An Atlanta businessman pleaded guilty Tuesday in Detroit to taking part in a bribe and kickback scheme that looted that city’s beleaguered pensions.
Roy Dixon Jr., who used some of the stolen money to help build a sprawling, gated $8.5 million mansion in northwest Atlanta, entered the plea on what was supposed to be the first day of trial in federal court for he and three other defendants.
U.S. District Judge Nancy Edmonds delayed the trial after announcing Dixon’s plea just minutes before opening statements were supposed to begin.
“The entire shape of the case has been reconfigured at this point,” Edmonds said.
Dixon, 51, pleaded guilty to the top count of a 13-count indictment _conspiracy to commit honest services, mail and wire fraud. The charge carries a maxium sentence of 20 years in prison and a $250,000 fine, but the government has agreed to cap Dixon’s sentence at eight years.
In return, Dixon has agreed to testify against the remaining defendants, including Detroit’s former city treasurer, Jeffrey Beasley, in a high-profile corruption case that prosecutors claim cost two Detroit pensions more than $80 million and helped push the city into bankruptcy.
“He apologizes for his actions, certainly,” Dixon’s attorney, Edward Wishnow, told reporters when asked if his client had a message for retirees whose pensions have been affected.
Dixon was charged with defrauding and embezzling more than $3 million from the Detroit pensions as well as one in Pontiac, Mich. He also was charged with conspiring with Beasley to provide the ex-city treasurer and others a series of bribes as an entree into doing business with the pensions.
The government alleged that Dixon arranged a free vacation for Beasley and his family in the Turks and Caicos Islands and also gave the influential city official cash.
Beasley and Detroit’s former mayor, Kwame Kirkpatrick, were fraternity brothers at Florida A&M University. The ex-mayor is serving a 28-year sentence in federal prison for racketeering and corruption.
According to Dixon’s indictment, the Detroit and Pontiac pension funds agreed to invest a total of $25 million in his private equity firm, Onyx Capital Advisors. They ultimately suffered a loss of $23.8 million.
An investigation by the U.S. Securities and Exchange Commission found that nearly $16 million of the money invested by the three pension funds went to a Georgia used car business even though Dixon had pitched his firm as focusing on Midwest manufacturing.
The used car company, Second Chance Motors, was operated by another Atlanta businessman, Michael Farr. Second Chance Motors once had dealerships in Georgia and three other states but has since gone out of business.
According to the SEC, Dixon and Farr used the money for their own benefit, including more than $500,000 paid to contractors working on Dixon’s home. The 12,000-square-foot mansion, which features seven bedrooms and 11 baths, went into foreclosure last year after Dixon defaulted on a $4.8 million loan.
Dixon has been ordered to pay a penalty of $3.1 million and an equal amount to victims to resolve the SEC’s civil suit resulting from the inquiry.
Farr, a former NFL receiver with the Lions and Patriots, was not named in the criminal case. He was sued by the SEC and, even though he cooperated with the agency, he has been ordered to pay a $1 million penalty and $2.3 million to repay victims.
Judgments totalling $119 million also have been entered against Onyx and Second Chance Motors as a result of a civil suit filed against them by the pension funds. The judgment against Onyx, $71.1 million, represents three times the amount lost by the funds.
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