Luzerne County To Decide Fate of Federal Lawsuit By Friday

February 19, 2004 ( - After a judge ruled public pension funds could not be used to pay legal fees in a federal civil racketeering suit, the Luzerne County Retirement Board will decide by Friday how to proceed with its lawsuit.

The Retirement Board was spending money on a federal lawsuit it filed seeking the recovery of $75 million.  The suit charges violation of federal civil racketeering influenced and corrupt organizations (RICO) violations and alleges Majority Retirement Board members and 24 former pension consultants or money managers were paid excessive fees and commissions from the pension fund in exchange for donations for political reelection campaigns (See PA Country Seeks Halt To Pension Funds Used for Legal Fees ), according toa report in The Citizens Voice.

However, earlier this month the county’s case hit a snag whenCounty Court of Common Pleas Judge Mark Ciavarella ruled that there was evidence showing that legal fees hinder the fund’s security, unless the fund is infused with new money.  Such money will not exist, though, since the judge noted that taxpayers are expected to provide more than $9 million to subsidize the fund for 2003 and 2004 (See  Judge: Pension Funds Not For Legal Expenses ).

The Retirement Board has already used $400,000 from the fund in preparation for the litigation and had budgeted another $500,000 for 2004.

Now, Retirement Board Chairman Greg Skrepenak, Controller Steve Flood and Treasurer Mike Morreale have been called into session on Friday to discuss the retention agreement the fund currently has with Schnader, Harrison, Segal and Lewis, the Philadelphia law firm representing the county’s interests.

Skrepenak hinted if ratified, the agreement would cost the county less money in fees and legal expenses. The firm would likely take the case on more of a contingency basis.