NEWS RELEASE
Board Chairman: Development ‘slams door’ on accusations
PHOENIX – The U.S. Department of Justice and the U.S. Securities and Exchange Commission have terminated separate investigations into the investment practices of the state’s Public Safety Personnel Retirement System after finding no evidence of criminal misconduct.
The investigation of PSPRS arose from allegations waged by former PSPRS employees who accused senior investment staff of fraudulently rigging valuations of certain Arizona-based real estate investments to qualify for annual performance pay bonuses.
In November, the U.S. Department of Justice announced that a joint investigation with the F.B.I. found no reason to believe PSPRS committed any criminal acts. Federal investigators also stated that PSPRS, as an entity, was not a subject or a target of the investigation.
Recently, the U.S. Department of Justice confirmed it finished its investigation after finding no wrongdoing on the part of PSPRS employees. The same decision was also reached by the U.S. Securities and Exchange Commission, which conducted an informal investigation into allegations made against the Arizona public safety pension system.
“This is a door slamming on the false accusations that unjustly damaged public confidence in our agency, our employees, our partners and our mission,” said PSPRS Board of Trustees Chairman Brian Tobin. “Now we can all move on to real issues, like improving the financial health of the trust and making this pension system sustainable for public safety employees and employers.”
The concluded federal investigations follow several other major reviews of PSPRS real estate investment matters involving investment partner Desert Troon. The matter was previously vetted by independent accounting firms Ernst & Young and Heinfeld Meech Company, real estate experts with ORG Portfolio Management, opposing staff reports and the Office of the Arizona Auditor General.
“Late last year, the Department of Justice took the unusual step of publicly issuing a termination letter in which they stated that PSPRS had engaged in no criminal conduct and the Securities and Exchange Commission never even opened a formal investigation file before terminating its investigation and issuing a no action letter,” said PSPRS defense attorney Jim Belanger. “This result speaks volumes about the flimsiness of the allegations made against PSPRS.”
In November, PSPRS officials were notified of the determination impacting the agency through a letter written by U.S. Attorney for the District of Arizona Elizabeth Strange and Dominic Lanza, Assistant U.S. Attorney and Chief of the Financial Crimes and Public Integrity Section.
