Ohio Teachers Pension Touts Past Transparency Awards, Fails To Disclose Special Investigation By State Auditor

Link: https://www.forbes.com/sites/edwardsiedle/2022/05/23/ohio-teachers-pension-touts-past–transparency-awards-fails-to-disclose-special-investigation-by-state-auditor/

Excerpt:

The nearly $100 billion State Teachers Retirement System of Ohio never tires of telling its members of past transparency awards it has received from Ohio State Auditor Keith Faber. The fact that Faber’s office is currently conducting a special investigation into the pension’s transparency practices, prompted by public records lawsuits and numerous member complaints—the results of which could, says the auditor, affect the retirement system’s rating in the future—is not disclosed by the pension.

In April 2022 Board News under the heading, “STRS Ohio earns auditor of state’s top rating from transparency for second year,” the State Teachers Retirement System of Ohio’s website boasts:

…..

Perhaps not surprising, this self-professed paragon of transparency is not touting the following ugly facts provided to me by the auditor’s office in a recent email:

“In October 2021, Auditor of State Keith Faber informed STRS that his office was launching a special audit after receiving numerous complaints, following the release of a report issued by Benchmark Financial Services Inc. titled “The High Cost of Secrecy: Preliminary Findings of Forensic Investigation of State Teachers Retirement System of Ohio,” commissioned by Ohio Retired Teachers Association.

….

In other words, it appears the Auditor of State’s transparency rating system merely asks whether a public agency has policies and procedures addressing transparency, not whether the agency is, in fact, being transparent in its dealings with the public in compliance with applicable laws. Such a rating system is of limited value to stakeholders, in my opinion, and presents the very real risk of being misinterpreted, as well as unduly relied upon, by the public.

Author(s): Edward Siedle

Publication Date: 23 May 2022

Publication Site: Forbes

Putin, Russian Pals “Mystery” Partners In Public Pension Deals?

Link: https://www.forbes.com/sites/edwardsiedle/2022/03/10/putin-russian-pals-mystery-partners-in-public-pension-deals/?sh=3057aa8524af

Excerpt:

America’s state and local government pensions invest as much as 40 percent of their assets in secretive, offshore “alternative” hedge, private equity, real estate and venture funds which warn that certain unidentified “mystery investors” pay lower fees, are provided greater information about investment strategies and portfolio holdings, have been granted liquidity preferences and receive superior net performance—all at the expense of America’s public sector workers. How many wealthy Russians are “mystery investors” in these pension deals which, according to an internal FBI document leaked last year, criminals and foreign adversaries regularly use to launder money? Wall Street refuses to say and public pensions have promised not to ask. Ironically, the invasion of Ukraine and calls to dump Russian investments to punish the country are drawing attention to the ugly fact that America’s public pensions have long consented to being kept in the dark by Wall Street, abrogating their duty to monitor and safeguard workers’ retirement savings.

….

For example, my second investigation of the Rhode Island state pension revealed in 2015 that contrary to the pension’s financial reports, 40 percent of the pension’s investments—not the 25 percent disclosed—had been allocated to secretive alternative investments.

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It’s no secret that the FBI suspects that many alternative investment vehicles are widely utilized for money laundering. In 2019, the FBI compiled a report titled “Financial Crime Threat Actors Very Likely Laundering Illicit Proceeds Through Fraudulent Hedge Funds and Private Equity Firms to Obfuscate Illicit Proceeds.” Then, a leaked May 1, 2020 internal FBI report similarly titled “Threat Actors Likely Use Private Investment Funds to Launder Money, Circumventing Regulatory Tripwires” purported to supplement the January 2019 report “by providing recent reporting of hedge funds and private equity firms used to launder illicit proceeds, and expands the threat context beyond financial threat actors to include foreign adversaries.”

Author(s): Edward Siedle

Publication Date: 10 Mar 2022

Publication Site: Forbes

Facebook International Man Of Mystery And GoFundMe Fraudster Disrupt $115 Billion Ohio Pension Forensic Investigation

Link:https://www.forbes.com/sites/edwardsiedle/2021/12/20/facebook-international-man-of-mystery-and-gofundme-fraudster-disrupt-115-billion-ohio-pension-forensic-investigation/?sh=3ef0ed262c78

Excerpt:

Who is Facebook international man of mystery Robert Parkle and why is he advising Ohio Public Employees Retirement System stakeholders not to follow through with an expert forensic investigation of their state pension? Why did Kasandra Ward from Aurora, Colorado create a fraudulent OPERS Forensic Investigation GoFundMe page apparently to divert funds from the real project? Our nation’s public pensions have never been more precarious and there are powerful interests working hard to keep pension stakeholders in the dark.  

