The Securities and Exchange Commission has charged a now-defunct, Detroit-based investment advisory firm and its former top officials for stealing almost $3.1 million from a pension fund for the city's police officers and firefighters.

Chauncey Mayfield, who at 57 was founder, president, and chief executive officer of MayfieldGentry Realty Advisors, took the money from the Detroit's Police and Fire Retirement System of the City of Detroit in 2008 without obtaining permission and used it to purchase two strip malls in California, the SEC said.

Mayfield is already awaiting sentencing stemming from his guilty plea in a criminal case over his participation in a pay-to-play scheme in which his firm lavished gifts on former Detroit mayor Kwame Kilpatrick and former city treasurer Jeffrey Beasley in return for pension fund investment business.

In this latest case, the SEC also charged four other top officials at the firm for helping Mayfield try to cover up the theft. Chief financial officer Blair Ackman, 42, chief operating officer Marsha Bass, 59, chief investment officer W. Emery Matthew, 40, and chief compliance officer and general counsel Alicia Diaz, 50,  found about Mayfield's actions but chose not to come clean, according to the SEC complaint. Instead, the SEC alleges, the group conspired to cover up the theft by cutting costs at the firm and selling the strip malls, as well as misleading pension fund trustees.

"Mayfield stole pension money from Detroit's retired police officers, firefighters, and surviving spouses and children to buy strip malls," said Andrew Ceresney, co-director of the SEC's Division of Enforcement. "To make matters worse, other senior officers at the firm joined together with him to cover up his deceitful and grave betrayal of trust, all for the purpose of keeping the client."

Managing the fund was a substantial business for the firm, the SEC said. MayfieldGentry had been registered with the commission as an investment adviser since April 29, 2004, and formerly managed approximately $750 million in assets.

The SEC complaint alleges that the defendants violated sections 206(1) and 206(2) of the Investment Advisers Act of 1940, which make it unlawful for an investment adviser to defraud clients or prospective clients.

The money could have provided a year of benefits for more than 100 retired police officers, firefighters, and surviving spouses and children, the SEC said. While neither admitting nor denying the SEC charges, Mayfield, his firm and the other officials agreed to disgorge the ill-gotten gains and be barred from further violations of the law.

According to the SEC, Diaz told trustees during a 2011 meeting that MayfieldGentry would remit $4.96 million to the pension fund in 2012. Diaz never told the pension fund trustees that the amount would take a 60% hit once the stolen money was taken into account.  At the same meeting, the SEC said, Matthews claimed that MayfieldGentry had achieved a benchmark-beating 6.8% return for the pension fund. He didn't explain that the return would be materially affected by the $3.1 million theft.

The cover-up failed when MayfieldGentry could not raise enough capital to put the stolen amount back into the pension fund. The conspirators confessed in May 2012, the day before the SEC filed its complaint in the pay-to-play case.

Upon learning of the theft, the pension fund promptly terminated its relationship with MayfieldGentry, essentially putting the firm out of business.

Mayfield's attorney could not be reached for comment.

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