Amid FBI review, top PSERS pension officials update financial information
Amid an FBI investigation into real estate held by the large Pennsylvania PSERS pension fund, the agency’s chief investment officer and his senior staff updated their financial information to include their roles on the boards. directors of agency affiliates that own PSERS buildings in Harrisburg and elsewhere.
The documents filed by PSERS officials James H. Grossman Jr. and three other investment officers, completed since September 22 and recently made public, categorically state that Grossman and the others are not employees of the companies and do not receive no money from them.
In June, PSERS admitted that Grossman and other members of his staff had been listed on a different disclosure form filed with the Internal Revenue Service not only as members of the board of directors of affiliates, but in as paid staff. This seemed to place them in dual and conflicting roles as key employees of both PSERS and the companies that did business with the pension fund.
However, in June, the pension plan said those forms were wrong and that it would file the corrected forms with the IRS.
Regarding the annual financial statements that all state employees are required to file annually under state ethics law, Grossman et al. Had either checked “none” or omitted real estate entities when ‘they were asked about the positions of the board of directors. Now he and the others have changed those forms as well.
Evelyn Williams, spokesperson for the pension fund, said staff members received bad advice from agency lawyers by leaving the form blank. However, Robert Caruso, executive director of the state’s Ethics Commission, said she never penalized anyone who simply made a mistake.
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PSERS – the Pennsylvania Public School Employee Retirement System – is one of the top 25 public pension funds in the country, sending $ 6 billion a year to 250,000 former teachers and other former educators. It is funded by about $ 5 billion per year in “contributions” from taxpayers, $ 1 billion from working teachers, and profits from its $ 72 billion investment fund. PSERS invested a lot of the money invested in stocks and bonds, but a small part, relatively speaking, went directly into real estate in places ranging from Harrisburg to Florida to Texas.
Seven months ago, federal prosecutors served grand jury subpoenas on the fund demanding information about the PSERS board’s erroneous adoption of an unduly positive figure for investment profits – and on the purchase by the fund, since 2017, of 13 properties near its head office in Harrisburg.
Late last month, the U.S. Securities and Exchange Commission filed a new subpoena asking, in part, whether PSERS staff members improperly received gifts from companies that do business with PSERS.
At its board meetings last week, pension system executives agreed to budget an additional $ 1 million for growing legal bills stemming from investigations – four times the money budgeted in 2020-21. The fund has hired three law firms to help it deal with the scandal and is also paying other lawyers to represent staff members. PSERS has a policy that it will pay up to $ 40 million in total legal bills over the course of a year for agency staff caught up in an investigation.
In its updated financial information for the years 2018, 2019 and 2020, Grossman has registered on the board of directors of four PSERS-owned holding companies that own a shopping center and apartment buildings in Fort Lauderdale, in. Florida; commercial real estate in San Antonio, Texas; The PSERS office building in Harrisburg and newly acquired real estate nearby. He also stood as a member of the board of directors of a fifth company that once oversaw the PSERS property in Chester County which was sold in 2013.
In total, Grossman, who is paid $ 485,421 per year, the state government’s highest amount, has worked in at least seven subsidiaries that own PSERS properties, according to the records. The fund said it put them in place to protect the parent agency from lawsuits.
Charles Spiller, who is one of Grossman’s two deputies, and William Stalter, a real estate investment bureau expert, said they have served on the same five boards. Another staff member, Melissa Quackenbush, who updated her form on Thursday, joined them at a company. Grossman’s new form went public online early last week. Forms for his assistants were released by PSERS on Friday.
As for the Harrisburg real estate identified in the federal subpoenas, PSERS has been assembling it in stages since 2017. The retirement plan bought and destroyed the old office and printing house of the Harrisburg Patriot-News newspaper. They also bought two other industrial buildings and a series of parking lots.
He has said little publicly about his plans, even approving a $ 5 million real estate expense for the project in a closed-door session in October 2019. Nothing came of an idea the fund launched in internship in which it would partner with the Harrisburg University of Science. and the technology to build a mixed-use tower.