Ex-cop gets almost 5 years in prison in pension scandal

Detroit — A former Detroit pension fund trustee was sentenced to almost five years in federal prison Tuesday for his role in a bribery and kickback scandal that undermined Detroit’s retirement system.

The 57-month sentence — and a controversial bid for less time behind bars — came 10 months after the former trustee, Paul Stewart, was convicted in a public corruption case alongside former Detroit Treasurer Jeffrey Beasley and ex-pension fund lawyer Ronald Zajac.

They were accused of pocketing cash, free trips and more in exchange for approving $200 million in corrupt pension fund investments. Two Detroit pension funds lost more than $95 million in the corrupt deals, weakening a pension system that faced takeover during the city's landmark bankruptcy case.

“This was a serious, serious breach of trust,” U.S. District Judge Nancy Edmunds told Stewart, who closed his eyes and held his hands in a prayer pose as she issued the sentence. “To me, this is a very sad case.”

Stewart apologized to city retirees, his family and Detroit residents.

“I accept full responsibility for my actions,” he told the judge.

Stewart also will serve three years’ supervised release, forfeit $33,000 and pay an as-yet undetermined amount of restitution.

Prosecutors wanted Stewart to spend at least eight years in prison.

“As a Detroit police officer, Stewart swore an oath to enforce and uphold the law,” U.S. Attorney Barbara McQuade said in a statement. “By demanding and accepting bribes in exchange for his vote as a pension trustee, Stewart broke his oath, broke the law and betrayed his fellow police officers. To make matters worse, he attempted to obstruct the investigation by lying to the grand jury.”

The sentence came after a tense speech by defense lawyer Elliott Hall, who argued Stewart, a black man, was treated differently than a white police officer who allegedly received identical bribes and kickbacks.

The speech marked a split between Stewart and Marty Bandemer, the white retired cop who also sat on the Detroit Police & Fire pension board.

The two were inseparable. Bandemer, of Macomb Township, was president of the Detroit Police Officers Association. Stewart was vice president. They were tight as brothers and drinking buddies who often could be found at Sinbad’s in Detroit and Mosaic in Greektown.

Bandemer didn’t lie to a federal grand jury about cash he received from businessmen seeking investment money from the pension funds, and was never charged with a crime. Stewart lied, as reported by The Detroit News last year, and stood trial in the high-profile corruption case.

Stewart’s lawyer on Tuesday called race “the elephant in the room.”

“Mr. Stewart is black and his partner is white,” Hall told the judge. “How did Mr. Bandemer not get charged and the brother got charged? That’s what they’re saying on the streets.”

Stewart deserved less time in prison, Hall argued, because of historical disparate treatment faced by blacks in the criminal-justice system. Stewart also deserved less time because, as a retired cop, he could be mistreated in prison, the lawyer argued.

Prosecutors, and the judge, rejected the racial argument.

“The most important distinction ... is Stewart lied. Mr Bandemer did not lie or perjure himself,” Assistant U.S. Attorney Stephanie Dawkins Davis said. “Suggesting race played any role ... is scurrilous.”

Bandemer’s lawyer Steve Fishman said race was not a factor.

“As someone who certainly recognizes racism when I see it, I can assure you race had nothing to do with the disposition of this case,” Fishman told The News on Tuesday. “It was a decision made by the government for reasons that had to do with the evidence of the case and nothing more.”

Stewart remains free on bond and is expected to report to prison after Jan. 1.

Stewart, 57, was vice president of the Detroit Police Officer's Association and a trustee on the city's Police & Fire Pension fund from 2005-11.

During that time, businessmen pitching investments to the pension funds paid bribes and kickbacks for his vote totaling $63,750, including cash hidden in a Christmas basket, a $5,000 casino chip, trips to Florida for Stewart and a mistress, limousine rides, drinks, meals and entertainment, prosecutors said.

In return, the bribe payers received $5.2 million from money-losing investments approved by Stewart that cost cops, firefighters and beneficiaries more than $47 million, prosecutors said.

Stewart was found guilty of pocketing bribes and kickbacks following a trial in December. Along with Beasley and the late pension fund lawyer Ronald Zajac, Stewart was accused of weakening a retirement system that faced takeover during the city's bankruptcy case.

During the trial, Stewart admitted accepting some cash, trips and other perks but said the gifts came from friends and did not influence his investment decisions.

As union vice president, Stewart pocketed $8,000 in union campaign donations, charged gas fill-ups on a union credit card, and spent more than $10,000 in union funds at Sindbad's Restaurant and Marina on the city's east side, according to the filing.

When he wasn't making the union pay for his meals, Stewart drank and ate for free, thanks to pension fund businessmen, namely Greektown mogul and restauranteur Jim Papas, the prosecutor wrote.

Stewart also received a $5,000 casino chip from Papas, who had a financial stake in several transactions involving the pension boards, the prosecutor said.

One of those pension fund deals backed by Stewart paid Papas a $600,000 fee.

The sentencing comes one week after Beasley was sentenced to 11 years in prison. Zajac, died in July while awaiting sentencing.

Several others who struck plea deals are awaiting sentencing in the case.

rsnell@detroitnews.com

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