California accuses bank of raiding pension funds ($57 million by inflating fees it charged)

[Omaha Steve]

Source: LA Times

By Marc Lifsher

Reporting from Sacramento - A Boston bank cheated California's two largest employee pension funds of nearly $57 million by inflating fees it charged for foreign currency trades, according to a suit filed Tuesday by the state attorney general's office.

The pension funds, including the giant California Public Employees' Retirement System, didn't even know they were being fleeced by State Street Corp., the state's lawyers said. The scheme was uncovered by whistle-blowers with firsthand knowledge of how State Street operated, they said.

The accusations mark another hit to CalPERS. Investment losses have wiped out nearly a fifth of what once was a $248-billion portfolio. The fund also is investigating about $50 million in fees paid to a placement firm, headed by former board member Alfred Villalobos, that directed hundreds of millions of CalPERS dollars into private investor funds.

CalPERS officials were outraged that State Street, their primary banker for the last 17 years, allegedly ripped off retirement money owed to the fund's 1.6 million members, including state, county and municipal employees.



Read more: http://www.latimes.com/business/la-fi-pension-suit21-2009oct21,0,5567195.story

[Phoebe Loosinhouse]

1. I really love CalPERS

They are a gorilla in the room and they are not afraid to kick butt and take names.

I keep looking for them to file the kind of lawsuit about conversion of assets and fiduciary failure that someone somewhere sometime has to introduce against some company and their BOD for essentially looting the company and robbing the stockholders.

C'mon, CalPERS, you can do it!

[CountAllVotes]

7. CalPERS is Union

and that is why this is getting the respect/attention it deserves.

UNION YES!

:kick:

[Phoebe Loosinhouse]

8. You betcha - UNION YES!!!

:kick:

[YvonneCa]

2. This is Jerry Brown, right? Our former and future Governor...

...of California...current Attorney General... :patriot:

[Joanne98]

6. Yep.

[David Zephyr]

15. This is Jerry Brown. California's next Governor.

And just in time,too.

[YvonneCa]

18. Former and FUTURE...

...governor. Next...absolutely. :7

[Alameda]

3. If the money was stolen, why can't they be made to repay?

I don't understand how entities like Enron, Silverado and others can steal huge amounts of money and get away with it. The money is still there in their assets, why can't at least some of it be demanded back?

[haele]

10. So much of what they stole was "virtual" money - compounded interest, etc,

so it's more costly to sue for the total package back than it is just to submit a fine for actual dollars that were pulled via the exorbitant fees or actual skimming.
Depending on the year, compounded interest that was not paid into the fund because of their malfeasance could range anywhere from a couple million to a couple billion; and the time and cost of the number crunching required to determine an actual number that will legally hold in court will far outweigh the amount they can recover.

In many politician's views, it's less costly to go the short-term route to "fine", then go into arbitration to collect perhaps 10 - 20 cents on the actual dollar the offending entity skimmed than it is to drag out a 2,3 year court case, and run the risk of only receiving 50 cents on the actual dollar skimmed (which will get eaten up in court costs) and wait another 5 - 10 years before you receive even that - if the offending corporation itself does not go bankrupt and you find yourself waiting in line with other creditors. (Enron pulled that one...)
The train of thought is - "this slap on the wrist will keep the less ethical from pulling their dirty tricks, and at least the citizens will recover something."

Haele

[GreenTea]

4. Despicable greedy corporations!

[Vidar]

5. Good for California.

[WriteDown]

9. Damn Bostonians!

:evilgrin:

[intheflow]

11. I work for a munipality and they don't pay into social security,

preferring this kind of bullshit private entity to entrust my retirement income. :grr:

[Hekate]

12. Mr. H's pension will come from CalSTRS. He doesn't get SS taken out of his paychecks, so...

Anyhow, God bless Jerry Brown. I wish him all the luck in the world in this battle, because untold thousands of peoples' security is at stake.

Hekate

[Alameda]

14. Mr. H, who is Mr. H....sorry if I missed it here.

[Hekate]

19. Mr. Hekate, my hubby.

Sort of a DU convention I picked up, seems to work for most people in context.

Hekate

[Alameda]

20. yes, I figured it out after posting....

[Doctor_J]

13. Seize the bank's assets and suspend their operations

today

[shanti]

16. go jerry, go jerry!

if anyone can get the money, he can! :thumbsup: close the bastards down!

[Odin2005]

17. Scumbags!

These banksters need jail time!

[salin]

21. several years ago their was a poster who kept warning of investments in mutual

funds that dealt with State Street Bank. Wonder what he knew...