Last month, I wrote about pressure on state pension funds, many of which are underfunded and are facing immense pressure to chase higher returns. I profiled a $125 million investment made by the New Mexico Educational Retirement Board (NMERB) into Gramercy, a Connecticut-based hedge fund.
As we showed last month, there were some gaps between what Gramercy disclosed to NMERB and what we found in official records. Now Gramercy is making big news as a potential facilitator of a settlement between Argentina and holdout creditors. According to news reports, Gramercy and other bondholders who took Argentina's 2010 bond exchange are pushing a settlement.
The financial crisis brought havoc to just about every financial institution in the country. But let's focus on the current status of state pension funds, where the crisis is beginning to look particularly grim.
Just how underfunded are state pension funds? The estimates start at well over a trillion dollars and go up from there. The answer depends on the observed time period, the difficulty in raising taxes on an already overtaxed public, and the severe problems in getting decent returns without taking unacceptable risks.
New York State Senator John Sampson (D-Brooklyn) was arrested today, charged with embezzelment, obstruction of justice and making false statements to the FBI.
Also, the New York Daily Newsreports today that the FBI is investigating a $188,500 "loan" to Sampson from Edul Ahmad, the Guyanese-American businessman who pled guilty to charges in a multi-million dollar mortgage fraud scheme.
On Friday, prosecutors disclosed that Shirley L. Huntley, when she was a Democratic state senator from Queens, had secretly recorded conversations with seven elected officials and two other people after she was confronted by the F.B.I. and asked about her alleged participation in criminal schemes involving embezzlement and bribery.
NLPC exposed a sham charity Huntley founded called The Parent Workshop, to which she steered tens of thousands in taxpayer money. Our research was first reported in the New York Post of March 6, 2011, apparently triggering the criminal probe.
Democratic State Senator Malcolm Smith, a close crony of embattled U.S. Rep. Gregory Meeks (D-NY), was arrested by the FBI this morning, along with several Republican party officials. According to various news reports, the arrests result from a scheme to bribe Republican officials to allow Smith to run for New York City mayor as a Republican. Smith is the former president of the State Senate.
From afar, the scheme seems bizarre, but in the context of the endemic graft in New York City, it is not far fetched at all. NLPC has played a key role in exposing a rotten political culture that is corrupt from top to bottom, and spans both parties.
The Washington Post today reports that a federal grand jury is investigating Senator Robert Menendez (D-NJ) for pushing a Dominican port security deal that would have meant a windfall for Dr. Salomon Melgen, a major donor. The post security deal was first reported in the New York Times on February 1, based on information provided by NLPC.
Post reporters Carol Leonnig and Peter Wallsten cited unnamed sources for the existence of the grand jury and a related investigation. According to the story:
Frances Robles reports in the New York Times that an ex-aide to Senator Robert Menendez (D-NJ) stood to benefit from a Dominican port security deal, along with Menendez benefactor Salomon Melgen. From the Times:
Mr. Menendez, Democrat of New Jersey, has pushed United States government officials to help enforce a contract that a company owned in part by one of his major donors, Dr. Salomon E. Melgen, has with the Dominican government, which has refused to honor it.
A top executive at Dr. Melgen's security company will be Pedro Pablo Permuy, a former national security adviser and senior legislative aide to Mr. Menendez, according to a cousin of Dr. Melgen. Mr. Permuy's ties to the senator go back at least 20 years.
But Menendez' office told the Times that this is all news to the Senator:
Ever since the allegations first made in November that Dominican-born eye doctor Salomon Melgen provided prostitutes for Senator Robert Menendez (D-NJ), a favor that appeared to be gravy on top of his large campaign contributions, the obvious question for us has been, "What has Menendez done for Melgen?"
We believe that we have answer. After an extensive review of publicly available documents that link the two men, the answer relates to unusual actions on behalf of a port security company known as ICSSI.
Amanda Becker reports in the Capitol Hill newspaper Roll Call today that outside groups spent $3.6 million to sponsor foreign trips for members of Congress and their staffs in 2012. The article includes my comments:
"Congressmen are frequently accused of living inside a bubble. So you can make a good case that members should be traveling and getting to see certain things overseas," Boehm said.
"But all too often they have been arranged by groups that have very pronounced legislative interests," he added. "And what's more enticing than having the possibility of talking [to lawmakers] in a relaxed, vacation resort-type setting?"
Investigators are asking questions about the roles of then-Senate Democratic leaders John Sampson and Malcolm Smith and others who were accused of helping the Aqueduct Entertainment Group (AEG) land a multibillion-dollar casino contract three years ago, sources said.