November 24, 2014
Public Safety Personnel Retirement System
State of Arizona
Nov. 24, 2014
Contact: Christian Palmer
Feds: ‘No criminal misconduct’ by PSPRS
Board Chairman: ‘We knew this day would come…’
PHOENIX – The US Department of Justice announced the investigation into the investment practices of the state’s Public Safety Personnel Retirement System has not led federal authorities to believe PSPRS engaged in any criminal behavior.
The investigation of PSPRS arose from allegations waged by former PSPRS employees who accused senior investment staff of fraudulently rigging valuations of certain Arizona-based real estate investments in order to trigger performance bonuses.
The investigation, which has involved the U.S. Department of Justice and the Federal Bureau of Investigation, has lasted more than a year. PSPRS officials were notified of the determination through a letter written by U.S. Attorney for the District of Arizona Elizabeth Strange and Dominic Lanza, Assistant U.S. Attorney and Chief of the Financial Crimes and Public Integrity Section. The letter states that PSPRS is “not a subject or a target of the investigation.”
Both PSPRS and staff have maintained they committed no wrongdoing.
“We knew this day would come,” said PSPRS Board Chairman Brian Tobin. “This announcement is the just reward for PSPRS staff, board members, business partners, and beneficiaries who waited patiently, remained committed and worked tirelessly throughout an extremely difficult time.”
The federal investigation marks the third major review to find no wrongdoing in PSPRS’ real estate investment matters involving investment partner Desert Troon. In addition to external auditing by independent accounting firms Ernst & Young and Heinfeld Meech Company, the investment valuation in question was also vetted through opposing staff reports and the Arizona Auditor General’s Office.
“This conclusion was not unexpected,” said PSPRS attorney Jim Belanger, “But this is a significant development that we are grateful was made public by the U.S. Attorney’s Office.”
A copy of the letter from the U.S. Attorney’s Office is attached.
The Nov. 24 PSPRS press conference announcing this news can be viewed here.