State prosecutor builds case for trial of Eric Smith
‘Smith believed he was a separate unit of government’
The district court judge presiding over Eric Smith’s preliminary examination denied a defense objection to the prosecutor categorizing four accounts under the former prosecutor’s control as “off the books.”
Smith’s attorney, John Dakmak, objected to Assistant Attorney General Mike Frezza using the phrase during the questioning of Macomb County Deputy Treasurer Joseph Biondo during Smith’s preliminary examination Friday in 41B District Court on allegations he illegally maintained secret accounts from which he misspent hundreds of thousands of dollars.
Dakmak called it a “factual mischaracterization” and “a veiled attempt to show these were secret funds that nobody knew about other than the prosecutor. There’s been zero fact to allege that.”
“These funds were known and were subject to audit year after year after year, so to keep calling them off the book accounts is a complete mischaracterization and is only offered to throw some cloud of criminality where his facts don’t support it.”
But Judge Cynthia Arvant, who will decide whether the case will be bound over to Macomb Circuit Court, said she will allow
it as she can separate any negative connotations with that phrase when used by Frezza, who is prosecuting the public corruption case against Smith and his co-defendant Derek Miller.
“I don’t know what else you call them,” Arvant said from the bench. “I don’t know; they’re not on the county books. I think I can overlook the nefarious connotations of
‘off-the-books’ and I think we can do it as kind of a short hand for saying these are the accounts, the four accounts.”
Arvant ruled after hearing the argument put forth by from Frezza.
“It is an understanding of what we’re dealing with,” Frezza said. “It is relevant because they were not in the county treasur
er’s books. So, if they’re not in the books, then they’re off the books. And I appreciate fact Mr. Dakmak doesn’t like the characterization, but that’s an accurate characterization.
“If I hear a defense being offered, it is somehow that unlike every other department in the county of Macomb, Eric Smith believed he was a separate unit of government.”
Biondo testified in the afternoon Friday after Assistant Cooperation Counsel Frank Krycia took the stand in the morning at the evidentiary hearing for Smith, who is charged with 10 felonies — including racketeering and embezzlement by a public official — for allegedly misspending up to $600,000 in funds mostly garnered from a drunken driving vehicle forfeiture account but also from a accounts in revenues from drug forfeitures, Warren Drug Court and bad-check restitution from 2012 to 2018.
Smith, the Democratic Macomb County prosecutor since 2005, resigned in March 2020 days after he was criminally charged by state Attorney General Dana Nessel.
Miller, Smith’s former chief of staff, is charged with two low-level felonies, accused of helping to restrict the funds from county Treasurer Lawrence Rocca.
During the hearing, Smith took many notes on a legal pad, whispered remarks to Dakmak and wore a mask, changing it at the lunch break.
In 2018 he and Rocca learned that for a second year in a row Plante Moran accounting firm cited the accounts as a “material weakness” in the county’s budget, Biondo testified.
Rocca in July 2018 sent a letter to all department heads, including units headed by elected officials, ordering them to turn over the funds from any accounts not part of the county budget, Biondo said. All of the department heads except Smith responded, and none of the other department had off-the-book accounts.
“The treasurer was very concerned,” Biondo said. “He thought it was very suspicious. I found it suspicious.”
Rocca contacted Smith by telephone in early August 2018. The prosecutor said he did not receive the email letter but would not turn over the funds.
“He (Smith) said … that he needed the money for funerals and charities,” said Biondo, who said he was present for the call over speaker-phone.
According to Biondo, Rocca told Smith: “Eric, I’m not sure what you need the money for, but I do know you need to turn that money into the Treasurer’s Office and then work with the Board of Commissioners regarding your need for that money and how it should be spent.
“He (Smith) reiterated he wasn’t going to give the money and he said ‘bye.’”
Officials later learned Smith spent the money on a variety of items, including cement funeral benches and flowers for families of select employees who lost a family member, donations to charities and churches, office parties, restaurant gift cards, gifts to certain employees and a security system for his home, among others.
Biondo said in late August county officials learned from Chemical Bank, where the accounts were held, they contained over $200,000, 10 times what James Langtry, Smith’s former operations director and chief of staff, had told them.
Smith continued to resist, and county leaders contacted state officials. At a Nov. 1, 2018 meeting, top officials at the Attorney General’s Office told Smith and a team of county treasurer, finance and legal officials to continue negotiating to work out a deal.
Biondo said at that meeting, he learned Macomb’s situation was unique.
“My understanding something unusual was going on in Macomb County that wasn’t going on in any of the other 83 (82) counties in the state,” he said.
Smith, or his proxy, changed the tax identification numbers of the accounts at the bank so Rocca and Biondo couldn’t access them and refused to change them back.
Smith continued to resist in mid-November.
“Eric Smith wanted assurances form the treasurer that once the money was turned over that he could continue to operate like he did previously, without going through the board of commissioners,” Biondo said. “It’s against the law, it was Treasurer Rocca’s position as far as what Eric Smith was proposing.”
Rocca sent an email to Smith on Nov. 29 demanding the money to be turned over or he would “resolve it another way.”
Smith turned in the money, which totaled about $233,000, on the afternoon of Nov. 30, 2018.
Under cross examination by Dakmak, Biondo said he and other Treasurer’s Office staffers were unaware of the off-the-books accounts until mid-2017 shortly after Rocca took office and Biondo was hired following Rocca’s victory in the 2016 election.
Biondo agreed with Dakmak that when Smith met with county officials in the state Attorney General offices in Lansing, the matter at that time was a disagreement.
“Your office had one interpretation, his office had another interpretation,” Dakmak said, an Biondo affirmed.
Biondo said he was unaware of how the funds were spent at that time. Details of the funding weren’t known until early 2018 after Smith was forced to release copies of the hundreds of checks written off the four accounts.
The hearing is scheduled to resume Tuesday in the Clinton Township courthouse and likely will continue for at least a day beyond that.
William Weber of Weber Security in Mount Clemens is expected to testify first Tuesday. Weber Security provided Smith’s home security and collected a total of $161,000 in payments for work also done at the Prosecutor’s Office in the county Administration Building in Mount Clemens.
Weber was originally charged with felonies and pleaded guilty to a misdemeanor on the condition he pay $23,900 in restitution for work not completed at the Administration building and testify against Smith.
Also expected to testify Tuesday are a Michigan State Police officer and Langtry.
Smith’s former chief of staff before he retired in 2017, Ben Liston, is expected to testify later in the hearing. He was originally charged with felonies and pleaded guilty to three misdemeanors in exchange for his testimony, nearly $16,000 in restitution for personal items purchase with the funds, and disbarment.