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.


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


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