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Kilmartin and Raimondo Announce Collaboration to Crack Down on Pension Fraud
Published on: Oct 4, 2010

Democrats Gina Raimondo, a candidate for General Treasurer, and Peter Kilmartin, a candidate for Attorney General, announced today their plan for inter-agency cooperation in cracking down on pension fraud and abuse when they are elected.

“Recent events on Wall Street, pension fraud prosecutions in other states and recent allegations of wrongdoing in Rhode Island demonstrate that we must be vigilant and aggressive to ensure the integrity of our pension system, especially during these difficult economic times. After all, every dollar saved in stopping pension abuse could be used for critical government services, which are currently being cut,” Raimondo said. “I look forward to working with the Attorney General in leading the charge against pension fraud in Rhode Island, when elected.”

Their inter-agency plan includes:

1.       Launching a joint pension fraud task force:  According to a recent GoLocalProv investigation, at least 25 firefighter disability pensions in Johnston are illegal and have helped to cause the town’s contributions to the pension fund to balloon from $1.6 million in 2000 to $3.5 million in 2007. To crack down on pension abuses like this and other fraudulent activity, Kilmartin and Raimondo propose to create a pension fraud task force, which would serve as a forum to share and mine data, as well as other information on suspicious or potentially fraudulent pension activities, and to coordinate investigative efforts. The task force would also involve the U.S. Attorney, the Auditor General, local and state police, city and town solicitors, as well as municipal pension and personnel boards. Working together, these officials will be in a much stronger position to ensure that taxpayers are not falling victim to pension fraud. As part of these efforts, the Attorney General will aggressively prosecute pension fraud occurring on a state or municipal level.

2.       Ensuring a higher pension fund investment code of conduct:  The Providence Journal recently reported on alleged fraudulent activity regarding pension fund investments in West Warwick, which is now under federal investigation. The Securities and Exchange Commission recently passed “pay to play” regulations that prohibit investment firms that make campaign contributions from receiving investment mandates from public pension funds, and prohibit placement agents — individuals hired to secure investment business from investment funds — who make campaign contributions from soliciting such opportunities. Kilmartin and Raimondo will collaborate to ensure that this higher code of conduct, which is focused on ensuring transparency and accountability for investment firms that seek to attract investment in public pension funds, is followed by all members of state and municipal pension boards. They will make sure that such boards understand their obligations, as well as the legal consequences for failing to comply.

3.       Creating a whistleblower hotline:  As the administration of many retirement systems across Rhode Island remains paper based, with limited transparency, there are potentially more situations like that in Johnston across the state. To root out this kind of abusive activity requires improved information. Raimondo and Kilmartin propose to create an inter-agency whistleblower hotline that will allow concerned citizens of Rhode Island to confidentially report their suspicions of abuse. It would operate 24 hours a day, online and on the phone. 

 “Pension abuse and fraudulent activities are an affront to overburdened taxpayers and to all those who served and retired honorably. As Attorney General, I look forward to working with the General Treasurer and others to aggressively lead the charge against pension abuses and use the powers of the office to prosecute those that violate the public trust,” Kilmartin said.