Sunday, May 28, 2023

Ted Siedle, Guest MINDSETTER™

In 2013, I completed my first forensic investigation of the Employee Retirement System of Rhode Island entitled Rhode Island Public Pension Reform: Wall Street’s License to Steal. In my report, I detailed the elaborate scheme a local investment amateur, Gina Raimondo, had concocted with the backing of her Wall Street billionaire friends to get their greedy paws on a honeypot of state worker retirement savings. There was something in the scheme for all involved:

·       Wall Street would get billions in investment fees from state workers and taxpayers.

·       Gina would get millions in Wall Street support for her political ambitions within and outside the tiny state and, ultimately, get rich herself.

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Rhode Island pension participants and taxpayers would pay the hefty price—i.e., get screwed. Pensioners would lose their promised Cost of Living Adjustments forever and taxpayers fleeced. But they’d all be kept in the dark, thanks to a new secrecy scheme devised to eviscerate state public records law. Raimondo would be the first state treasurer to claim all pension investment documents detailing the abuses amounted to “trade secrets” exempt from public disclosure.

And Rhode Islanders paid dearly for Raimondo’s Wall Street scheming—looting which continued under her successor Seth Magaziner and goes on through today.

A year later, in 2014, I wrote an article in Forbes, introducing the concept of “pay to go away.”  https://www.forbes.com/sites/edwardsiedle/2014/08/20/pay-to-go-away-from-state-and-local-pensions/?sh=626936a660b8

“Pay-to-go-away” refers to the calculated decision to pay an individual to no longer provide services—i.e., render no opinions, advice or decision-making—just go and stay far, far away.

“The “pay-to-go-away” I am advocating means to rationally conclude that the services provided by an individual are so destructive that it is preferable (assuming that for some reason they can’t simply be fired) to pay them a substantial, albeit lesser amount, to walk and keep walking.”

My recommendation was that since Gina Raimondo’s outrageous gambling of state pension assets in hedge funds was so foreseeably doomed, it would be in Rhode Islanders best interest to pay her to go away.

I wrote in 2014: “Last year, the pension underperformed the market by 10 percent or $800 million. In 2013, the underperformance was another $700 million. Paying Ms. Raimondo, say $1 billion to go away would have been a sound financial strategy. Now it’s too late. Since she’s running for Governor, win or lose, presumably she won’t be directly responsible for pension assets in the near future. Good riddance.”

Unfortunately, her successor, Seth Magaziner—who had been awakened to the possibility of using state worker retirement savings for his benefit as well—continued Raimondo’s ruinous policy of handing ever-greater fees to Wall Street and operating in secrecy, i.e., in violation of state public record laws. Investment fees soared under Magaziner to nearly $200 million a year.

By my estimate, Rhode Islanders have already paid in excess of $3 billion from the pension alone to further the political and financial futures of Raimondo and Magaziner. That amounts to roughly $6,000 per taxpayer. And the pension looting goes on …

What Rhode Island really needs is a shift from a culture of looting workers and taxpayers for the benefit of a few savvy political insiders to a new era of forensic investigations and recovery of public monies squandered or stolen. Every contract—from highways to pensions—should be reviewed by forensic experts. The cost of such reviews would be de minimis and potential recoveries could amount to billions. Of course, pension contracts involving the largest sums of state money and greatest opportunity for looting should be examined first. Investigations of past wrongdoing and recoveries should be the focus of Rhode Islanders, since there is ample existing evidence of wrongdoing and so much money has been pilfered. Not surprising, neither the Attorney General, State Auditor, State Treasurer nor Governor is talking about the obvious need for forensic investigations. And why do you think that is?

There’s a boatload of money to be recovered from Wall Street alone for past state wrongdoing. If you want to make Rhode Islanders richer—go after it.

The founder of Benchmark Financial Services, Siedle is a former SEC attorney who, in 2017, he secured the largest SEC whistleblower award in history ($48 million) and in 2018, the largest CFTC award in history ($30 million). He is the co-author of the bestseller, Who Stole My Pension? (with Robert Kiyosaki, author of Rich Dad, Poor Dad) and the author of How To Steal a Lot of Money–Legally. He is an active member of the Florida Bar.

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