The suit filed in Wayne County Circuit Court on behalf of all pensioners for Detroit’s two pension funds—the General Retirement System and Police and Fire Retirement System—alleges negligence by trustees made between 2008 and 2009 involving several failed investments, according to a statement from Mantese, Honigman, Rossman and Williamson, the law firm for the plaintiffs.
In addition to prompting procedural reforms within the two pension funds, the suit and subsequent settlement calls for the Hudson Insurance Company, which insured the trustees named in the suit, to equally distribute a payout of $5.4 million between the funds, with another $2.7 million will go to attorney fees and court costs, according to the law firm’s statement and a news report from the Detroit News.
The suit claims more than a dozen former trustees breached their fiduciary duties by approving high-risk investments of fund money without due diligence, with plaintiffs being granted a restraining order from the court to prevent documents from being destroyed (see “Detroit Pension Fund Participant Gets TRO”), according to the law firm.
Former Detroit City Council President Monica Conyers and former Detroit Police Union President Marty Bandemer, as well as former trustees DeDan Milton, Paul Stewart and Jeffrey Beasley were among those named as defendants in the suit, according to the news report. Beasley has also been indicted by a federal court on charges of bribery and kickbacks, and is awaiting trial (see “Former Detroit Pension Fund Trustee Charged for Kickbacks”).
The plaintiffs’ attorney, Gerard Mantese, says the settlement funds will put into the pension funds and be available for payments to pensioners.
Bruce Babiarz, with the Police and Fire Retirement System, explains that the suit did not involve the pension funds or pension boards, just individual trustees. In the news report, he says the pension fund is aggressive in pursuing wrongdoing.
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