Administration April 7, 2007

Illinois Grand Jury Indicts Ex-Jail Officials in Pension Fraud Scheme

July 28, 2005 (PLANSPONSOR.com) - Two former top-ranking officials of the Lake County (Illinois) Jail have been charged in a pension-fraud scheme uncovered during a two-year jail corruption investigation by state and local prosecutors.
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Charles DeFilippo, 46, and Lawrence Lesza, 55, former directors of the Lake County Department of Corrections, allegedly conspired to defraud two public employee pension funds on DeFilippo’s behalf, the indictment said, according to the Chicago Tribune.

DeFilippo, who resigned as director in 2003, and Lesza, who retired in 2000, each face one count of conspiracy to commit theft in excess of $100,000. They also are charged with one count each of attempted theft exceeding $100,000. DeFilippo faces five counts of forgery, and Lesza is charged with one count of forgery, according to the criminal indictment.

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Prosecutors charge that in March 1999, DeFilippo and Lesza began submitting phony documents to the Illinois Municipal Retirement Fund and to the Sheriff’s Law Enforcement Program in an effort to boost DeFilippo’s pension benefit.

The following year, the indictment said, the IMRF increased DeFilippo’s pension benefit by more than $19,000 annually, which could have cost taxpayers more than $344,000 were DeFilippo to begin collecting his pension when he turns 50 in 2008.

Administration April 6, 2007

CalSTRS Opposes Broad Investment Bans

April 6, 2007 (PLANSPONSOR.com) - The board of the California State Teachers Retirement System (CalSTRS) voted to oppose legislation that would ban investments with companies that do business in Iran or terrorist states.
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The board warned that sweeping investment bans could hurt investment returns and cost the fund money, the Sacramento Bee reported. Anne Sheehan, board representative for state finance director Michael Genest, told the newspaper a broad Iran investment ban could wreak havoc in the fund’s $163.5 billion portfolio. “We’re talking about Coca-Cola, Microsoft. It is amazing what we would have to divest.”

While CalSTRS previously backed legislation calling for divestment of Sudan-linked investments (See CalSTRS Supports Sudan Divestment Bill ), two measures introduced this year calling for California’s large public pension funds to shed holdings in investments linked to Iran and terrorist states would force the systems to sell off billions of dollars in investments. CalSTRS chief investment officer Christopher J. Ailman, noting that most of the system’s portfolio is held in multinational corporations, said in the news report it would be “impossible to find alternative investments.”

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Activist groups often turn to CalSTRS and the California Public Employees Retirement System (CalPERS) to make a stand against certain companies or countries, as they are the nation’s largest and most influential public retirement systems. The Bee noted that the funds have only agreed to divest in rare instances – to protest apartheid in South Africa and make a stand against smoking. Both funds supported divestment of Sudan-linked investments (See CalPERS Votes to Bar Sudan-related Investments).

As for the two measures currently in the legislature, CalSTRS plans to oppose the bills unless they are amended to include the fund’s legal and investment standards.

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