The error apparently can be traced back to a failure by previous officials overseeing the $8.8-billion Indiana Public Employees’ Retirement Fund (PERF) to cross check their pension participant rolls against Social Security records of those who have died – a fairly common procedure. However, realizing the folly of their predecessor’s ways, new pension officials began cross checking in March, and so far have recovered $100,000 of that money, according to an Indianapolis Star report.
This is just the latest in a series of moves the state pension fund – which was labeled by Wilshire as one of the nation’s five weakest recently (See Wilshire: Public Pension Landscape Still Bleak ) – is taking to better protect the pension money of more than 500,000 public employees, retirees and their families. The fund’s new managers, led by Executive Director Craig Hartzer and deputy Bruce Kimery, have discovered f ormer pension managers overlooked small but important details. Among them:
- Four years after Mark Webb quit as executive director of the fund, his electronic signature appeared on the 55,000 checks that went out each month.
- Fund officials had remote access to members’ accounts, which could be accessed away from the controlled state offices.
- Mail to pensioners was never locked up; instead it used to sit in the public lobby where anyone could snatch it.
However, perhaps the early officials’ failure in these areas was more fraud than oversight. Recently, PERF has been embroiled in controversy and the arrests of a top official and a temporary worker in separate incidents. One was a convicted identity thief accused of stealing another man’s identity to land his job as the fund’s chief-benefits officer. The other is accused of writing herself checks from pensioner accounts.
The former temporary employee, Shaunna Stone – who worked at the agency for eight months – is currently awaiting federal trial on charges that she stole the identities of two public employees and bilked three others out of nearly $11,000. Since those charges were filed, state and federal investigators say they have found evidence that she stole more than $23,000 and stole the identities of at least 70 public employees. Stone has pleaded innocent to those charges (See Another Indiana Pension Worker Accused of ID Theft ).
This is not Stone’s first dip in the legal hot water. Previously, she was a suspect in the theft of personal information from another state employee months earlier, which never led to an arrest. Additionally, Stone came to PERF with a rap sheet that included arrests on charges of check deception, distributing marijuana, possessing a handgun without a license and criminal conversion. However, due to her temporary employment status, a background check was not run on her by the pension fund.
After news of Stone’s involvement came to light, Indiana state pension officials went after temp agency Today’s Staffing seeking to make up more than $23,000 of money Stone allegedly made off with. PERF officials believe that Today’s Staffing should cover the losses because the worker had a prior police record and failed to run a background check, procedures Today’s Staffing said it only does when requested by the client (See Indiana Pension Officials Pursue Temp Company Over Losses).
PERF has since modified its background check policy so that it covers every current and new worker. Also, new fund officials have embraced employee loyalty, by awarding 30 workers a total of $104,486 in annual raises at a time when few other state employees are getting additional money in their paychecks. Additionally, the fund is relying less on temporary workers like Stone. The fund wants to make all 107 employees permanent.
For PERF officials, the Stone incident wasdéjà vu all over again, since Stone had previously worked in the same benefits department headed by convicted identity thief Walter Kevin Scott, who resigned from his job last August after his criminal past was revealed to state officials (See Probe Continues into Former Pension Benefits Officer ). Scott is also facing charges of embezzling money from his former employer, Cook Inc., a manufacturer of medical devices.
Additionally, hundreds of e-mails from Scott’s account, obtained under the state’s public records law, portray an unprofessional atmosphere at the fund during his time as chief benefits officer. Those e-mails suggest that Scott was having inappropriate relationships with two workers no longer employed by the pension fund.
The conversations were explicit; one shows Scott pulled strings to get one woman into a training class after she promised to wear her “most form fitting tops and the shortest skirts,” authorities said. Also, the e-mails show frequent golf outings, which officials dubbed “environmental impact” meetings, during the workday with Douglas Mills, the ex-chief financial officer, and the fund’s former executive director, E. William Butler.