Pension problems: Where have we heard this before?
Updated On: Apr 18 2014 06:19:19 PM EDT
The city of Detroit pensioners and future retirees may have been all but made whole by a near $1 billion shoveled their way by outsiders to cover underfunded pensions.
There was criminal wrongdoing, negligence, fraud and otherwise unwise investing going on in the general retirement system that ran amok under Kwame Kilpatrick. The money came from sources like foundations and the Detroit Institute of Arts that were concerned that the city of Detroit would be rendered nearly destitute by the bankruptcy.
Wayne County is similarly destitute and on the edge of emergency management itself. It has perhaps a worse pension problem. The underfunding is closer to 50 percent and the only helpful difference is that the county did not get involved in so called SWAP deals. Kevyn Orr himself says the SWAPS caused Detroit’s bankruptcy.
But this is little solace: A lawsuit filed against former Wayne County Employees Retirement System board trustees who served from 2008 to 2012. Among the names of those sued are Lorenzo Moner, Robert Grden, Augustus W. Hutting, Julia Goodman, John Hubert, Elizabeth Misuraca, Jewel Ware, William Wolfson, Matthew Schenk and Edward Boike.
View/download: Wayne County Retirement Plan complaint
Strangely, the plaintiffs suing -- Bobby Hawkins and Anthony Fuller -- did not sue the system itself, but only the trustees. It turns out that Augustus Hutting is deceased, by the way, adding to the mystery here.
The suit is unabashed in saying that these trustees were anything but good at what they were supposed to be doing, looking out for the best interests of the county’s retirees. Instead it accuses them of operating in the dark, having little clue about good governance of pensions, having no guidance or ethical standards to live up to and operating with a friends and family approach so familiar to all of us in metro Detroit. They claim the system lost $800 million with these people at the helm.
We attempted to speak with the majority of the people on this list and no one was available or would say anything because they either weren’t home or hadn’t been served. The attorneys who filed this suit didn’t want to talk about it today, either, which leads to questions about the motives behind this case.
Still, the pleadings in this lawsuit read more like a criminal indictment than a civil lawsuit the language is that strong. Attorneys don’t do that unadvisedly. But it makes one wonder whether the feds aren't looking at this mess and considering that. If true, one would certainly hope that is the case.
The larger concern here is that unlike Detroit that has the cachet of its great history and the necessity for a brighter future post-bankruptcy, Wayne County has neither. There is likely to be little sympathy for the county and its colossal financial blundering of the past decade.
There is likely no bailout coming should Wayne County lapse into emergency management or bankruptcy.
What happens to its pensioners? It’s not a recipe for a brighter future.