Paul Greenwood and Stephen Walsh have been charged with running an estimated $550 million investment fraud (see Money Manager Fraud Snares Public Pensions ). The U.S. Securities and Exchange Commission said the men solicited numerous institutional investors, including educational institutions and public pension and retirement plans.
A report on KCRA news channel’s Web site said Richard Stensrud, CEO of the Sacramento County Employees’ Retirement System, confirmed the system is a victim. The retirement system had originally invested $57 million, but managed to recover about $5 million after becoming aware of the problem earlier this month, according to the news report.
“I’d like to be optimistic and say that we will (recover all of the money),” Stensrud said in the news report. “But I think based simply on the materials that we’ve seen to date, there may be some question as to whether it can all be recovered.” Stensrud said it is possible that the losses might eventually be passed on to county taxpayers.
Because of the recession and the recent market downturn, the system already expected to ask the county for $1 million of additional funding this year and unknown amounts in future years.
“Market behavior, market performance when it’s happening by virtue of market forces is one thing. But when people are potentially stealing from you, it’s personal.” Stensrud said in the news report.
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