MN Auditor Investigates "Illegally Created Trust"

June 21, 2006 ( - Minnesota State Auditor Pat Anderson is investigating what she calls an "illegally created trust" for the Minneapolis Teachers Retirement Fund.

The Associated Press reports that Anderson issued a subpoena for records related to a $1.5 million liquidating trust created by the fund’s board five days after Governor Tim Pawlenty signed a bill authorizing the state Teachers Retirement Association to take over the fund.

In addition, Attorney General Mike Hatch said he is seeking a restraining order to stop the Minneapolis fund from spending the trust, according to the AP.

The takeover law prohibits the Minneapolis fund from entering into any contracts without the approval of the Teachers Retirement Association. Anderson questioned the timing of the liquidating trust’s creation and said the trust would benefit trustees and the fund’s executive director, not retirees.

Tom Heffelfinger, a former US attorney representing the fund’s liquidating trustee said the trust was set up to protect the board and executive director from legal claims and to pay off creditors. What’s left over will go to the Teachers Retirement Association. “Our goal here is to preserve the assets for the teachers,” Heffelfinger said, according to the new report. He is seeking a ruling in Hennepin County court that the trust is legal.

The Teachers Retirement Association will absorb the Minneapolis fund effective June 30.