About six months before it opened, the trendy downtown salon Detroit Blows got a $20,000 boost from Motor City Match, Mayor Mike Duggan’s grant program to grow local businesses.

Detroit Blows' financial support didn’t end with that grant award.

Alexis Wiley, Duggan's chief of staff, personally lent Detroit Blows $6,000 in the form of a convertible note, which is like a bond that can be converted into company equity, raising questions of a possible conflict of interest.

In a recent interview with the Free Press, Wiley said her investment in November 2017 is aboveboard because it was made after the blow-dry salon won its Motor City Match award in April 2017. The mayor’s office plays no role in selecting the grant winners, she added.

“I deeply believe in supporting black- and female-owned businesses in the city of Detroit, and that’s what I did,” Wiley said.

Stanford law professor Robert Gordon, who specializes in ethics, called Wiley’s investment “a little troubling” but said it did not seem to create a conflict of interest because the grant was awarded prior to her loan and because Wiley had no involvement in picking Detroit Blows to receive the $20,000.

But Wiley’s investment could create pressure to shore up the business with further public support, whether from the city or other government sources, Gordon said. “So I think a really conscientious ethics adviser should probably say, ‘You haven’t done anything wrong, but it would be prudent to unload your stake,' ” Gordon said in an email.

Wiley’s note carries an 8 percent interest rate but she has not collected any income, according to the Miller Canfield law firm, which represents Detroit Blows.

Miller Canfield attorney Brad Arbuckle wrote a letter to Wiley explaining her connection to the company on March 6, the day after the Free Press asked Wiley about her ties to the salon.

“Although interest accrues at the rate of 8.0 percent per annum, to date, and consistent with your direction, no payments have been made to you under the Note,” Arbuckle wrote to Wiley, adding that her stake in the company would be small.

"You should be aware that even if the Note were converted to equity in the Company, you would be entitled to receive a nonvoting equity interest representing less than one-half of one percent of all issued and outstanding equity interests in the company,”

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Wiley's city salary is $155,072, according to the city's online data portal.

Wiley said she learned of the investment opportunity from Detroit Blows co-founder Katy Cockrel, who is the daughter of former Detroit Councilwoman Sheila Cockrel.

Katy Cockrel and co-founder Nia Batts opened the beauty salon in fall 2017 at 1232 Library St., near the site of developer Dan Gilbert's Hudson's project.

“The idea is you can come in, you can get a blowout,” Katy Cockrel told the Free Press a month after the shop opened. “You can get your makeup and brows done. You can get an express mani and pedi, all using nontoxic products, and you can pick up a gift item on the way to a dinner party or wherever it is you are on to next.”

Prior to its Motor City Match award, Detroit Blows had secured $185,000 in private investment as part of a $200,000 convertible note offering that Miller Canfield structured, according to a copy of the company’s grant application obtained through the Freedom of Information Act. Wiley said she was not part of that round of funding.

In a follow-up statement after speaking with the Free Press, Wiley said, "I supported them in a very small way because I believe in what these amazing women are doing and the positive impact this business and others like it can have on Detroit."

Co-founders Katy Cockrel and Batts, in a joint statement, said they tapped their networks to raise money, noting that female-led businesses receive a disproportionately low amount of venture capital investment relative to their involvement in the economy.

"Alexis Wiley is one of more than a dozen supporters that believed in Detroit Blows and the mission it aims to fulfill — a mission rooted not only in our commitment to wellness, but to the idea of affording a diverse range of clients access to affordable, nontoxic beauty products and services," the statement read.

In a follow-up phone interview, Katy Cockrel called Wiley a good friend and said no other public officials are among the dozen supporters mentioned in her statement.

Duggan launched Motor City Match in 2015. The program is not run by the mayor's office.

The Economic Development Corporation of the City of Detroit administers Motor City Match along with the Detroit Economic Growth Corporation, a nonprofit that supports economic development. The city allocates federal HUD money annually to support the program. The cash grants come from philanthropic donations, according to city and DEGC officials.

Motor City Match includes rules to avoid conflicts of interest. Businesses are not eligible for the program if their owners work for the city, the DEGC or the Economic Development Corporation.

Duggan appointees are required to disclose any business investments that constitute a 5 percent or more interest in a company that is doing, or intends to do, business with the city. Wiley said her interest in Detroit Blows had not been previously disclosed to the city because it does not meet the threshold.

Duggan said in a statement that he applauded Wiley’s support of the company.

“When a business owned by two Detroit women set out to raise additional funding, Alexis Wiley joined more than a dozen others in helping, signing on as a supporter and committing $6,000,” Duggan said. “She never used her city position to assist them and acted at all times in full compliance with all city ethics rules.”

Joe Guillen has been covering city governance and development issues for the newspaper since 2013. Contact him at 313-222-6678 or jguillen@freepress.com.