Macomb County Prosecutor Eric Smith countered criminal allegations of illicit spending of public funds by accusing state officials of a politically-motivated investigation Tuesday.

One of Smith's lawyer's, John Dakmak, said Smith's attorneys were "shocked and dismayed" Tuesday to learn about the charges through media reports.

"We have been working and cooperating with the Michigan Department of Attorney General since last year while it continued to investigate politically motivated allegations about how our client ... managed Macomb County’s forfeiture fund," Dakmak says in the statement. "We will vigorously defend Mr. Smith against these baseless allegations. We look forward to Mr. Smith’s day in open court, whenever that may be."

Smith, a Macomb Township Democrat, did not support Michigan Attorney General Dana Nessel, a fellow Democrat, when she ran and won in 2018.

Smith is charged with 10 felonies while three co-defendants each face multiple felonies in connection with the expenditure of about $600,000 from a fund segregated from the county budget some have called a "slush fund."

Smith and his co-defendants "utilized (the funds) for Prosecutor Smith's personal benefit and the benefit of others chosen by him, including being used to procure gifts. These gifts garnered good will, a valued commodity for an elected official," says a felony complaint signed by Attorney General Dana Nessel.

Smith, 53, faces 10 charges including:

• Five counts of embezzlement by a public official – a felony punishable by up to 10 years in prison – for acts that allegedly occurred in 2014, 2015, 2016, 2017 and 2018.

• One count of conducting a criminal enterprise – a 20-year felony.

• Single counts of: official misconduct in office, a 5-year felony; tampering with evidence in a civil proceeding – a 4-year felony; accessory after the fact to embezzlement by a public official – a 5-year offense; and one count of conspiracy to commit forgery, a 14-year charge.

The three others charged Tuesday include:

• Benjamin Liston, who was Smith's chief of staff before retiring two years ago. Liston faces four charges: two counts of embezzlement by a public official and one count each of conducting a criminal enterprise and misconduct in office.

• Derek Miller, the current chief of operations, faces two charges: conspiracy to commit a legal act in an illegal manner – a 5-year felony – and official misconduct in office.

• William Weber, owner of Weber Security Group in Mount Clemens, faces four counts: forgery, a 14-year felony; larceny by conversion in an amount of $20,000 or more, 10-year felony; aiding and abetting Smith’s alleged embezzlement by a public official, a 10-year felony; and receiving and concealing stolen property – a 10-year felony.

Macomb County Executive Mark Hackel, who asked Michigan State Police to invesitgate, said he was not surprised by the charges but disappointed in the alleged betrayal of the public trust by Smith, Miller and Liston.

“The (alleged) financial loss is secondary to the loss of the public trust,” Hackel said.

"This is a sad day for Macomb County," Chief Judge James Biernat Jr. said.

Former assistant Macomb prosecutor Stephen Steinhardt said the charges shouldn't reflect the efforts of the nearly 90 other employees in the office.

"The several dozen hard working men and women in that office are good people of high integrity and have nothing to do with these allegations," said Steinhardt, who worked there for 10 years ending in 2017. "They will continue to do their jobs and seek justice."

Weber was arraigned Tuesday by Judge Cynthia Arvant, who typically presides at 46th District Court in Southfield, in 41B District Court in Clinton Township after the three sitting judges recused themselves. Smith, Miller and Liston are scheduled to be arraigned Friday.

Weber appeared via video from the Michigan State Police Metro North Post in Oak Park. He was released on a $100,000 personal bond and faces a May 19 probable cause conference after waiving his right to a preliminary examination within 14 days. His attorney, Vincent Manzella, said it's premature to comment specifically on the charges, adding he will be receiving details of the accusations in the coming weeks.

"We still have to digest everything and see how it all shakes out," Manzella said. "At this time, he (Weber) is innocent, as are the other three defendants."

But like many people in Macomb County, he was surprised by the serious nature of the charges against the four defendants.

"It's surreal when you see the elected prosecutor in your county and two top people from his office being charged," he said.

Weber, meanwhile, got in trouble with the law in September 2018 when he was pulled over while driving on Cass Avenue near Sheridan Street, a block away from his company offices on North Rose. He was charged with being "superdrunk," having a blood-alcohol content above .17 percent, carrying a concealed weapon and unauthorized possession of a law enforcement badge. He pleaded to a reduced drunken driving charge as well as the other two offenses, all misdemeanors, and was sentenced last July to one-year probation.

The charges were filed Tuesday almost a year after the Michigan State Police, the Michigan Attorney General's Public Integrity Unit and other agencies began investigating expenditures from a forfeiture fund that had $1.8 million collected in it over the years.

“In order for citizens to maintain trust in the institutions of government, public officials must, at all times, conduct themselves in accordance with the laws of our state,” Nessel said. “When public officials fail to do so, the people must have confidence that they will be held to account, fairly, and without any special treatment based upon their status as a public official.”

“As Attorney General, I take no responsibility more seriously than protecting the public trust. ... Without public trust, government fails. Without public trust, justice stands no chance against reckless abuses of power.”

Asset forfeiture expenditures are supposed to be used for things like restitution to victims of check forgeries, prosecutor training, equipment like cellphones or fax machines to support prosecution efforts, and other programs for victims. Investigators allege Smith and other defendants used the money to buy flowers and make-up for select secretaries, a security system for the prosecutor's residence, garden benches for staffers’ homes, country club catering for parties, campaign expenditures and more.

Investigators allege the total amount of money embezzled since 2012 is approximately $600,000. They allege Weber provided false invoices totaling nearly $28,000 as part of the operation.

Most of the fund’s revenues came from repeat drunk drivers to retrieve impounded vehicles. Money also comes from drug forfeitures, bad-check restitution and the Warren drug court.

