Invest Detroit considers foreclosing on former CFO's cigar bar property

When William Smith needed money to buy and renovate the property for his ambitious cigar bar development, he approached Invest Detroit, a prominent local lender with long-standing ties.

Why it matters: Invest Detroit approved two loans last year totaling $3 million for Smith's project, as first reported by Axios Detroit.

• Those loans and Smith's other real estate interests are under scrutiny since bombshell allegations arose last month that he stole nearly $40 million over 11 years while he was CFO of the Detroit Riverfront Conservancy.
• Invest Detroit is weighing its options since Smith was charged and the property remains undeveloped.

What they're saying: "Invest Detroit is currently working with legal counsel to identify next steps, which could include foreclosure and additional remedies," president and CEO Dave Blaskiewicz said in a statement Monday about the loans for Smith's project.

• Invest Detroit disbursed one of the two loans — $600,000 for the building purchase and predevelopment costs at 1977 E. Woodbridge, a vacant property near the east riverfront.
• Blaskiewicz said the second loan of $2.4 million for construction costs was not disbursed because work never began.

What we're watching: Detroit's Economic Development Corporation (EDC), the public body that sold the Woodbridge property to Smith's development group last year, "retains certain rights," including a right to repurchase the property, if it's not developed as anticipated, Lanard Ingram, a spokesperson for the EDC, tells Axios Detroit.

• "The EDC will continue to monitor the situation, including any impacts of a potential foreclosure by Invest Detroit," Ingram says.

Context: The Riverfront Conservancy, where Smith worked, and Invest Detroit are linked through shared leadership.

• In addition to his job at Invest Detroit, Blaskiewicz sits on the conservancy's board.

• Matt Cullen, chairman of Cleveland-based JACK Entertainment and former Bedrock Detroit CEO, is chairman of both the Conservancy and Invest Detroit.

Zoom in: Smith was a volunteer member of the Invest Detroit Advisory Committee beginning in June 2015. He was removed from the committee this year, per an Invest Detroit spokesperson.

• The conservancy fired him in May.

State of play: Blaskiewicz defended Invest Detroit's approval of loans to Smith in Monday's statement. The process involved several layers of staff approvals, full underwriting, a third-party criminal background check and more.

• "After careful review of Will Smith's roles at both the Riverfront Conservancy and Invest Detroit, it was determined that no conflict of interest was present," Blaskiewicz said.

The latest: A federal judge today extended a freeze on Smith's assets until Aug. 29, the Detroit News reports.

• The judge allowed Smith to access $3,421 per month for living expenses.