Feds Issue Subpoenas on St. Joseph Pension Fund Collapse

Wednesday, April 18, 2018

 

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Federal Subpoenas issued

Federal officials are now investigating Rhode Island’s largest pension fund collapse.

The federal intervention augments the efforts now being pursued by the court-appointed receiver Stephen Del Sesto and Special Investigator Max Wistow.

For months, Del Sesto has been in and out of court forcing the Diocese of Providence and the Rhode Island Attorney General’s Office to comply with court-approved subpoenas. The pension fund went into receivership on August 18, 2017 - exactly eight months ago today.

The Pension Benefit Guaranty Corporation (PBGC) is the federal agency that issued the subpoenas in the St. Joseph collapse Del Sesto confirmed on GoLocal LIVE.

Del Sesto would not disclose which of the parties tied to the collapse received subpoenas, but GoLocal has learned that the Diocese of Providence was one of the entities. "They have been subpoenaing documents from some of the same parties as we did," said Del Sesto on GoLocal LIVE.

Calls to PBGC media office on Tuesday were not returned.

The PBGC's role is to “protect the retirement incomes of nearly 40 million American workers in nearly 24,000 private-sector defined benefit pension plans.”

The agency claims, "The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans that end in 2017, the maximum guarantee for workers who retire at age 65 is $64,432 yearly ($5,369.32 monthly). The guarantee is lower for those who retire early or when there is a benefit for a survivor. The guarantee is increased for those who retire after age 65.”

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Stephen Del Sesto, Receiver

Investigation — More than 700,000 Pages

During the interview, Del Sesto said that parties like the Diocese of Providence, Kilmartin, and Prospect have improved on delivering on the subpoenaed documents tied to the St. Joseph pension fund collapse.

As GoLocal reported in December, over forty plus years, the Diocese of Providence underfunded the St. Joseph Health Service pension fund by approximately $100 million.

Del Sesto said that Wistow is completing the process of reviewing more than 700,000 documents.

According to the timeline, Del Sesto believes it will be a number of weeks before the investigation will be completed and Wistow makes his recommendations about potential litigation.

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Max Wistow, Special Investigator

For the more than 2,700 members of the pension fund, it has been a long eight months since the fund was thrust into receivership. Del Sesto re-affirmed that to fully pay out all the retirees their promised benefits, the fund has a shortfall of  $115 to $125 million.  

“Retirees had no idea that their pension fund was so underfunded for years. They were made promises and pensioners were mislead on the health of the fund,” said Del Sesto told GoLocal in December.

The fact that ‘no one’ asked may be a sad indication of how the fund could be operated with such a mammoth unfunded liability and state regulators — the Rhode Island Attorney General’s office — failed to properly review the state of the St. Joseph pension fund both when St. Joseph was merged into Roger Williams Medical Center creating CharterCARE in 2009, and then when CharterCARE was acquired by Prospect of California.

“The question for me, that is more in my face in the failure by St. Joseph, is why didn’t Roger Williams Hospital, CharterCARE and regulators weigh the impact of the condition of the pension fund and the impact on the retirees more,” said Del Sesto said in December.

And as the facts are uncovered and the months progress the disappointment and frustration continues for retirees. "In talking to the pension holders, the one common theme is they all feel betrayed," said Del Sesto on GoLocal LIVE on Tuesday.

What is Next

As Wistow completes the investigation, it is likely that Wistow and Del Sesto will then present to the court a plan to Superior Court Judge Brian Stern to recover assets from parties involved in the pension collapse. Litigation could be initiated in the next month or so. It is unclear if the PBGC will take separate action.

 

Related Slideshow: St. Joseph Pension Fund Documents, August 18, 2017

 
 

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