Earlier this year, a forensic investigation of the $90 billion-plus State Teachers Retirement System of Ohio commissioned by the Ohio Retired Teachers Association and performed by my firm, was completed. The damning preliminary findings were reported to Ohio legislators, regulators and law enforcement in a 100-plus page report entitled The High Cost of Secrecy.

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In conclusion, I won’t speculate who may be seeking to derail the proposed forensic investigation of the $115 Billion Ohio Public Employees Retirement System on behalf of pension stakeholders, or why. One thing is for certain: One or more persons is seeking to disrupt the investigation into potential mismanagement and malfeasance at the massive pension.

Stakeholders in all 5 Ohio public pensions, including OPERS, should be alarmed and securities regulators and law enforcement ought to investigate any apparent violations of law through social media.

Author(s): Edward Siedle

Publication Date: 20 Dec 2021

Publication Site: Forbes

A Group of Midwestern Retirees Are Trying to Stop Wall Street’s Abuse of Retirement Funds

Link:https://jacobinmag.com/2021/11/ohio-teacher-pensions-hedge-funds-private-equity-strs

Excerpt:

Due to an active group of retirees and the assistance of a former Ohio attorney general, both the Ohio state auditor and the Ohio Department of Securities have launched inquiries into the Ohio State Teachers Retirement System (STRS Ohio), a $100 billion pension that has launched billions of dollars of investments into the riskier corners of the market, namely private equity and hedge funds.

“Ohio could be the first place where the secrecy surrounding public pensions and their investments in risky, speculative, and high-fee investment vehicles could be looked at in a serious way,” said Ted Siedle, a former SEC attorney and longtime pension whistleblower.

Pointing out that pension funds across the country have routinely invoked “trade secrets” exemptions to deny the public information about investment performance and fees, Siedle said the actions taken by the state auditor and securities commissioner “could be the beginning of the end” of such secrecy — not just in Ohio, but nationwide.

Author(s): MATTHEW CUNNINGHAM-COOK

Publication Date: 30 Nov 2021

Publication Site: Jacobin magazine

Call Your State Securities Regulator And NASAA, Demand To See Public Pension Prospectuses

Link: https://www.forbes.com/sites/edwardsiedle/2021/11/30/call-your-state-securities-regulator-and-nasaa-demand-to-see-public-pension-prospectuses/?sh=d277a077f881

Excerpt:

State securities regulators and NASAA have historically had very little to say about Wall Street looting of these pensions. That’s not altogether surprising given that state securities regulators almost universally serve at the whim of elected politicians—politicians who depend upon Wall Street campaign contributions. If a state securities regulator aggressively pursues Wall Street pension looting, she may be swiftly out of a job.

However, since NASAA believes “every investor deserves protection and an even break” the organization should focus upon the disturbing fact that today public pension stakeholders in all 50 states are routinely denied prospectuses and other material investment information related to their pension assets—the very same information which is widely disseminated globally to wealthy individuals. In the absence of prospectuses, public pension stakeholders cannot possibly evaluate whether pension assets are prudently invested.

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Recently I filed a complaint with the Ohio Department of Commerce, Division of Securities regarding the State Teachers Retirement System of Ohio which has failed since February to provide prospectuses and other offering materials related to the teachers’ pension investments in response to my public records request filed on behalf of 19,000 Ohio teachers. Not a single page of a single prospectus has been released to me by STRS Ohio since February. The Division is investigating my complaint at this time.

In Rhode Island, my request for the prospectuses regarding that state’s pension investments was also denied by Treasurer Seth Magaziner last week as the pension perversely asserts, on behalf of Wall Street, that widely distributed prospectuses can somehow be “trade secrets.” I intend to file an appeal and a lawsuit challenging Magaziner’s secret pension dealings in Rhode Island.

Given that public pensions in all 50 states today refuse to provide some or all prospectuses to stakeholders, including both participants and taxpayers, publci pension secrecy is a national problem that needs to be addressed.

Author(s): Edward Siedle

Publication Date: 30 Nov 2021

Publication Site: Forbes

19,000 Retired Ohio Teachers Want Pension Prospectuses, Wall Street Wolves Say No Way

Link:https://www.forbes.com/sites/edwardsiedle/2021/11/09/19000-retired-ohio-teachers-want-pension-prospectuses-wall-street-wolves-say-no-way/

Excerpt:

For nearly two decades, alternative investment managers have been permitted to handle public pension money while they refuse to play by the rules applicable to these funds and submit to public scrutiny.

