ASCO Counter-Sues Pension Fund, Advisor

October 19, 2004 ( - ASCO Financial Group, principal defendant in a 2002 Racketeer Influence and Corrupt Organization Act (RICO) suit involving the Luzerne County Retirement Board, has countersued the county treasurer and the plan's new advisor for $73.6 million.

ASCO was the county’s pension plan money manager from 1988 to 2002, and was originally sued over alleged mismanagement, according to the Wilkes-Barre, Pennsylvania-based Citizens Voice. The pension fund accused ASCO of using a ‘pay-to-play’ scheme with former county commissioners in which an ASCO official would contribute to political campaigns in return for rights to manage the fund and charge excessive fees (see  PA Country Seeks Halt To Pension Funds Used for Legal Fees ).

The countersuit, filed against county treasurer and former retirement board member Mike Morreale and the plan’s new advisor, Merrill Lynch & Co., levels charges of the same wrongdoing that produced the legal action against ASCO. The countersuit blames Morreale for losses to the retirement fund and asserts that the treasurer never voted against ASCO’s action while the company was managing the pension fund’s assets.

The suit also accuses Merrill Lynch, which it claims controlled 25% of the fund’s assets during its tenure, of the same practices ASCO was charged with in the original suit.  Specifically, the suit accuses multiple Merrill Lynch officials of either directly or through a spouse donating a total of $13,700 to board member’s campaigns. This is a larger amount than ASCO is accused of donating to campaigns. The suit also asserts that Morreale received election funds from Merrill Lynch, who later voted to hire them as fund managers.