Arizona Pension Scandal: Corruption And Cover-Up
Government Employee Pension Scandal in Arizona
brietbart.com – by Tom Fitton 25 Mar 2014
Corruption is not a “Washington-only” disease. Local and state corruption is endemic and often unchecked. That’s why Judicial Watch vigorously monitors and combats public corruption not only in Washington, DC, but in states across the nation.
According to the Arizona Republic, Arizona’s Public Safety Personnel Retirement System (PSPRS) now has a funding ratio of just 59 percent. That means it has only enough money to pay for just over half of its current and future liabilities. Yet, despite that, the Republic reported on August 1, 2013 that the PSPRS gave “five- and six-figure bonuses and additional pay… to managers and investment staff even when the pension trust posted financial losses in 2008, 2009 and 2012…”
To make matters worse, a federal grand jury is now investigating the PSPRC to determine whether it may have inflated its real estate investment values in order to trigger those huge bonuses to top staffers. The PSPRS appears to be in full cover-up mode. When the Republic requested a copy of the grand jury’s subpoena of the PSPRS the system’s pension-trust managers refused to hand it over, despite a ruling by the assistant state attorney general that it is a public document.
In short, the PSPRS has decided that the public is not entitled to public records. That’s why, on March 11, Judicial Watch requested that PSPRS provide us with a copy of the federal grand-jury subpoena pursuant to the Arizona Public Records Law. On March 13, PSPRS refused to comply with the request. So on that same day, we filed a lawsuit in the Superior Court for the State of Arizona against PSPRS, arguing, “Defendant has violated Arizona Public Records Law by improperly withholding information and failing to provide access to the requested record in its entirety.”
By way of background, the Arizona PSPRS manages a $7.7 billion trust to pay for the retirement benefits of 53,000 of the state’s police officers, firefighters, elected officials, and correctional officers. On March 7, the Arizona Republic reported that the U.S. Attorney’s Office had begun investigating PSPRS after its in-house counsel and three high-level investment analysts quit in protest last year over concerns about the way real-estate values were being recorded. According to the Republic article, the federal investigation focuses on whether PSPRS intentionally cooked the books on its real-estate values in order to pad the pockets of top staffers. In late April, after the story broke, PSPRS conceded that it has now reduced the value of its real estate investment portfolio by nearly $40 million, due to “accounting errors” – which included the double counting of some property values.
At the center of the PSPRS controversy is its real-estate portfolio managed by the Scottsdale-based Desert Troon Companies. According to the Arizona Republic, “Trust records show that the current administration in fiscal 2009 began shifting real-estate assets from other companies to Desert Troon and that the value of property managed by Desert Troon more than doubled over that period.”
The Republic further reported:
The trust’s collective losses from properties managed by Desert Troon from fiscal 2009 to 2012 were at least $284 million, according to annual reports compiled by The Republic. In fiscal 2012, properties that Desert Troon managed lost at least $131 million in value.
Despite the losses, the PSPRS trust paid Desert Troon more than $12 million in fees in 2012, according to a January 22 article in the Arizona Republic.
The bottom line is that it is up to the grand jury to determine whether there is sufficient evidence to indict the PSPRS pension-trust managers for criminal conduct. However, it is not up to the PSPRS pension-trust managers to decide if the public has a right to public records. Their continued stonewalling suggests that the PSPRS has something to hide. If so, Judicial Watch intends to find out the full extent of it. We will keep you posted.