PA Country Seeks Halt To Pension Funds Used for Legal Fees

December 31, 2003 ( - Luzerne County, Pennsylvania is asking the County Court of Common Pleas for an injunction to stop the county Retirement Board from spending employee pension funds on legal fees.

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) 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,according to a report in The Citizens Voice.

These alleged violations, in turn, led to the county pension fund hemorrhagingmore 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.

The county though wants to put a stop to the outflow before it gets any worse.In Luzerne’s petition 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.

Originally the county’s hearing for a spending injunction was scheduled for today, however Judge Mark Ciavarella granted a request for a continuance until January 23.