Men charged with bribery conspiracy involving Detroit pension funds

(WXYZ) - Just a week after Detroit's former mayor was convicted on corruption charges – there are new indictments tonight.

Two men tied to the city's pension funds from the Kilpatrick administration are accused of bribery conspiracy.

The pension funds General Counsel and a former trustee are now accused of being part of the pay-to-play corruption that has put so many others behind bars.

These new bribery conspiracy charges involve everything from kickbacks like $5,000 casino chips to trips to the Bahamas.

Former police and fire pension fund lawyer Ronald Zajac and former pension trustee Paul Stewart are now charged in a 13-count grand jury indictment.  Federal prosecutors say the two men conspired with former city treasurer Jeffrey Beasley and others to defraud Detroit's retirees.

United States Attorney Barbara McQuade said the men were indicted for participating in a bribery and kickback conspiracy involving over $200 million in investments before the two City of Detroit pension funds.  "Public officials entrusted with billions of dollars in employees money cannot take bribes and kickbacks to influence their investment decisions," said McQuade.

The 7 Action News Investigators were there when the police and fire pension board fired Zajac last November.

They wanted him gone when it was revealed the long-time lawyer's salary was increased to $400,000 a year after hosting birthday parties at the Atheneum hotel for trustees who collected thousands of dollars from people trying to do business with the retirement system.

According to today's indictment – Zajac sought to curry favor with Beasley and former Mayor Kwame Kilpatrick by raising more than $70,000 for the Kilpatrick Civic Fund.  The feds also say he forced people having business before the retirement funds to spend thousands of dollars to entertain trustees.. including making one person pay more than $10,000 for limousines in New York City.

The 7 Action News Investigators were also the first to expose Paul Stewart's connection to the FBI investigation… when he got a free car for stepping down from the police union.  At the time Stewart denied that he quit because of the probe.

‘I have a right to retire," he told 7 Action Investigator Scott Lewis in 2011.

These are few things federal prosecutors say Stewart accepted from people who wanted investments from the police and fire pension:

-a $5,000 casino chip

-a Christmas basket that included an envelope filled with thousands of dollars in cash

-excursions to the Bahamas and Naples, FL

-and a $5,000 cash "birthday present" at the Atheneum Hotel.

"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," said FBI Special Agent in Charge Robert Foley.

Detroit Mayor Dave Bing has released the following statement about the indictment:

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 and Stewart face up to 20 years in prison and a fine of up to $250,000 if found guilty. 

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