How To Loot A Public Pension..... [View all]

[Laxman]

Last edited Mon Aug 17, 2015, 08:13 AM - Edit history (2)

telling it like it is Jersey style. Ahoy mateys! Thar be gold in them coffers and Cap'n Christie is here to take it! The good folks at HedgeClippers.org have done a handy little analysis of the New Jersey pension system and the results are disturbing. New Jersey has a serious pension shortfall. Governor Christie is running around the country touting his "reforms" as he tries to cut benefits that have been paid for by public employees based on that shortfall. He blames the "greedy" public employees. But in reality, it isn't a systematic failure of the pension funds, its been a deliberate hijacking of the public funds meant to finance public pensions and diverting it BY THE BILLIONS to Christie donors-who then used their sharp business acumen to produce smaller returns and charge higher fees.

This isn't just a NJ problem, according to the Financial Times (the use of hedge funds)...equated to public sector pension plans paying about 72 cents for every dollar of investment gain they got back from hedge funds between the start of 2008 and mid-2014, according to the FT calculations. Bad news indeed. But here in the Garden State it stinks even more. Consider the donations made by some of the hedge fund geniuses-who must be pretty smart because if there is any investment that has paid better returns than a donation to the Republican Governor's Association while Christie ran it, I haven't seen it. Consider these generous donations:

KSL Capital – On March 25 of this year, the New Jersey State Investment Council approved a $100 million allocation to this firm,[viii] whose chairman donated $2.5 million to the RGA between 2013 and 2014.[ix]

Lazard Rathmore – A senior advisor with this firm, Herbert Gullquist, donated $75,000 to the RGA from 2012-2014;[x] in 2012, the state committed $150 million to this fund.[xi]

Canyon Capital – In 2011, the New Jersey State Investment Council made a $100 million allocation to a Canyon Capital fund five months after Canyon invested in Atlantic City’s Revel hotel and casino—the same month that New Jersey handed the casino $260 million in tax incentives.[xii]

Chatham Asset Management – In 2012, the firm’s principal, Anthony Melchiorre, along with Andrea Melchiorre residing at the same address, made donations totaling $58,300 to the Republican National Committee,[xiii] an organization that helped fund voter turnout for Christie’s reelection campaign in 2013.[xiv] In November, 2013, the state proposed investing $300 million in this fund;[xv] the following year, potential conflicts also surfaced surrounding Chatham’s reported interest in a major casino in Atlantic City.[xvi]

Third Point Management – The CEO of this company, Daniel Loeb, donated $1.25 million to the RGA between 2012 and 2014;[xvii] in 2011, Third Point was awarded a $100 million contract by the State Investment Council.[xviii]

Elliot Associates – This company – whose CEO, Paul Singer, donated $3.85 million to the RGA between 2012 and 2014[xix]– also manages $200 million of New Jersey pension fund assets.[xx]

Lesser returns? Not a problem as long as there have been larger political donations, right? So when Christie touts his record in NJ consider this:

The state’s hedge fund investments have come under additional scrutiny in recent months, as allegations of misrepresentation of fees paid to hedge fund managers, serious conflicts of interest, and possible pay-to-play involving hedge fund managers and contributions to Governor Christie have surfaced.

Since Governor Chris Christie took office in January 2010, the New Jersey State Investment Council nearly doubled its allocation to hedge funds, to over 10 percent of assets under management. Total hedge fund fees from July 1, 2010 through June 30, 2014 were likely more than $1 billion; meanwhile, hedge fund returns lagged same-sized portfolio of total fund returns by $1.1 billion over the same period.

Just remember Cap'n Christie and his swashbuckling band of pension pirates. They've been growing fat on public pension money and blaming the folks who actually paid into the system for the shortfalls.

Head on over to the Christie Crime Digest for lots more on the sordid rule of Christie the Pirate.

Try not to look too closely at this picture-it can cause either uncontrolled laughter or horrible nightmares. We let this guy bully us?