JW Files New Lawsuit for Possible Fraudulent Activity Involving Arizona Public Safety Pension-Trust Managers
MARCH 18, 2014
Judicial Watch Files Suit against Arizona Public Safety Personnel Retirement System for Grand Jury Subpoena on Possible Fraudulent Activity by Pension-Trust ManagersArizona’s Public Safety Personnel Retirement System refused to release copy of federal grand jury subpoena
(Washington, DC) – Judicial Watch announced today on March 13, 2014, it filed a lawsuit in the Superior Court for the State of Arizona against the Arizona Public Safety Personnel Retirement System (PSPRS) for a grand jury subpoena seeking documents related to an investigation of possible fraudulent activity by PSPRS pension-trust managers (Judicial Watch v. PSPRS (CV2014-003027)).
According to a March 7 report by the Arizona Republic, PSPRS is now under federal scrutiny into “whether pension-fund managers inflated certain real-estate investment values to trigger staff bonuses.” PSPRS had initially refused to release a copy of the subpoena to the Arizona Republic.
On March 11, 2014, Judicial Watch requested that PSPRS provide it with a copy of the PSPRS federal grand-jury subpoena pursuant to the Arizona Public Records Law. On March 13, PSPRS refused to comply with the request by asserting that the subpoena was not a public record. In filing its lawsuit to compel compliance, Judicial Watch argued, “Defendant has violated Arizona Public Records Law by improperly withholding information and failing to provide access to the requested record in its entirety.”
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. The Arizona Republic reported in its March 7 article that the U.S. Attorney’s Office began 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 centers on whether PSPRS inflated real-estate values in order to award substantial bonuses to top staffers.
In an August 1, 2013, article, the Republic had reported that PSPRS “gave performance and retention bonuses to its highest-paid staff along with guaranteed pay raises and additional compensation the past five years … The five- and six-figure bonuses and additional pay were awarded to managers and investment staff even when the pension trust posted financial losses in 2008, 2009 and 2012 ….” In late April 2014 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.
“It is up to the grand jury to determine whether there is sufficient evidence to indict the PSPRS pension-trust managers for criminal conduct,” said Judicial Watch President Tom Fitton. “But, it is not up to the PSPRS managers to decide if the public has a right to public records. Their continued stonewalling suggests that the PSPRS has something to hide.”