Three Louisiana pension funds that handle the retirement benefits for thousands of public employees in that state are hoping to get their money back from a failed hedge fund.
The Firefighters' Retirement System, the Municipal Employees' Retirement System and the New Orleans Firefighters' Pension and Relief Fund invested a combined $100 million with Alphonse Fletcher Jr., a Wall Street financier, in one of his funds, FIA Leveraged, in 2008.
The fund was offering essentially a 12 percent guaranteed return secured by a third-party investor; they were told the fund would invest in liquid securities that could be sold in a matter of weeks.
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Fletcher's hedge fund has since been described by a court-appointed bankruptcy trustee as having elements of a Ponzi scheme. The trustee, Richard Davis, was appointed in 2012 after Fletcher's main fund, Fletcher International, filed for bankruptcy protection.
The funds are hoping to get their money back through various civil suits, the most recent of which was filed in the middle of January. A federal judge is scheduled to rule in March on a plan to liquidate the fund's assets, which Davis deemed "virtually worthless" in a report last November.
There's a lot of things I wasn't aware of until I read the trustee's report," said Robert Rust, the executive director of the municipal pension fund. "Like where the money went."
The retirement funds, however, say the Fletcher investment was not catastrophic. "The system is financially strong and none of our retirees or our members are in any jeopardy because of the diversification of the portfolio," Rust said. "But we have a responsibility to go after the people who took the money."
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