Reuters reports that on June 20, Detroit Emergency Manager Kevyn Orr ordered the city’s auditor general and inspector general to investigate the funds, which handle pension benefits for more than 20,000 retirees.
“There have been many questionable investments that have been made by the fund boards, and some of those investments were made without the advice of their financial adviser. We want to find out what happened,” said Orr’s spokesman, Bill Nowling, in the news report. Orr has called for a preliminary report to be issued within the next 60 days.
Corruption has been suspected before in Detroit’s pension systems. Earlier this month, investment adviser Chauncey Mayfield agreed to give back $3.1 million that regulators allege he stole from a pension fund for the city’s police and firefighters. The city’s former treasurer, Jeffrey Beasley, also has been charged with taking bribes in exchange for steering business to Mayfield (see “Adviser to Detroit Pensions Guilty in Pay-to-Play Scheme”).
Two former pension officials were indicted on pension-related corruption in March (see “Former Detroit Pension Fund Trustee Charged for Kickbacks”).