Wall Street alternative managers have successfully argued that the very same investment information widely distributed to wealthy individuals somehow amounts to “trade secrets” exempt from public records laws… when requested by state workers.

While it’s not surprising Wall Street’s biggest gamblers want to keep investors in the dark as to their misdeeds, it’s unconscionable that STRS Ohio and other public pensions around the nation are willing to abandon transparency, exposing workers to unfathomable risks and jeopardizing their retirement security.

Alternative investment managers may seek to keep secrets, but it’s no secret what’s often in these well-guarded documents: excessive and illegal fees; outrageous conflicts of interest and self dealing; fiduciary breaches and outright violations of law—even criminal conduct. For example, eight years ago the SEC staff found that a majority of private equity firms inflate fees and expenses charged to companies in which they hold stakes.

Author(s): Edward Siedle

Publication Date: 9 Nov 2021

Publication Site: Forbes

Private Equity’s Mighty Battle Against Public Pension Transparency

Link:https://www.forbes.com/sites/edwardsiedle/2021/11/15/private-equitys-mighty-battle-against-public-pension-transparency/

Excerpt:

Private equity firms widely distribute their prospectuses and offering materials to prospective wealthy investors as they trawl globally to raise capital for their costly, high-risk funds. Yet when state and local government pension stakeholders request prospectuses of the funds in which their pensions invest, PE firms claim these very same broadly disseminated documents are “trade secrets” exempt from disclosure under state public records laws. On the one hand, PE risks, fees, and questionable business practices are fully disclosed via prospectus to wealthy investors who can afford to gamble. On the other, government workers in severely underfunded pensions (many of whom have already seen their retirement benefits cut) and taxpayers who are on the hook for any public pension gambling losses, are intentionally kept in the dark. SEC and state securities regulators should demand that every PE investor, including public pension stakeholders, be provided with all material investment information related to these risky investments and end PE secret fleecing of government workers’ pensions.

Author(s): Edward Siedle

Publication Date: 15 Nov 2021

Publication Site: Forbes

Everyone Is Urging SEC To Stop Public Pension Mismanagement, Looting By Wall Street

Link:https://www.forbes.com/sites/edwardsiedle/2021/10/07/everyone-is-urging-sec-to-stop-public-pension-mismanagement–looting-by-wall-street/

Excerpt:

An investigation of the Chicago Policemen Annuity and Benefit Fund was funded by members of the Chicago Police Department Pension Board Accountability Group. According to the report, the CPABF is one of the worst funded public pension plans in the U.S. today with a funding ratio at year-end of only 23%. According to the report, “The toxic mix of defunding the police pension, conflicted and high-risk investments, and poor management of the pension cry out for greater transparency and accountability.”

As Arthur Levitt, Chairman of the SEC stated back in 1999 in connection with the Commission’s review of pay-to-play practices at public pensions, “Today, public funds hold more than $2 trillion of assets. These assets do not belong to the elected officials, and they do not belong to the trustees. They belong to the tens of thousands of firefighters, ambulance drivers, city clerks, bus drivers and other public employees who make our communities work. “Their interests,” as my father said twenty years ago, “must be paramount in investment of that money.”

The tremendous importance of public funds demands that they be managed with complete honesty and integrity and for the sole benefit of their beneficiaries.”

Author(s): Edward Siedle

Publication Date: 7 October 2021

Publication Site: Forbes

Chicago Police Pension Forensic Audit Ends With Disturbing Findings

Link: https://www.forbes.com/sites/edwardsiedle/2021/09/03/chicago-police-pension-forensic-audit-ends-with-disturbing-findings/?sh=18a0d9717c0c

Excerpt:

This week, the Chicago Police Department Pension Board Accountability Group—comprised of retired and active Chicago police officers and their dependents— released the scathing findings of a forensic audit of the Chicago Policemen’s Annuity and Benefit Fund. The Group hired an outside expert to conduct the forensic audit after the pension refused their request to do so on its own.

…..

According to a lawsuit filed this week by Tobe, the pension denied most of his requests for records under the Illinois Freedom of Information Act. It’s no secret that state and local government pensions—which are supposed to be the most transparent of all pensions—are regularly criticized for opposing public record requests, particularly related to alternative investment documents.

