PSERS chief attorney resigns when the board approves contested legal fees

Jackie Wiest Lutz was a member of a “very challenging time”, as stated by Frank Ryan, R. – Lebanon, who is the chairperson of the audit committee.

Jackie Wiest Lutz was a Pennsylvania attorney for 33 years. After serving as Chief Counsel to the PSERS pension plan, Jackie retired Wednesday. The directors approved the payment of almost $1.2 million for outside law firms investigating the $73B fund.

Chris Santa Maria was the chairman of the board and stated that Lutz served in “very challenging circumstances”.

Lutz was appointed by PSERS (Public School Employees’ Pension System) in March. Three months later, Lutz admitted that the system had exaggerated investments returns. The agency hired an outside lawyer to investigate. FBI agents visited Lutz’s offices in March. They demanded information about the error as well as Harrisburg land deals. This criminal probe was defended by Lutz’s firm by more outside legal firms.

Lutz’s boss Glen Grell, chief investment officer James Grossman and executive director Glen Grell were the targets of dissident trustees who tried unsuccessfully to overthrow them in June. The U.S. Securities and Exchange Commission (PSERS) sent its own subpoena asking for information regarding the error and any potential illegal “gifts” that Wall Street fund managers might have made to agency staff. No one has been accused.

It was not easy to handle all the investigations remotely.

Lutz will be temporarily replaced in the interim by Charles Serine, long-serving PSERS chief counsel, who retired last year and is now available for a permanent replacement.

Lutz served in “a very tough time,” said Frank Ryan (R. Lebanon), chair of the audit panel. The board then passed a thank-you resolution. Jason Davis, the head of the investment committee, wrote his own thank you message. “Rough times.” Debbie Beck, the trustee, acknowledged that there are still many steps to be taken.

Beck is also leaving. Upper Darby School Superintendent’s purchasing leader and union leader decided not to run for reelection for the position of PSERS’ representative for teachers and non-teaching school staff. This unpaid job has had near-weekly meetings and three-day sessions since March.

PSERS had invited people to fill out a request for candidates to succeed Beck. The board canceled a scheduled vote and named Ann Monaghan (president of a school labor union in Lake Wallenpaupack, Poconos) as Beck’s successor. Steve Esack, a spokesperson for the board, wrote that Lemmo and She “won automatically.”

The agency’s longest-serving trustee Melva Vogler is also in that district. She endorsed Monaghan. Ann and I have been friends for years. Vogler, at an Oct.8 meeting, confirmed that Vogler was capable.

No candidate filed to run for the teacher-only board seat currently held in Curwensville by Sue Lemmo. Lemmo was an art teacher as well as a union leader. Lemmo agreed that he would serve another term. That election was also canceled, as there was no race.

PSERS also voted Wednesday for approval of payments to several legal firms. This follows months of delays at the state Treasury, due to trustee concerns that the firms were not performing the work required by their contracts.

The board approved $700,000 in payments to Philadelphia-based Morgan Lewis & Bockius. It also expanded the firm’s work advising PSERS concerning the FBI. The firm will continue supporting the SEC investigation as well as the defense of the agency from a suit by one of its trustees, state Senator Katie J. Muth, (D., Montgomery), for records the agency refuses.

Morgan Lewis, who has so far bill PSERS $956,000, had not yet received any funds as of last Wednesday according to state Treasury records.

PSERS also agreed to a $150,000 payment to Pillsbury Winthrop Shaw Pittman’s lawyers for past work in defense of the Muth suit. It was filed last summer.

“The easiest way for us to cut our legal expenses is if you can find settlement”, said trustee Nathan J. Mains. Mains represents the state’s school districts, which pay $2B a year to keep PSERS solvent. “This seems like it should easily be settled.”

Muth claimed she has twice offered to settle. She voted against Morgan Lewis, Pillsbury, and the other lone votes.

The board also agreed that it would pay $35,000 more to Womble Bond Dickinson. Ryan’s audit board tapped Womble in March to conduct an internal investigation on the inflated investments numbers. Trustees can expect to receive results as soon the November.

Womble received $141,000 from the system in a contract amounting to up to $367,000.

In addition, the board paid up to $300,000. to Cohen Milstein Sellers & Toll. Suzanne Dugan is the fiduciary counsel to PSERS. Cohen Milstein has received $210,000 from the system this year.

The board paid $24,000 to Adviser Compliance Associates LLC, (ACA Compliance Group), for “additional tests services” during its work reviewing the investment returns that were flawed. This was one of many events that sparked federal investigations.