Tuesday, August 27, 2013

What is the Illinois Teachers Retirement System Hiding?

The Illinois legislature is working on pension reform while investor monies are walking out the back door into the pockets of politically connected folks who wired deals to obtain pension funds!


Here is a wake up call to all teachers who contribute pension payments to the TRS Trust Me, Trust Me money managers.

There are over 1 Million active members and annuitants who have properly paid into the benefit fund from wages earned as educators in Illinois schools.


In accordance with negotiated contracts, these funds are automatically deducted from pay checks and paid by school districts into the TRS.


The TRS has personnel who handle investment decisions on behalf of the folks who contribute to this pension fund. In addition, there are board members who oversee policy and who have a fiduciary duty to protect the assets and investments of the members. 


Corruption Busters issued a number of FOIA requests to TRS to obtain the names of the entities where private investment managers under contract to TRS placed funds. Corruption Busters was provided information that indicated a pattern of investment with political cronies whose sole purpose was to secure management fees irrespective of the investment performance.


Our July 2, 2013 FOIA request states "In accordance with FOIA, please provide in electronic PDF file format documentation related to contracts between TRS and Hopewell Ventures (David Wilhelm) and Healthpoint Capital Partners (initiated by convicted felon, Joe Cari) for private investment management of TRS funds." (Please refer to previous posts on this blog for details related to these two placements.)


Corruption Busters issued an appeal to the Illinois Attorney General's Office who determined that further inquiry was appropriate. Shari L. West, AAG, sent a letter to TRS on July 19, 2013 to provide a written explanation of the applicable exemption cited in TRS's denial.


The response from TRS dated Aug. 8, 2013 to Ms. West explains that the investment contracts and terms related to termination and management fees were DENIED under Illinois FOIA section 5 ILCS 140/7(1)(g) as proprietary trade secrets and confidential commercial or financial information.


The denial further states that there would be "Harm to TRS Members and Beneficiaries. If the records in question are disclosed to FOIA requesters, the chilling effect on the TRS investment program will negatively impact TRS' ability to invest trust assets pursuant to the fiduciary duties imposed by Article 1 of the Illinois Pension Code, and the exclusive benefit rule of Section 401(a) of the Internal Revenue Code."


In goes further stating "As fiduciaries, the TRS Board of Trustees must invest the trust assets solely in the interests of the the participants and beneficiaries"


According to Section 1-109(b) Duties of fiduciaries

"With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims:"

We would like to thank Cynthia Fain, FOIA Officer of the Illinois TRS for disclosure of this information as it now begs the question, 


"Why would a prudent person place any pension monies with private investors who have consistently racked up millions of dollars of losses and taken management fees that have diminished the value of the investments?"



  • The TRS is not a blind trust. Why is it deliberately concealing the identities of the end point investments made by these managers? Certainly Dick Ingram, the board members of TRS, employees or any prudent person would not hand over their personal investment funds to a third party without knowing where the funds would be invested!
  • What nefarious person invests in companies that have not provided any returns to the fund for 10 years unless there is a pattern of placing these funds with friends and family for personal gain? Read our previous posts disclosing losses and management fees garnered by Hopewell and Healthpoint.
  • Why has TRS failed to oversee these investments to trend losses and then make a decision to terminate these managers for poor performance? Certainly a breach of fiduciary!
  • Who is responsible for managing the funds on behalf of the members?
  • Why have these employees not been fired for gross mismanagement?
We have been previously informed that TRS has no knowledge and can't control the investments made by the private managers because that duty is not explicitly stated in the investment agreement.

A CALL TO ACTION!

We encourage 1 Million active members and annuitants to immediately request full disclosure of all investments made to third parties and demand termination of investments that are losing assets. We also suggest that those responsible be called to account for their lack of oversight to the detriment of those who contribute to this pension fund.

Here is contact info for the TRS:


Teachers' Retirement System of the State of Illinois

2815 West Washington Street
POB 19253
Springfield, IL  62794-9253

Richard Ingram, Executive Director

executive_director@trs.illinois.gov







Wednesday, August 21, 2013

A Call for Transparency and Accountability in hiring patronage workers and board members

All public jobs should be posted and qualified applicants can then respond with their interests, resumes and letters of recommendation. A process that enables fair, open and honest evaluation of candidates should facilitate selection of the best folks for the job. This will be a prudent use of taxpayer dollars. 

