It’s kind of old news but today’s SEC suit against MayfieldGentry Realty Advisors is still pretty amusing. Basically MayfieldGentry was a registered investment advisor with $750mm of AUM at its peak, something like $140mm of which belonged to its biggest client, the city of Detroit’s Police and Fire Retirement System. You get the sense that MayfieldGentry wasn’t a very good investment advisor; in particular it got the PFRS account through a massive bribery campaign directed at Detroit officials some of whom are now in prison for those and other massive bribery campaigns. Lotta bribery. But anyway against that backdrop what MayfieldGentry is now accused of doesn’t seem that bad:
In early 2008, [CEO Chauncey C.] Mayfield, on behalf of MGRA, secretly stole approximately $3.1 million from the PFRS to purchase two shopping malls in California. … Over the following months and years, as each of the other MGRA principals learned of the theft, they conspired with Mayfield to keep the theft a secret from the PFRS.
Ha well no of course that sounds bad. I mean, stealing. But actually “stole” and “theft” are perhaps slightly strong words for what happened. I can’t tell exactly what’s going on, and I suspect neither could anyone at MayfieldGentry, but from the complaint it sounds like they genuinely intended to invest client money in those strip malls, but were so used to being corrupt and/or inept that they couldn’t get it together to do that the right way, and so ended up (1) taking PFRS money without permission and (2) owning the California strip malls themselves. And you should have seen the look on their face etc.: Read more »