Since 2011, the Detroit Police and Fire Retirement System has appointed four receivers to collect on a $10-million unpaid loan to repair and sell homes to low-income buyers. After discovering an elaborate Ponzi scheme and filing multiple lawsuits against the three debtors, one partner committed suicide while the other two fled and are thought to be in Panama.
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McWhorter later wrote a book for African-American children who wanted to start their own businesses, and he founded and published a technology magazine.
At age 31, he was honored as a rising star by the African-American Hall of Fame in Cleveland, where he shared the stage with Motown founder Barry Gordy, magazine publisher Bob Johnson, and Oprah Winfrey.
He was recognized for a scholarship program he founded for Detroit schoolchildren, “Show Up to Blow Up,” which offered $1,000 to students with perfect attendance records from the ninth through the 12th grades.
Needless to say, he received an attentive hearing from the police and fire trustees. They initially declined to invest in his company, but later on agreed to a $10 million loan at 18 percent interest.
That change of heart was explained years later when former Detroit Mayor Kwame Kilpatrick’s corruption scandal erupted. Details emerged showing that the $10 million loan was part of more than $95 million in shady deals and bribes involving money from the police and fire retirement system, as well as the city’s general retirement system, that wound up in the pockets of Kilpatrick and his inner circle.
Two police and fire pension officials convicted in that case, former Detroit Treasurer Jeffery Beasley and Trustee Paul Stewart, voted to give the $10 million to McWhorter. Since that time, Babiarz says the pension board has established a policy against individual real estate transactions going forward. Today, financial advisers favor only investments in professionally managed Real Estate Investment Trusts, or REITs, where risks are greatly reduced.