Full disclosure on employment applications and financial disclosure filings will enable the public to readily access information via the Freedom of Information Act (FOIA) for any elected official, municipal employee or board member.

There should be a section that divulges recommendations made to influence the hiring process. This information should also include any volunteer work for a politician, as well as paid employment including campaigns, grassroots politics and lobbying. 

The public has a right to know if there was a fair evaluation process that is unbiased based upon qualifications for a particular position or if there is favoritism based upon political connections.

John Kass of the Chicago Tribune today revealed that Lois Scott, CFO City of Chicago, recommended Amer Ahmad for his position as City Comptroller. While there are no direct allegations of wrongdoing on Scott's part, it is interesting to note that her eponymous consulting firm Scott Balice had business interests in Ohio.

Illinois has a population of 13 Million. Certainly, Lois and the Mayor could find qualified professionals with integrity to perform public service without wiring hiring to politically connected folks.

Take the lead from corporations that post job opportunities and solicit responses from qualified applicants.

It will also be a good first step in removing patronage hiring and rewarding marginally qualified workers from getting a free ride at taxpayer expense.

Friday, August 16, 2013

Question: In Chicago, what can you purchase for $165,000?
Answer: a City of  Chicago Comptroller who has a history of awarding sole source contracts to friends and family in Ohio!

Amer Ahmad indicted facing Federal fraud charges for conspiracy, bribery, wire fraud and money laundering in Ohio

http://www.dispatch.com/content/stories/public/2013/08/15/former-state-official-indicted.html

Are we sure he is not truly one of our own here in Chicago?

Who recommended him for the job as Chicago's Comptroller?
Who checked his resume and public record, including news coverage?

Let this person step forward and take credit for another boneheaded political decision that resulted in fraud and waste of taxpayer dollars. Applause, Applause!

It is comforting to note that Chicago holds no exclusive on corruption.

Per the City of Chicago website

Amer Ahmad was named City of Chicago Comptroller by Mayor Rahm Emanuel on May 16, 2011. As Comptroller, he is responsible for the City's cash flow and debt management, processing vendor payments and payroll, maintaining official financial records, preparing financial reports, administration of employee and annuitant benefit programs, and risk management.

The connection to David Wilhelm cannot simply be a coincidence....

Here is a record from the Ohio Legislature 
http://www.legislature.state.oh.us/JournalText128/SJ-12-07-10.pdf

"STATE OF OHIO
EXECUTIVE DEPARTMENT
OFFICE OF THE GOVERNOR
COLUMBUS
I, Ted Strickland, Governor of the State of Ohio, do hereby appoint, Amer Ahmad, from Powell, Delaware County, Ohio, as a Member of the Ohio Cultural Facilities Commission for a term beginning December 3, 2010 and ending at the close of business December 31, 2010, replacing David Wilhelmwho resigned.

IN WITNESS WHEREOF, I have hereunto subscribed my name and caused the Great Seal of the State of Ohio to be affixed, at Columbus, this 3rd day of December in the year of our Lord, two thousand and ten."



Is there a personal tie to David Wilhelm who fled Illinois under the cloud of improprieties with pension funds placed with him as private investments?

This information was blogged  June 10, 2010

http://mypetjawa.mu.nu/archives/202815.php

Ohio Treasurer's Muslim CFO Amer Ahmad hands out no-bid contracts, state jobs to fellow Islamic extremists, attends terror tied Noor mosque

Several articles have appeared in the past week in the Ohio media concerning accusations against the Ohio Treasurer's CFO and deputy treasurer, Amer Ahmad, that he has handed out no-bid contracts and state jobs to Islamic extremist friends associated with the terror-tied Noor Islamic Cultural Center, where he and his family attend.
The story began with the Dayton Daily news, who reported:
Boston-based State Street Bank won work worth $1.27 million from Ohio Treasurer Kevin Boyce’s office this year after hiring a lobbyist with personal connections to Boyce’s deputy treasurer. State Street Bank was the low bidder on a subcontract to be the custodial bank for global assets at three of Ohio’s five public pension systems — a job that entails keeping track of more than $23.6 billion in assets.
No laws were broken and Boyce’s office makes a solid business case why State Street got the work. But just two days before proposals were due, the bank hired an immigration attorney with little experience in banking or lobbying to lobby for the contract.
In fact, Noure Alo’s only lobbying contract is with State Street, according to records filed with the Joint Legislative Ethics Commission.
Alo, who lives in Dublin outside Columbus, also appears to have ties to Amer Ahmad, Boyce’s deputy treasurer.

