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Administration October 4, 2006
MN Official Demands Criminal Probe of Teacher Pension Fund
October 4, 2006 (PLANSPONSOR.com) - Minnesota State
Auditor Patricia Anderson has accused executives and former
trustees of the defunct Minneapolis teachers pension fund of
failing to transfer all of its assets to a larger state
teachers fund as part of a bailout.
Reported by Fred Schneyer
Anderson accused the trustees and executive director of the Minneapolis Teachers’ Retirement Fund Association of using plan assets as a legal defense fund against allegations of past mismanagement by diverting $1.5 million of the fund’s more than $700 million in assets into a special trust, according to a Minneapolis Star Tribune news report.
After leveling those charges, Anderson demanded a criminal investigation into the matter, the newspaper said. Anderson referred her request for a criminal probe – as well as a request to look into possible civil violations – to the Hennepin County Attorney’s Office.
“It is my conclusion that…ten state laws were violated, some numerous times,” Anderson told the newspaper. “The only purpose of this money is to defend them in a lawsuit,” she said, adding that the outstanding bills used to justify the trust were already paid.
Anderson charged that the trust is holding onto the $1.5 million as a bargaining chip for use in seeking special state indemnification for the former pension fund officials.
Executive director Karen Kilberg on Tuesday denied any misappropriation of money or deliberate destruction of records, saying that the $1.5 million trust was intended in large part to retire any outstanding debts of the Minneapolis fund that were not paid by the larger Minnesota Teachers Retirement Association (TRA), after the merger.
The $1.5 million is part of an estimated $738 million that was transferred to TRA under a consolidation that was approved this year by the Minnesota Legislature and became effective June 30. The money, along with state subsidies, is needed to offset unfunded obligations of nearly $1 billion to 13,500 current and former Minneapolis teachers.
A copy of Anderson’s findings is here .