System from 2004 to 2011. Stewart also served as the vice president of the Detroit Police Officers Association, the union that represents most of Detroit’s police force.  

If convicted, both Zajac and Stewart could face up to 20 years in prison and fines of up to $250,000.

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