TPR Bans Trustees for Scamming Millions from Pensions

Regulator says trustees showed “reckless disregard” and a “lack of integrity.”

The UK’s The Pension Regulator (TPR) has banned three people from acting as trustees of pension plans for allegedly using the plans they oversaw to scam investors out of millions of pounds.

Timothy Walker, Desmond Cheyne, and Lindsay Macalister have all been banned for life by TPR from acting as a trustee because of their links to the Milton and Carrick Harbour occupational pension plans. The three have been added to TPR’s register of prohibited trustees.

TPR said members of other plans were encouraged to transfer their pensions into the Milton and Carrick Harbour pension. It said it believes the trustees then invested funds held by the pension plans in high-risk, unregulated investments that were acquired at “grossly over-inflated prices” without the members’ knowledge.

“The trustees showed a disregard for their obligations resulting in scheme assets being gambled on high-risk investments that are now worth a tiny fraction of what was put into them,” said Mike Birch, TPR’s director of case management. “This has jeopardized the financial futures of the scheme members they were supposed to be supporting.”

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TPR’s Determinations Panel said that Lindsay showed “reckless disregard for his obligations,” and ruled that he and Walker should be banned for their lack of “integrity, competence and capability,” and are “not fit and proper people to act as trustees.” The panel ruled Cheyne should be prohibited on the grounds of his lack of competence and capability.

The panel found that it was “more likely than not Walker was complicit” in the pension scam activities, and that “Cheyne’s actions, or lack of them … demonstrated a lack of competence and capability” for him to be a trustee.

It said Lindsay’s conduct was “so reckless as to demonstrate that he lacked the integrity appropriate to acting as a trustee, particularly given his admission that he was fully aware” that the pension funds were going into inappropriate investments, and was paying substantial fees to do so as well.

The TPR was alerted to the activities by independent pension professionals who were concerned about the actions of the trustees, including reports of suspicious transfers, and conflicts of interest. Dalriada Trustees, an independent trustee services provider, was appointed by TPR as an independent trustee to the plans and is working to recover as much of the invested money as possible for the members. The TPR estimated that £9 million ($12.2 million) was transferred from the pensions into investments between November 2012 and May 2013.

“Savers have the right to expect trustees to manage their pension schemes effectively,” said Birch. “Where trustees cannot or do not do this, we will take action to protect members’ benefits by replacing them and then, where appropriate, ensuring that they can no longer act as trustees.”

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Pennsylvania Delays Pension Payments

State treasury holds up $581 million in obligations to PSERS.

Pennsylvania is delaying more than $1.7 billion in payments due to school employee pensions and Medicaid because the state government has run out of funds.

The payments are for the state’s share of pension obligation payments to Pennsylvania’s school employees pension fund, and for reimbursements for medical care under Medicaid. The Medicaid reimbursements, which are due Sept. 22, will be delayed for at least a week, and school officials said they expected the pension obligation reimbursements, which are due Sept. 25, to be delayed by a few days, reported the Associated Press.

The treasury delayed $581 million in the state’s share of pension obligations to the Pennsylvania School Employees Retirement System (PSERS), and $1.169 billion in payments to managed care providers for medical assistance services.

“Without a completed budget, the commonwealth’s Treasurer and Auditor General have said they are not currently inclined to authorize the normal short-term lending that would typically allow for seasonal cashflow interruption,” said J.J. Abbott, a spokesman for Pennsylvania Gov. Tom Wolf. “Delayed payments will remain stalled until funding exists to meet commitments.”

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State officials expect rolling delays of payments, at least until spring, said the AP, unless the budget issues are settled before then.

“We’ve been told it’s going out next week,” said Jay Himes, executive director of the Pennsylvania Association of School Business Officials, according to the AP. “After that, we’ve been told, ‘Don’t hold your breath.'”

The AP reports that insurers that administer benefits for 2.2 million Medicaid enrollees will be forced to borrow money to make timely payments to hospitals, physicians, and pharmacies that are required by federal law. It is the first time that the Pennsylvania state government has missed a payment as a result of not having enough money.

“I spoke with House and Senate leaders to try to finalize a budget that protects investments in critical programs important to the people of Pennsylvania,” said Wolf in a statement. “We made progress, and with more work, I believe we can reach a compromise in the coming days.

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