|Mike Farr accused of pension fund fraud
U.S. suit claims ex-Lion helped bilk $3.1M from Detroit, Pontiac retirement systems
Paul Egan / The Detroit News
From The Detroit News: Mike Farr accused of pension fund fraud | detnews.com | The Detroit NewsMike Farr is part of a Detroit family as famous for its car dealerships as its football talent. On Thursday, he was accused in a government lawsuit alleging civil fraud against pension funds in Detroit and Pontiac.Farr, 42, a former Detroit Lions receiver and the son of Lions great and “Mel Farr Superstar” car dealer Mel Farr Sr., is accused of helping businessman Roy Dixon Jr. bilk the public funds of more than $3.11 million.Michael Farr of Atlanta is president and CEO of Georgia-based Second Chance Motors Inc. He played four NFL seasons, three of them with the Lions. His older brother, Mel Farr Jr., also played in the NFL.Michael Farr is accused of working with his friend Dixon, whose Onyx Capital Advisers LLC received investments of close to $20 million from two city of Detroit pension funds and $5 million from the city pension fund in Pontiac. About 80 percent of the investment money allegedly went to businesses Farr controlled.
“These public pension funds provided seed capital to the Onyx Fund, and Dixon betrayed their trust by stealing their money,” U.S. Securities and Exchange Commission regional director Merri Jo Gillette said in a news release.
Phone messages left for Farr and his Chicago attorney, Michael Monico, were not returned. Dixon and his Detroit attorney, Jeffrey Collins, also did not return calls.
The Onyx case is one piece in a series of controversies surrounding the city’s two big pension funds, which together hold assets of about $8 billion. Pension fund records have been subpoenaed by a federal grand jury probing Detroit corruption.
The recent trial of political consultant Sam Riddle heard about payments made to politically connected third parties who grease the investment process and trustees being wooed with free drinks and meals at informal board meetings at Greektown restaurants.
George Orzech, a Detroit firefighter and member of the board of the police and fire pension fund until last year, said he remembers the Onyx investment as one of several that concerned him.
Though the majority of the fund’s assets are invested soundly, the 5 percent set aside for “alternative investments” often goes to boondoggles touted by the politically connected, he said.
“Five percent of the assets cause 95 percent of the problems,” said Orzech, who described as “fantastic” the news of the SEC intervention.
In 2007, the Detroit General Retirement System and the Detroit Police and Fire Retirement System each agreed to invest $10 million with Onyx, while the city pension fund in Pontiac agreed to invest $5 million, records show. According to the complaint, the amount the three funds paid before investments halted in 2009 was $23.8 million.
SEC officials from Chicago were in Detroit on Thursday seeking an emergency hearing to freeze Onyx assets and “prevent the defendants from further misusing and dissipating investor funds.”
No hearing was scheduled by U.S. District Judge Denise Page Hood by late afternoon.
Dixon, 46, of Atlanta, owns Detroit-based Onyx Capital and has homes in Plymouth and Naples, Fla., the complaint alleges. Dixon also owns a Detroit insurance business, Onyx Financial Group LLC, and numerous rental properties in Detroit and Pontiac, the complaint says.
Documents filed in the case allege Dixon and Onyx made false and misleading statements to the pension funds and sent a forged letter purporting to show that Elliot Fullen, an executive with an Ohio-based chemical company, was a principal of Onyx. Fullen has denied he is a principal and his first name is spelled incorrectly in the allegedly forged document.
The complaint alleges Dixon and Onyx took more than $2.06 million in excessmanagement fees and Farr helped Dixon misappropriate almost $1.05 million through the Onyx Fund’s purported investments in companies Farr controlled.
Dixon used misappropriated money to pay personal and business expenses, including “payments for the construction of Dixon’s multimillion-dollar house in Atlanta, Ga., and mortgage payments on more than 40 rental properties Dixon owns in Detroit and Pontiac.”
Farr made payments from one of his companies that received investor money to three construction companies that did work on Dixon’s new Atlanta home, the complaint alleges.