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

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