In light of the recent negative investigative findings by DOI of the former NYCERS Chair of the Board of Trustees, it would be prudent for the trustees to review the investment decisions that occurred during her tenure from 2002 to 2009.
As background, DOI found that the Chair failed to implement corrective actions with respect to the city’s property valuation system. Such actions were agreed upon by all parties in response to a major 2002 bribery scandal in the property valuation system. The Chair subsequently lied about implementing these actions. During this seven year period NYCERS’s started making significant real estate investments, as outlined below.
In addition, there is an alleged claim of interference by the Chair in the property valuation of the Met-Life Building just prior to its 2005 sale for $1.74B to a limited partnership which included both NYCERS and NYCTRS. The NYCERS Chair was also the Chair at NYCTRS at the time. This allegation was reported to the Manhattan DA’s office in 2006 but no action was taken. The new DOI report should prod the DA to wake up.
Considering the huge increase in private equity investments during the same period along with the associated scandal at the NYSLERS pension fund in Albany, the trustees should expand their review to this asset class also.
To complete their due diligence the Trustees should review the unresolved perjury and conspiracy charges still pending against senior NYCERS management.
As of June 30, 2002 the assets of NYCERS were reported to be worth $32.2B with no real estate investments and $96M in private equity.
As of June 30, 2009 the assets of NYCERS were reported to be worth $30.9B with $885M in real estate investments and $1.9B in private equity.
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