Pension problems trace back to lax leadership, lavish trips
Four years ago, the Dallas Police and Fire Pension System billed itself as one of the premier in the country.
Today, the fund is going broke.
Accounts have been frozen, investments have failed, and taxpayers are being warned of a billion dollar bailout.
But few are discussing the actions of the man at the top of the pension system all those years, the man many say is largely responsible for the system's failures.
If you have seen the sleek Museum Tower in northern downtown Dallas then maybe you've also heard the phrase, "all that glitters is not gold."
The Museum Tower is perhaps a fitting metaphor for its owner, The Dallas Police and Fire Pension System. Stylish on the outside, but inside, a half-empty, financial drain.
Just weeks ago, panicked pensioners were scrambling to withdraw their savings from the pension system that was going broke.
Just days ago, Dallas Police and Fire Pension System Trustee Scott Griggs made the sobering revelation. "We got from an actuary the letter that says we can't afford to keep the lights on," said Griggs.
The Police and Fire Pension Fund has lost $1.5 billion dollars since 2013, partly from inflated interest rates on pension benefits but also from risky private equity and real estate investments such as the $200-million Museum Tower.
The Pension System's Chief Administrator for 20-years was Richard Tettamant. He and other top administrators plowed a half-billion dollars into speculative real estate projects, much of it in 2005-2006, at the top of the real estate market.
Resorts in Napa Valley, luxury homes in Hawaii, Aspen, Colorado, Park City, Utah and Scottsdale, Arizona. Dallas Mayor Mike Rawlings says he saw trouble immediately after taking office in 2011.
"I was concerned about the real estate, private equity, issues that have a high beta to them," Said Rawlings. "I realized right then that's not what most pension funds do." Rawlings says when he started questioning Tettamant and his staff for specifics, they snubbed him. "They were not giving me the information I was asking for," said Rawlings. "That's when I said there may be more than smoke here."
Rawlings took action.
He appointed four fiscal watchdog Dallas City Council Members to the Pension System Board.
Among them, Scott Griggs who says his eyes were opened to a culture of entitlement and waste. "Initially I was offered a new I-Pad," said Griggs. "Then I was offered a trip with my family to go see Australia and to check on some investments over there." Griggs says not only did he decline, he and fellow city Council member Phillip Kingston dug deeper.
They, along with fellow City Council members Lee Kleinman and Tennell Atkins questioning the investment portfolio as well as Tettamant's claims of success. "Tettamant misrepresented the value of the real estate assets," said Kingston. "He misrepresented the performance of many of these investments including the private equity investments. And he had fully 50 percent of the fund in alternative investments. That's a recipe for financial suicide."
Some investments, Tettamant and his staff managed themselves, mainly the boutique resort properties in Napa Valley and Hawaii. In 2012, News 8 asked for staff and board members travel records. We found $185,000 in travel expenses for that one year. $21,000 of that has spent by Richard Tettamant.
From 2009 to 2012, Tettamant traveled the globe to attend conferences, meet with investment managers or, as he explains, to check up on real estate investments.
London, Brazil, Zurich, Uruguay, Florence, Milan, Amsterdam and Abu Dhabi where airfare alone was $13,000. At the same time, Tettamant paid a consultant more than $100,000 to wage a secret public relations campaign to monitor and shape new coverage. An inspection of the consultant's billing records showed the expenditure of $75 on and item labeled "what to do about (Brett) Shipp".
In 2013, Tettamant, paid the consultant, former NBC5 news anchor Mike Snyder, $5,700 to orchestrate and secretly video tape a meeting in which News 8 had requested an accounting for all of Tettamant and the Board's travel. It was at this meeting that News 8 discovered and questioned Tettaman about multiple trips to the Calistoga Ranch, California resort and the Pension System's other Napa Valley properties.
Records also show the consultants were billing for putting "a forensic trace" on adversarial board member Scott Griggs and others.
"It was completely arrogant," said Griggs. It was reckless, it was a misappropriation of resources."
When asked how Griggs would describe the level of activity being engaged upon behind the Board's back, Griggs responded, "Corruption. It's absolute corruption."
A year and a half later, in June of 2014, Tettamant was forced to resign. The pension's properties in Napa Valley, Hawaii and other high-risk investments resulted hundreds of millions of dollars in write-downs and losses of more than $320-million dollars.
In April of last year, FBI agents raided the offices of the pension system's investment advisers which were located in the same building.
The only top pension system official still employed is General Counsel Josh Mond, who traveled on many of the same trips as Tettamant.
Neither he nor Tettamant has responded to our requests for an interview. Neither has been accused of or charged with breaking the law.
Which brings us back to the current crisis and the question on many pensioners minds. Police and fire retirees have repeatedly asked the question over the past several months, when will anybody, present or past be held responsible for what went on?
And while board members may not have an answer, an FBI investigation is ongoing. Two weeks ago Mayor Mike Rawlings requested the Texas Rangers get involved.