To say that they have ties is an understatement. Noure Alo was the registering attorney for Ahmad's consulting corporation, Five River Partners LLC. Both attend the Noor center mosque, and Alo is actively involved in Ahmad's service organization, Salam Corps.
As both the Dayton Daily News and Cleveland Plain Dealer have reported, State Street won the no-bid contract to manage $23.6 billion in state assets just days after hiring immigration attorney Alo as a lobbyist. State Street is Alo's only lobbying client registered with the state of Ohio. State Street is currently facing a lawsuit filed by the state of California for defrauding it of $56.6 million - a lawsuit that had already been filed before the state of Ohio awarded the no-bid contract to State Street (who just happened to hire Noure Alo two days before the RFI deadline).

The Cleveland Plain Dealer reported on Sunday that Noure Alo's wife, Walaa Waeda, was hired by Ohio Treasurer Kevin Boyce as an assistant for a job that was never posted, only announced at Ahmad and Alo's mosque, and she the only candidate who applied and was interviewed:
Ahmad said his wife belongs to the same professional organization as Alo, and he met him through her. They also have been involved in the same community service activities and attend the same mosque. In 2008, Alo filed business organization papers with the secretary of state on behalf of Ahmad and his wife. The company, Five Rivers Partners LLC, is related to consulting services Ahmad’s wife performs, he said.
Boyce hired Alo’s wife in late December to fill a sudden opening in his office. Ahmad said the job, which pays $37,500 a year, was not posted. He announced the opening at his mosque and Alo’s wife, Waeda, responded. She was the only job candidate interviewed, Ahmad said.

Ohio state jobs openings only announced at a terror-tied mosque? Not quite sure how that is legal.

Ahmad should have been properly vetted by City of Chicago's human resources prior to being placed in a position where he controlled millions of taxpayer dollars. Who is responsible for not performing due diligence of Ahmad by simply seeking information readily available on the Internet from 2010?

Editorial: Making Politically Appointed Board Members accountable to Illinois taxpayers

It is time to achieve transparency in the selection process

Daily there are news stories published that focus on breach of the public trust, waste of taxpayer monies and failure to safeguard the public's assets. 

Investigations are launched, such as the announcement yesterday of Governor Quinn appointing a task force for Metra. 
http://www3.illinois.gov/PressReleases/ShowPressRelease.cfm?SubjectID=3&RecNum=11451

Putting yellow crime tape around the scene simply provides a historical reference of the events. This is tantamount to holding a coroner's inquest after the commission of a homicide. Forensic investigation of the  crime after the fact; not preventative actions to avoid the death in the first place.

Conjures up the image of Ducky Lucky warning that the sky is falling in.

FACTS & BACKGROUND:

There are 13 Million citizens in the State of Illinois.

The Governor of Illinois has an Office of Executive Appointments Illinois Board, Commission, Task Force & Council List comprising 361 entities
http://appointments.illinois.gov/appointmentsListing.cfm

Using simple arithmetic, with an average of 7 appointees per commission, this is a haven for patronage appointments numbering 2,527. This represents 0.00019 of the entire population. Why be selfish? Let's give others a chance to serve.

Why do these anointed few vie for these coveted positions, many at no compensation? It can only be for ultimate personal gain in stature or financial reward!

Here is a challenge to the established press and watchdogs in Chicago who profess to seek honest government: 

We urge you to create an open forum and public posting of these nominations for 60 days to allow the public to scrutinize the reputation, backgrounds and motivations of these civic minded individuals. This vetting process will insure open and fair consideration of folks who have a fiduciary duty to budget and spend millions of taxpayer dollars. 

This process will also put elected officials on notice to appoint people with integrity and proper qualifications to represent the citizens of Illinois and make them accountable for their decisions.

