Shumlin proposes to allow confiscation of public employee pensions

Gov. Peter Shumlin announced a proposal today to make the pensions of public employees subject to forfeiture if they are convicted of fraud, embezzlement or other financial crimes.

Under current law, the state can withdraw money from a public employee’s pension to correct for inflated hours or other types of fraud but it cannot order restitution beyond that amount. Under Shumlin’s proposal, which was drafted with input from the Vermont Attorney General’s Office and the Treasurer’s Office, the pensions of state and municipal employees and teachers would no longer be impervious to confiscation.

Shumlin told reporters at one of three scheduled press conferences this week that the point of the proposal is to ensure that “If you rip off the public … the judge has the discretion to order those dollars to be repaid to the state, or some portion of them.”

State Treasurer Beth Pearce said, “For me, the bottom line is taxpayers should not have to pay for retirement benefits for a public official that has violated the public trust through acts of fraud or embezzlement.”

The proposal was prompted by the case of Vermont State Police Sgt. James Deeghan, who is pleading innocent to two felony charges for committing timesheet fraud to the tune of about $139,000. The legislation, however, would be prospective, so it would not apply to the Deeghan case or other pending or past cases.

“I think it is a good tool to have,” said Chittenden County State’s Attorney TJ Donovan, the prosecutor for the Deeghan case. Donovan declined to comment on what measures he would take to obtain retribution from Deeghan, but he said, “Reimbursement and restitution is an issue that we are taking very seriously.”

When making a decision about pension forfeiture, a judge would weigh a handful of factors including the scale of the crime, the degree to which public trust was betrayed, and the number of unimplicated family members dependent upon the pension.

Shumlin told reporters that the proposal has solid support from the state’s unions, and, to prove the point, he brought along Michael O’Neil, head of the Vermont Troopers Association, the union for state police officers, as well as representatives from the Vermont National Education Association and other unions, to the press conference.

Rep. William Lippert, D-Hinesburg, and Sen. Richard Sears, D-North Bennington, chairs of the House and Senate Judiciary committees, respectively, have pledged to take up the pension reform legislation early on in the upcoming session.

Shumlin said the state’s audits have not revealed any other instances of timesheet fraud, substantiating his hunch that the Deeghan case “was an isolated instance of fraud.” But, the governor added, the case was a wake-up call to the state that it needs to have recourse to recoup taxpayer dollars when financial crimes do occur.

Department of Public Safety Commissioner Keith Flynn updated reporters on the steps his department has taken to reform their payroll procedures in the wake of the Deeghan case.

• The department conducted a three-month internal audit of all Vermont State Police timesheets, followed by a six-month audit of timesheets at the Williston barracks, where Deeghan was based.

• A supervisor must approve all timesheets, verifying their accuracy through review of radio logs. (Deeghan has been accused of signing his timesheets, acting as his own supervisor.)

• There will be an automatic review of timesheets whenever an individual’s overtime hours exceeds 20 hours during a single pay period.

• At least one lieutenant in both the northern and southern regions of the state will now work during the night shifts, which, Flynn said, will provide greater oversight of overtime decisions.

Secretary of Administration Jeb Spaulding said an external forensics audit commissioned by the state Auditor’s Office is due out within the month.

Alicia Freese

Comments

  1. Lee Stirling :

    I fully support the seizing of state employee pensions in the event they are guilty of fraud, embezzlement, or otherwise cheating me and every other VT taxpayer. But, as the old adage goes, “if you build a better mousetrap, they will build a better mouse”. Many of the recent publicized instances fraud and embezzlement across VT highlighted more about the lack of accountability and oversight than the craftiness of those who stole the money in the first place. Some of the thieves’ schemes were really pretty ham-handed, far from being a masterminded plan. If people are going to steal, they will probably find ways to steal even with the threat of losing pensions and they might get really good at covering their tracks. I just hope that the system of review and accountability across state government is improved and expanded so that they can more quickly and easily uncover such thefts before they go on for years and so the thieves will be assured at losing their state pensions.

