$3 Million Jacked From Detroit Pension Funds (Fire, Police and General Retirement)

Updates on more financial shadiness in the D. Three Detroit Pension Funds (Fire, Police and General Retirement funds according to Detroit News) had $3 million jacked by private equity firm Onyx Capital Advisors with help from friend Mike Farr.  Below is part of the SEC press release and a few local articles.

Mike Farr, firm accused of bilking local pension funds - Detroit News
Ex-Lion, money manager stole $3M from Detroit, Pontiac pensions, U.S. says - Detroit Free Press
Asset freeze ordered in pension fund case - Detroit News
SEC: Former Lion Mike Farr, partner stole more than $3M from Detroit-area pension funds - MLive

SEC Charges Private Equity Firm and Money Manager for Defrauding Detroit-Area Public Pension Funds

Washington, D.C., April 22, 2010 — The Securities and Exchange Commission today charged a private equity firm, a money manager and his friend with participating in a fraudulent scheme through which they stole more than $3 million invested by three Detroit-area public pension funds.

The SEC alleges that Detroit-based Onyx Capital Advisors LLC and its founder Roy Dixon, Jr., raised $23.8 million from the three pension funds for a start-up private equity fund created to invest in small and medium-sized private companies. Often to cover overdrafts in his bank accounts, Dixon illegally withdrew money invested by the pension funds from the bank accounts of the private equity fund. Assisting in the scheme was Dixon’s friend Michael A. Farr, who controls three companies in which the Onyx fund invested millions of dollars. Farr diverted money invested in these entities to another company he owned, withdrew the money from that bank account, and gave the cash to Dixon. Farr also kept some money for himself, and used investor funds to make payments to contractors building a multi-million dollar house for Dixon, who lives primarily in Atlanta.

The SEC’s complaint, filed in federal district court in Detroit, also alleges that Dixon and Onyx Capital made a number of false and misleading statements to defraud the three pension funds about the private equity fund and the investments they were making.

“These public pension funds provided seed capital to the Onyx fund, and Dixon betrayed their trust by stealing their money,” said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. “Farr assisted Dixon by making large bank withdrawals of money ostensibly invested in Farr’s companies, and together they treated the pension funds’ investments as their own pot of cash.”

According to the SEC’s complaint, shortly after the three pension funds made their first contributions to the Onyx fund in early 2007, Dixon and Onyx Capital began illegally siphoning money. Dixon and Onyx Capital took more than $2.06 million under the guise of management fees, and Farr assisted in diverting approximately $1.05 million through the Onyx fund’s purported investments in companies Farr controlled. Dixon used the money to pay personal and business expenses, including construction of his house in Atlanta and mortgage payments on more than 40 rental properties Dixon owns in Detroit and Pontiac, Mich. [Find the full release at SEC.gov]
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