Current Method #1  Nominate yourself
http://appointments.illinois.gov/bcForm.cfm

This looks legitimate but Illinois citizens can spot a rigged deal at 100 paces. There is almost no chance that an average citizen will secure an appointment simply by applying.

"Nobody that Nobody sent" would disrupt the political recommendation process and rewards for loyalty to elected officials. Having common folk perform these altruistic acts
of proper government would be a lot less fun but would surely result in getting proper use of taxpayer funds for the public welfare.

Current Method #2  Become an insider

It is Illinois. We are cynical. Method #2 is the only route to getting appointed to these boards!

These appointments all carry a finite term. Here is a little known secret. When the term has expired, board members continue to serve until new appointments are made; they do not vacate their offices like elected officials. 

There are also no term limits for service on these boards. We recommend no more than 5 years total. Churn is good to provide fresh viewpoints and prevent these board members from obtaining personal gain or influence based upon these appointments.

The insidious fact is that these people also game the system by moving from one board to another. Keeping track is harder than playing Wackamole!

How many appointees live south of I-80? Are any appointees from Cairo, Decatur or Danville? Maybe a handful at best.

Taxpayer Options

Report Misconduct
How to file a complaint with the Special Inspector General regarding any suspected instances of fraud, waste, abuse, or misconduct involving a Board or Commission.
Visit http://inspectorgeneral.il.gov/complaint.htm
Office of Executive Inspector General
32 West Randolph Street
Suite 1900
Chicago, Illinois 60601
General Number: (312) 814-5600
Hotline Number: (866) 814-1113
TTY: (800) 524-8794
Fax: (312) 814-5479

Online Complaint Link  http://www2.illinois.gov/oeig/Pages/FileaComplaint.aspx

Make the Illinois Senate accountable for their approval of these appointees.

There is a system of checks and balances between the executive and legislative branches of Illinois government. The Senate should convene an oversight committee that reviews the candidates 60 days prior to voting on the appointments. Public disclosure of affiliations to politicians should be part and parcel of the vetting process. The public has a right know about potential conflicts of interest during the approval process.

Currently, appointments are rammed through a session at 3PM when nobody is paying attention. This is not acceptable, especially since there is no process for background checking on any candidate. This "all in favor say aye" approach to government is not in the taxpayer's interest.

Senators, you have the ability to fix this problem and we strongly suggest that you do this post haste!

Corruption cannot breed where safeguards are in place. Public awareness and the use of the Freedom of Information Act (FOIA) empowers the citizens of Illinois to foster honest government. Reporting misconduct should keep the Inspector General very busy. Whistleblower complaints will keep these board members on notice that taxpayers will no longer tolerate mismanagement of public funds via sole source contracts to friends and family.

We have seen the failure of Governor Quinn to reform government with the Illinois Reform Commission. After 100 days, none of the recommendations proposed by Patrick Collins were adopted.

Our expectations are very low that he will succeed in reforming Metra until the current practice of patronage appointments is
eliminated. 

Today is a good day to start the cleanup, Governor.

Thursday, August 8, 2013

So the old joke goes... "How do you become a millionaire? Start out as a billionaire!"

Employing his proven OPM (Other People's Money) strategy, David Wilhelm and Hopewell Ventures continue their losing streak of pension fund monies while increasing their personal take via management fees.

In our FOIA of the CTA pension funds held by Wilhelm, we have been provided with information that the initial investment of $5,000,000 now has a value of $2,176,934.21 as of September, 2012. This includes a non-refundable personal piggy bank management fee of $1,899,965.71 to Wilhelm & Hopewell.



Is this how the CTA pension fund trustees watch the store?
Breach of trust? Failure to protect assets? We are not convinced
that nobody noticed the funds shrinking under Hopewell's custodial duty.
No problem, its not their money!
 
At this rate, there will be no money left from the initial investment. Who gained from this transaction? Wilhelm and Hopewell, certainly not the contributors to the fund. Nice work if you can get it!
How about a recall vote from the employees and retirees who are counting on these funds and expect proper management of their assets??

Sunday, August 4, 2013

David Wilhelm & Hopewell Ventures continue legacy of 
failed pension investments while increasing his take from management fees.

