The SEC charged private equity firm Onyx Capital Advisors and founder Roy Dixon Jr. with misappropriating more than $3 million combined invested by three Detroit-area public pension funds.
In a civil lawsuit filed Thursday in U.S. District Court in Detroit, the SEC is alleging that the three public funds — the $2.4 billion Detroit General Retirement System, the $3.4 billion Detroit Police and Fire Retirement System and the $335 million Pontiac (Mich.) General Employees' Retirement System — invested a total of $23.8 million in the private equity fund managed by Mr. Dixon between June 2007 and June 2009.
According to the SEC's court complaint, which also alleged fraud, Mr. Dixon misappropriated about $3.1 million from the fund, in which the three Detroit funds were the limited partners, to pay for personal and business expenses. “These expenses included 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, Mich.,” the SEC suit said.
The SEC is seeking return of the money and civil fines, along with a permanent injunction barring Mr. Dixon and a friend of Mr. Dixon's, Michael A. Farr, allegedly involved in the misappropriation scheme, from continuing the activity.
In an interview, Anne C. McKinley, assistant director of the SEC's Chicago regional office, said the agency has also asked the court to freeze the assets of Mr. Dixon and his private equity fund.
Mr. Dixon's attorney — Jeffrey Collins, with the law firm Collins & Collins — did not return calls for comment by press time.
Also not returning calls by press time were Ellen Zimmermann, retirement system administrator of the Pontiac fund, and Walter Stampor, executive director of Detroit Retirement Systems, which oversees the general retirement fund and the police and fire fund.
