Judge orders Kentucky pension agency to release report on hedge fund deals – InsuranceNewsNet


A judge has ordered the Kentucky state pension agency to release a suppressed report about possible fraud in its controversial hedge fund investments, ruling that taxpayers deserve to see a report that cost them $1.2 million.

“The public has paid $1.2 million for this report,” Franklin Circuit Judge Philippe Berger ruled on Thursday. “The public has the right to know its content and to decide whether it got what it paid for.”

In 2020, the Kentucky Public Pension Authority hiring New York law firm Calcaterra Pollack to investigate “any improper or illegal activity” in multi-billion dollar hedge fund deals that led to lawsuits alleging fraud. The first lawsuits were brought by civil servants and, later, by the Attorney General’s office.

Lawsuits claim multiple hedge fund dealers deceived KPPA $1.5 billion in risky, poorly disclosed and high-fee investments from 2011 to 2017, aided by some KPPA directors and employees. The dealers deny the allegations. The KPPA itself did not join the fraud prosecution as an active party.

After initially stating that Calcaterra Pollack’s report would be shared with the public, the KPPA rejected requests from numerous people, including the Lexington Herald-Leader – to release it under the Kentucky Open Records Act.

The KPPA cited a number of exemptions in the Open Records Act, including solicitor-client privilege and the work product doctrine, the confidentiality shield that documents generally enjoy if produced by lawyers for a possible trial.

But Franklin circuit judge Philippe Berger knocked down the pension agency’s defenses. In two separate opinions published on Thursday, Shepherd gave the KPPA 10 days to publicly release the final report.

The KPPA waived attorney-client privilege when it shared the report last year with the Attorney General’s Office, who is not the agency’s attorney in this case, Shepherd wrote. Regarding the report as a product of the lawyers’ work to prepare for possible litigation, Shepherd said he was skeptical as the KPPA has staunchly refused to join in the fraud prosecutions brought by other others over the past five years.

Shepherd, who reviewed the report privately, said much of it consisted of a collection of publicly available documents, including KPPA committee transcripts, internal KPPA investment records and articles. of newspapers – none of these were privileged.

“A compilation of facts cannot be channeled through attorneys to confer privilege on otherwise unprivileged records,” Shepherd wrote.

“In short,” he writes, “a comprehensive review of the Calcaterra Pollack report raises questions as to whether the purpose and intent of the report was to fully expose all relevant facts (and to determine whether the KPPA and its employees made mistakes), or whether the report was commissioned to cover up or downplay those mistakes in an effort to convince the (Attorney General) not to pursue claims that might prove embarrassing to current or former KPPA management.

eager davidexecutive director of the KPPA, declined to comment on Thursday, saying he could not discuss ongoing litigation.

The two plaintiffs who won the winning open case challenges were Louisville Lawyers Glen Cohen and Jordan Whitewho represent some of the defendants in the fraud prosecutions.

In an interview on Thursday, Cohen said his client – a former pension system administrator William Cook – believes he did nothing wrong, and he wants to see any reports the KPPA has produced on hedge fund deals as he prepares his defence.

In his rulings, Shepherd said he observed what he called “a questionable tendering process” behind the KPPA’s award of the survey contract to Calcaterra Pollack.

Based on its review of KPPA records, he wrote, the law firm submitted two separate but “substantially identical” proposals for the work, the first of which was dated June 19, 2020, two months ahead of KPPA soliciting competitive bids for the project. This June 2020 proposal suggested a “high-end” fee range of approximately $1.2 millionwhich is what the law firm ended up being paid in its final settlement with the pension agency, the judge wrote.

The KPPA is responsible for providing pension benefits to over 400,000 state and local government employees and retirees. Kentucky. It is one of the least funded public pension plans in the country, with $16.7 billion retirement assets listed in its 2021 financial report and $25 billion unfunded actuarial liability.

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