PA County Official Vows More Court Action over Troubled Pension Fund

December 3, 2007 ( - A group of employees and retirees of Luzerne County (PA) have vowed to sue to recoup the more than $3 million in legal fees spent to prosecute an unsuccessful civil racketeering case over earlier pension plan losses.

A news report in the Wilkes-Barre (PA) Times Leader quoted county Chief Clerk/Manager Sam Guesto that the latest planned legal action might also try to recoup funds lost from the 2002 mass liquidation of the fund. The board majority at the time had terminated all money managers and liquidated their assets so the money could be reinvested with new managers, the Times Leader report said.

Guesto told the newspaper that the new “pension advocacy group” will be contacting the county district attorney and state Attorney General’s Office seeking investigations. “We’re contending there was abuse of power and political retaliation,” Guesto said.

A federal judge on Tuesday threw out the county retirement lawsuit against 14 past county officials and pension fund money managers (SeeLuzerne County Drops Investment Firm from Racketeering Suit ). According to the newspaper, the board’s past majority – Mike Morreale, Stephen A. Urban and Steve Flood – filed the suit in October 2003, accusing defendants of mismanaging the pension fund to collect political contributions or large fees and commissions that were hidden from some county board members and the public.

“We have been victimized by this whole frivolous lawsuit and the mass liquidation,” Guesto charged in comments to the newspaper. He said he has documentation showing that the fund would be worth $250 million instead of $210 million if the liquidation and lawsuit had not occurred.

Commissioner Greg Skrepenak publicly blamed the mass liquidation and the legal fees on the need for multimillion-dollar annual taxpayer subsidies to shore up the fund.

According to Guesto, 1,833 employees contribute to the fund and 990 receive county pension benefits.