PA Country Passes Attorney's Extra Fee Request

January 8, 2004 (PLANSPONSOR.com) - Luzerne County, Pennsylvania's lead attorney Christopher Cullen received the green light from the Luzerne County Retirement Board to begin charging a fee for "extraordinary" work.

Cullen is no stranger to pay raises.   A few months ago he received an annual salary increase from $20,000 to $45,000.   The latest provision, would pay Cullen an extra $200 an hour on top of his $45,000 annual salary. However, the fee would not be levied unless for a good cause , according to a report in The Citizens Voice.

Granting extra fees to the county’s attorney for “extraordinary” work would only add more legal bills to the already mountainous pile.  The Retirement Board has been spending money on a federal lawsuit it filed seeking the recovery of $75 million dollars.  The suit charges violation of federal civil racketeering influenced and corrupt organizations (RICO) laws 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.

These alleged violations, in turn, led to the county pension fund hemorrhaging more than $60 million from 2000 to 2002, the country contends.  While the fund was worth $203 million in 2000 it dwindled to $141 million by 2002. The pension consultant at the time said the losses were due to dismal stock market performance.  

Additionally, the retirement board has decided to actively pursue a claim of $9 million against the Luzerne County general fund for pension fund back payments owed for 2003 and 2004.   The current county budget is carrying that obligation as an “unfunded debt” due to a projected multi-million deficit in other areas.

County’s Actions

The county though wants to put a stop to the outflow before it gets any worse.  Last month, Luzerne petitioned for an injunction to halt legal payments.   The county alleges that legal costs will climb to more than $2 million and that legal expenses are and will continue to do irreparable harm to the pension fund’s assets and to benefits that should be paid to retired county employees.

The petition asks the court to order a halt to any more legal fee payments and to require defendants to repay money expended to date.  So far, lawyers for Luzerne County have collected more than $400,000 in fees and plaintiffs have approved the expenditure of $500,000 more in legal fees in 2004. 

A ray of sunshine though was reported by the new financial consultants for the plan, Merrill Lynch.   Merrill reports the plan earned a 16% return in 2003, and is now worth $160 million.

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