  2. Luci Stephens :

    Maybe I’m missing something in the translation, but my read of the second paragraph of this article is that current law already allows the State to ‘withdraw money from a public employee’s pension to correct for inflated hours or other types of fraud but it cannot order restitution beyond that amount.’ If that phrase is a correct description of the law, then the remedy in the Deeghan case already exists. The State can recover, through the pension withdrawal process, what was lost to inflated hours and other types of fraud.

    As much as we are justifiably outraged when public employees violate the trust placed in them, the restitution process, under existing State law and constitutional interpretation, calls for repayment of what was actually taken/ lost. It does not constitute or allow for punishment by confiscation of monies the individual has contributed and/ or truly earned. I urge legislators considering this initiative to be very conscious of the difference between punishment and actual loss. It’s easy and popular to jump on the bandwagon of ‘let’s find a way to really hammer this bad actor’. It’s more difficult to find the better response, but worth the effort.

    Using the Deeghan case as an example, it appears the mechanism already exists to withdraw from the pension funds what was actually lost – that will be restitution. What appears to remain needed is a way to assure that the ultimate monthly pension amount is NOT based on any fraud/ abuse, etc. AND if we don’t already have it (I think we don’t) there probably needs to be specific criminal law/ criminal procedure/ penalty enhancement for cases where public employees violate the public trust by committing a criminal act(s) in the conduct of their duties. That would send a very strong message, act as a deterrent, and would not confuse restitution with punishment.

  3. David Rogers :

    I also think we should review public employees padding their last years pay with overtime pay plus holdover vacation and sick time. This is creating major problems with goverment pensions just search “Unfunded public pensions”

  4. Jim Barrett :

    A total lack of oversight, guidance caused this problem and if a department head can’t understand how to keep track of employee work hours I can just imagine what else is not managed. It is obvious that the management in government doesn’t care about the ripoff of taxpayer money and it has taken extreme cases to highlight the problem ! WHO IS BEING HELD ACCOUNTABLE……………………..!

  5. kevin lawrence :

    If you look at the top 100 list of retirees from the VT system, and then if you look at their hours worked during their last 3 years of employment, you will find many, many examples of people trying with due dilligence to expand their earnings and thus their retirement income. Who are the top 25 Vermont State Retirement System recipients? Almost all are in law enforcement, where overtime is granted. Perhaps policy changes related to padding those last 3 years are in order???? Teachers in the system don’t get overtime pay, which is fine, but certainly not an equitable situation compared to the State Police in VT.

  6. HENRY HAGGERTY :

    I agree with the proposed Vermont law. I worked 48 years for the public in Vermont and Florida. A thief gives all present, past and future public employees a black eye.

    This punishment is a greater deterrent than prison time. In Florida loss of pension is something the employer is able to due without going to court. Court has nothing to do with truth. It is who is able to put on the better show.

  7. Luci Stephens :

    With all due respect for anyone’s contrary personal sensitivities, those public employees who conduct themselves dishonorably do NOT tarnish those of us who served with honor, which is most of us who served, now serve, or will serve. I imagine that most past and present state and other public sector employees who did their jobs well and truly are justifiably proud of their service and proud of themselves – I certainly am! One bad apple does not spoil the whole bunch, but it sure gives a lot of folks who appear to have time on their hands a chance to sling mud, make accusations, cast aspersions and generally call attention to themselves.

  8. How about not counting all overtime hours when computing pensions all together???

  9. Luci Stephens :

    I applaud Ms. Bisbee’s idea!!! Discounting elective (as opposed to ordered/ required/ mandatory) overtime hours in pension computation is a great lead-off for a rational discussion of meaningful pension reform. It’s also a clear opportunity to put the issues of pensions and needed pension reform where they belong – separate and distinct from appropriate, relevant,effective responses to dishonest and/ or criminal behavior committed by public employees.

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