Iowa Public Pension Recovers $215 Million in Fraud Case

(May 2, 2011) — The $22.27 billion Iowa Public Employees’ Retirement System (IPERS) could get $215 million by the end of the month as its initial recovery in the Westridge Capital Management fraud case.

The $215 million, representing about 85% of the state’s total investment in the firm, is in addition to $35 million recovered initially when the investment firm was closed by authorities.

Since February 2009, a court-appointed receiver has been collecting investments and assets of Westridge Capital Management, WG Trading Company, and the individual principals of these two companies due to alleged fraudulent investment schemes, according to a statement issued by IPERS. Westridge managers were charged with operating a fraudulent scheme, misappropriating at least $554 million of institutional investor capital since 1996.

“The court recently approved the receiver’s proposal showing how $815 million in recovered assets would be distributed to more than 50 affected institutional investors,” the statement said. “Additional assets may be recovered and distributed in the future.”

Both the endowments of the University of Pittsburgh and Carnegie Mellon University were investors in Westridge, allocating $65 million and $49 million, respectively.

Officials say the Iowa’s investment in Westridge Capital amounted to 2% of fund’s portfolio, which totaled $18 billion in 2009.