Wilhelm's reverse Midas touch continues as Corruption Busters digs into his mismanagement of pension funds entrusted to him.

A new FOIA has revealed facts that Wilhelm and Hopewell Ventures had secured $5 Million in private investment funds from the Municipal Employees' Annuity and Benefit Fund of Chicago (simultaneous to an investment placed with his buddy Robert Vanecko at DV Urban. This time, Wilhelm has continued his streak of losses... -17.2 IRR while grabbing $1,939,113 in non-refundable management fees at the expense of the municipal workers and retirees!

Strangely, our FOIA response was authored by Mary Patricia Burns from the law firm Burke, Burns & Pinelli, Ed Burke's firm on behalf of MEABF. Certainly Mary would not entrust her personal investments to Wilhelm with this track record! If she had, we are certain the she would have terminated their management agreement at the first hint of losses, especially with their charging a management fee not dependent upon success.

Our FOIA request obtain a copy of the investment contract was denied as a "trade secret". This is complete nonsense. Wilhelm holds no proprietary formula for success; rather, he has a continued legacy of losing funds from inception. We have appealed the denial with the Illinois Attorney General's Office and will keep you posted if we secure this information.

UPDATE 8/15/2013: Further information provided by the fund after mediation of Corruption Busters' appeal by the Illinois Attorney General. We have now obtained the yearly analyses since 2004 that verifies continued losses of investment funds entrusted to Wilhelm since Day One. 
The current value of the fund is just of $2 Million - a direct loss of close to $3 Million. The only winner here is Wilhelm!!

Previous action by the MEABF Board Vanecko was forcibly removed from management of the fund's investment by court order. We wonder why Wilhelm's contract was not terminated as he continues to make money while losing precious investment dollars.

Our latest tally of Wilhelm's management fees now totals $9.6 Million on management $25.5 Million with diminished value of the initial investments every year since 2004!

We strongly urge the contributors to these funds to initiate lawsuits for recovery of these funds that were granted to Wilhelm based upon clout and sole source deals.

The questions are 

  • What are the names of the MEABF board members who gave Wilhelm this contract?
  • Who appointed them to the board?
  • What are their patronage affiliations?
  • Should they face personal liability for breach of trust and abuse of pension funds entrusted to their care?
We eagerly await response to these questions from the MEABF.




Friday, August 2, 2013

A public call for revising 
The Illinois Municipal Tort Immunity Statute 
745 ILCS 10/ 

On a daily basis, the press and government watchdog agencies like Better Government Association, Reboot Illinois and Corruption Busters reports corruption, abuse of taxpayer dollars and breach of the public trust by elected officials, employees and patronage appointees serving on boards that determine policy and contract massive sums of taxpayer monies.

The latest Metra scandal illustrates how a small board can approve hush money in order to prevent a whistleblower complaint. Insult is added to injury by the egregious use of taxpayer monies to compensate politically connected outside legal firms to defend these actions.

We call for a revisit of the Illinois Municipal Tort Immunity Statute that provides indemnification of these public officials from personal liability and accountability for their poor judgment and waste of taxpayer dollars. Specifically, the statute must be revised to exclude acts related to exceeding authority, fraud, unfair hiring practices that provide an advantage to political influence, awarding of sole source contracts that result in overpayments and cronyism and the inability of taxpayers to obtain information about these acts routinely shielded by the veil of legal privilege or trade secrets.

Currently, taxpayers have no recourse to recover funds improperly awarded to these insiders who are in this not for the benefit of the public, but for personal gain.

Breaching the public trust should eliminate these officials from using public funds for their legal defense; rather, they should personally foot these bills and understand the ramifications of defending against judgments that could affect their personal property. This will serve as a deterrent to future looting of public monies and inappropriate spending.

At the present time, the only hope for relief is if there are criminal charges lodged against these perpetrators. Illinois taxpayers demand protection of their monies and deserve the ability to curtail abuse of authority by people who swear to uphold the best interests of the public.

We call upon the Illinois legislature to amend the Municipal Tort Immunity Statute and enable taxpayers to file civil lawsuits for recovery of these funds.

To view a list of Illinois legislators go to http://www.ilga.gov/