Over the years, Smith properly funneled half of the money back to local police departments. The remaining funds are supposed to be split between law enforcement purposes and to the benefit of crime victims. It was the money spent for law-enforcement purposes that drew suspicion.

The existence of the fund has been known for many years after Smith took office following his 2004 election victory. However, it was not part of the county budget; Smith filed an annual one-page spending summary to the state.

County auditor Plante and Moran in 2016 and 2017 flagged the fund because of its absence from county books.

Prompted by Hackel, Treasurer Larry Rocca went public in August 2018 to insist the funds go through his office and attempted to take control of the four bank accounts containing a total of about $234,000. But he was thwarted by Smith, who changed account-identification numbers.

Smith claimed former Macomb County treasurer, the late Ted Wahby, knew about the accounts and accused Rocca of “grandstanding.”

Hackel said Tuesday he attempted to resolve the matter with co-defendant Miller when Miller was treasurer for less than a year in 2016. He was appointed to fill a term after Wahby died in December 2015. A Democrat, Miller lost to Republican Rocca in November 2016. But Miller rebuffed Hackel's efforts, the executive said.

Eventually, in November 2018, Smith turned over the funds, although he never turned over the bank numbers which would have revealed activity in the accounts. The fund is now a special-revenue fund in the county budget.

For the future, Hackel stopped short of calling for Smith’s resignation but is concerned about operation of the office with both Smith and Miller charged.

“Who’s running the office? It’s a wayward situation over there,” the county executive said.

County Commissioner Robert Leonetti, D-Harrison Township, agreed with Hackel, saying Tuesday he was taken aback by the severity of charges, noting the criminal enterprise is punishable by up to 20 years in prison.

"You have the No. 1 and No. 2 person in that office charged with running a criminal enterprise," Leonetti said. "They are innocent until proven guilty, but you can't have that kind of breach of faith in the government, especially the prosecutor's office."

Based on Dakmak's statement, it appears Smith will not resign. He is up for election this year, and the filing deadline is April 21.

"As he has for over 15 years, Mr. Smith will continue to run the Macomb County Prosecutor’s Office efficiently and effectively with the needs of victims, law enforcement partners and the community as its top priority," Dakmak wrote.

The matter is expected to come up at Thursday's county Board of Commissioners meeting, although it was not on the agenda as of Tuesday afternoon.

Board Chairman Bob Smith is Smith's brother. Bob Smith said Tuesday in a written statement he will not comment on details of the case and will not partake in board matters that involve his brother's situation.

"I hold myself to an even higher standard of accountability than the public, and will continue to recuse myself from any actions related to the case that may come before the board," Bob Smith said. "We are fortunate to live in a country where an accused person has the right of being innocent until proven guilty. I trust that in this case and in all cases, our judicial system will render a fair and truthful outcome."

The county board commissioned a forensic audit of the forfeiture fund that MSP used as part of its investigation.

Leonetti expects the board to look into its options.

Smith can be removed by the governor.

State Police raided the Prosecutor’s Office in the Macomb County Administration Building in Mount Clemens in April 2019, and executed a search warrant at Smith's home in May, where police removed a security system, including several outdoor cameras.

Michigan State Police investigators handle boxes outside the Macomb County Administration Building in April 2019 after searching county Prosecutor Eric Smith's offices in the Mount Clemens building.MACOMB DAILY FILE PHOTO ▲

The following are a few of the expenses that have been questioned:

About $160,000 to Weber Security, which installed equipment at the Prosecutor's Office in the County Administration Building as well as Smith's home

$600 for a foursome at a Care House golf outing in August 2017 that included Eric Smith and his brother, Bob Smith, and two others

$5,000 to a parent-support group of a Shelby Township elementary school that Smith’s children attended

Two $1,000 payments in 2014 and 2018 to the yearbook at Chippewa Valley High School in Clinton Township – from which Smith graduated -- for an advertisements congratulating graduating seniors

Thousands of dollars in donations to more than a dozen churches, including an inordinate amount to ones in Clinton Township

$22,090 paid in May 2017 to Greco By Design in Clinton Township that the check memo says was for "office furniture." Greco By Design also was paid $5,165 by the county board for decorative items -- such as vases, wall pictures and a table -- for board offices, according to county records obtained by The Macomb Daily. That bill included $1,100 for "professional services," records show

About $20,000 in four payments to Spyder Byte Media

$2,000 to Care House for "golf sponsor -- Oasis" in July 2017

Tens of thousands of dollars of expenditures for items such as hotel and flights for conferences and office supplies were made primarily on two credit cards.

Macomb County Prosecutor Eric SmithMACOMB DAILY FILE PHOTO ▲

Smith has been the elected county prosecutor for 16 years. He won the first of his four terms in 2004. Prior to running for the top post, he was an assistant prosecutor for several years, spending much time in the sex crimes unit.

He earns an annual salary of $157,715.

Miller, 36, of Warren, worked as a Macomb assistant prosecutor from 2010 until 2014, when he was elected to the Michigan House of Representatives. He is the son of former long-time Warren state Sen. Art Miller Jr.

Miller's salary ranges between about $95,000 and $120,000.

Liston, 58, of Warren, retired from the Prosecutor's Office in February 2018 after a 25-year career there, including the last 13 as chief assistant attorney. He is married to Judge Suzanne Faunce of the 37th District Court in Warren.

In this February 2018 file photo, Ben Liston, left, and Macomb County Prosecutor Eric Smith talk on Liston's last day before his retirement.JAMESON COOK--THE MACOMB DAILY Digital First Media ▲

Michigan State Police remove security cameras from Macomb County Prosecutor Eric Smith's Macomb Township home in May 2019 during a search.MACOMB DAILY PHOTO ▲

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