Georgia County Manager Charged with Pension Fraud

A former county manager in Georgia has been charged with fraud for allegedly misleading pension boards to hire an unnamed investment adviser because of a romantic interest he had with one of the firm’s consultants.

The SEC says former Bibb County Manager Dale Walker misled three Macon-Bibb County public pension fund boards in connection with their selection of an investment adviser to manage a combined $402 million in pension fund assets. As county manager, Walker was a member of the board of directors of one of the three Macon-Bibb County pension funds.

“Walker had a personal conflict of interest which led him to provide a specific investment adviser with an unfair competitive advantage in the request for proposal process,” said the SEC in its complaint. “Walker had an undisclosed personal relationship with an individual associated with the adviser.”

According to the complaint, which was filed with the US District Court Middle District of Georgia Macon Division, Walker met someone in 2007 who worked for the state retirement system where he was a member of the board at the time. It said he “developed a romantic interest” in the individual, who the complaint identified as “Associate A.”

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In late 2013, Walker learned that Associate A had become a consultant with the unnamed adviser, and reached out to Associate A to discuss a potential business opportunity. The complaint said during 2013 and continuing into 2015, Walker began to regularly contact Associate A and repeatedly expressed his romantic feelings. During that time, Walker also sent numerous personal gifts.

As chief administrative officer for the City of Macon, and as county manager for Macon-Bibb County, Walker had authority to hire an investment adviser to provide cash management services for certain non-pension fund related financial accounts of the city and county. In late 2013, Walker selected the unnamed adviser to provide these services to the City of Macon, and in early 2014, to Macon-Bibb County.

The SEC said Walker “undermined the integrity of the pension fund boards’ selection process in several ways.” It said he allegedly allowed the adviser to review the confidential proposals of other investment adviser candidates and asked the adviser to draft a written analysis of the proposals and create a numeric ranking of all the applicants. The adviser ranked itself first above all other applicants.

According to the complaint, Walker then took credit for the adviser’s analysis and ranking and attached them to his own memos to the pension fund boards in which he recommended the adviser be selected for all of the pension funds.

“The three pension funds were given copies of all proposals submitted by all candidates, but were unaware of the Adviser’s role in the recommendation process and the associated conflict of interest,” said the complaint. “Each of the three pension fund boards followed Walker’s recommendation and selected the adviser as the investment adviser for their respective pension funds.”

Without admitting or denying the allegations in the complaint, Walker consented to pay a $10,000 fine, and is no longer allowed to advise any government entity on pension- or municipal security-related activities.

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Tags: Bibb County, Dale Walker, Fruad, Georgia, Pension, SEC

Modern Monetary Theory, the notion that huge federal deficits don’t matter much if at all, has a new detractor: Warren Buffett.

“I’m not a fan of MMT—not at all,” the Berkshire Hathaway chief told Bloomberg. He said the theory, if put into practice as many on the left of the Democratic Party are advocating, would bring “spiraling” inflation.

The storied financier, who is far from a conservative (he once lamented that he paid a lower tax rate than his secretary), added: “We don’t need to get into danger zones, and we don’t know precisely where they are.”

A supporter of the presidential runs of Bill Clinton, Hillary Clinton, and Barack Obama, Buffett has called for greater federal health coverage and is no deficit hawk. In a 2011 fight over raising the federal debt ceiling, he called not lifting it “asinine.”

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In his recent comments, he elaborated on his views about federal debt: “It’s just ridiculous to be able to use the debt ceiling as a weapon in terms of other fights. The problem with having a debt ceiling is that it can be used for extraordinary mischief or, in effect, the blocking of government.”

That said, he pointed out that he thought consistently raising the ratio of federal debt to gross domestic product was a bad idea.

The concept has been embraced by several 2020 Democratic presidential aspirants. MMT holds that, since the US prints its own money, it need not concern itself with a large deficit expansion. The theory is a way of expanding government spending to pay for such goals as a Green New Deal and Medicare for all.

MMT has attracted criticism from other financial figures, not all of them Republicans: Federal Reserve Chairman Jerome Powell, former US Treasury Secretary Larry Summers, BlackRock CEO Larry Fink, and DoubleLine Capital chief Jeffrey Gundlach.

Tags: federal deficit, Modern Monetary Theory, Warren Buffett

Georgia County Manager Charged with Pension Fraud

Warren Buffett Slams Modern Monetary Theory

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