The report accuses the pension of failing to monitor and fully disclose investment fees and expenses.  It is estimated that fees and expenses could be 10 times greater than the $7.4 million disclosed in the pension’s most recent financial audit.  Tobe believes the fees related to dozens of investment managers are not properly disclosed. Using assumptions from an Oxford study, Tobe estimated that undisclosed fees could be as high as $70 million a year. Also, $2 million to $3 million a year in investment fees may have been paid to Wall Street for doing nothing, i.e., fees on committed, uninvested capital

Author(s): Edward Siedle

Publication Date: 3 Sept 2021

Publication Site: Forbes

Chicago Police Pension Forensic Audit Ends With Disturbing Findings

Link: https://www.forbes.com/sites/edwardsiedle/2021/09/03/chicago-police-pension-forensic-audit-ends-with-disturbing-findings/

Excerpt:

This week, the Chicago Police Department Pension Board Accountability Group—comprised of retired and active Chicago police officers and their dependents— released the scathing findings of a forensic audit of the Chicago Policemen’s Annuity and Benefit Fund. The Group hired an outside expert to conduct the forensic audit after the pension refused their request to do so on its own.

In a September 2, 2021 statement on the police pension’s website it was stated:

“Recently, certain annuitants, without asserting any wrongdoing on the part of the Fund, any Fund employee, or any Board Trustee, past or current, and in fact repeatedly acknowledging no wrongdoing or fraudulent conduct has occurred, have demanded the Board contract with another entity to conduct a desired independent forensic audit. The purpose of a forensic audit is in substance to conduct an investigation as a means of discovering potential fraud, wrongdoing, or other financial crimes. Given that no legitimate cause for this type of audit exists, it is not a prudent use of Fund resources to engage with an additional auditor to perform a forensic audit.”

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According to the report, CPABF is one of the worst funded public pension plans in the U.S. today with a funding ratio at year-end of only 23%. That fact alone merits an independent investigation, in my opinion. And, by the way, forensic investigations of pensions are not necessarily focused upon “potential fraud, wrongdoing or financial crimes.”

Author(s): Edward Siedle

Publication Date: 3 September 2021

Publication Site: Forbes

Your State Pension Is Not Fully Protected Under Law

Link: https://www.forbes.com/sites/edwardsiedle/2021/09/08/your-state-pension-is-not-fully-protected-under-law/

Excerpt:

State and local government pensions assure workers and retirees that they enjoy the same protections as the comprehensive federal law, ERISA provides to corporate participants. That’s simply not true. Don’t count on state law to protect your retirement security.

It has been said that the Law is a blunt instrument, incapable of dealing with all shades and circumstances, with little or no regard for individual situations.

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Even where the most comprehensive legal and regulatory framework exists and answers are crystal-clear, your pension is at risk because enforcement or policing of the law is lacking. I have taught U.S. Department of Labor pension investigators. As trained and committed as they are, they’re hopelessly out-gunned by the investment industry. Wall Street runs circles around regulators charged with enforcing pension laws.

However, the vast majority of pensions are not subject to any comprehensive law.   

For example, as hard as it is to believe, explain or justify, the approximately $4 trillion in America’s government pensions is not protected by any comprehensive federal or state law.

Author(s): Edward Siedle

Publication Date: 8 September 2021

Publication Site: Forbes

Forensic Investigation Of Chicago Police Pension Fund Underway

Link: https://www.forbes.com/sites/edwardsiedle/2021/05/25/forensic-investigation-of-chicago-police-pension-fund-underway/?sh=6f9aac8c3ed9

Excerpt:

The Chicago Policemen’s Annuity and Benefit Fund (PABF) —commonly referred to as the Chicago Police Pension Fund—is one of the worst funded public pension plans in the United States today, with a funding ratio of only 23 percent.

A group of retired and disabled officers, along with widows, has long questioned the trustees and management of the struggling pension. Dissatisfied with the responses they received, the group formed the CPD Pension Board Accountability Group.

Funds were raised to commission an independent forensic audit of the pension and an expert in pensions was retained recently to conduct the review. As Forbes readers will recall, in my recent book, Who Stole My Pension?, I encourage pension stakeholders to band together to fund independent forensic investigations by pension experts of their own choosing—to get a second opinion as to whether the pension fiduciaries and Wall Street “helpers” they have hired to manage investments are doing a good job.

Author(s): Edward Siedle

Publication Date: 25 May 2021

Publication Site: Forbes