IPERS awaits more information April 27

DES MOINES – Leaders of the Iowa Public Employment Retirement System already have recouped $35 million and they expect to know by April 27 how much more they might hope to recover in the wake of a federal fraud probe.

Jeffrey Thompson of the Iowa Attorney General's Office told the IPERS Board Friday there are encouraging signs the system could get back part of the assets that were frozen when two New York brokers were arrested on federal criminal and civil charges in an alleged investment scam.

“We're all working together to hopefully get a great result,” Thompson said. “We don't know what the nature of the loss is right now.” He expressed doubt the recovery will be 100 percent of IPERS' investment given the likelihood of losses associated with the economic downturn regardless of any alleged impropriety.

IPERS officials announced last month they had terminated a contract with Westridge Capital Management and were seeking to recover assets valued at $339 million. Westridge and WG Trading managed about 2 percent of IPERS' investment portfolio since March 2007.

Two days later, federal regulators and investigators arrested and charged top Westridge officials with misappropriating at least $553 million as part of an alleged $1.3 billion investment scam.

A federal judge in New York agreed to freeze the assets and protect records of businesses owned by Stephen Walsh and Paul Greenwood after the  Commodity Futures Trading Commission brought civil charges against them.

Walsh, 64, of Sands Point, N.Y., and Greenwood, 61, of North Salem, N.Y., also were named in a criminal complaint filed by the U.S. attorney for New York's southern district and faced civil action by the U.S. Securities and Exchange Commission.

Federal commodity trading regulators alleged Walsh and Greenwood treated investor money as “their own piggy bank to lavish themselves with expensive gifts that included rare books, horses, a $3 million residence and mohair teddy bears valued up to $80,000.

At Friday's IPERS board meeting, Thompson said a court-appointed receiver has liquidated or traded out the assets that were frozen and was slated to issue a preliminary report next month on the status and amount of those assets and a time estimate on how long it might take to distribute the money. It is believed the 310,000-member Iowa retirement system had the largest amount of assets in the pool, he added.

“The current status is that we're really waiting to some degree to get more details about the value of the assets that were there,” he told the IPERS panel.

“We know that there were assets; we know that the receiver anticipates some sort of shortfall – in other words a variance between the expectations in the claims versus what the value they were able to obtain on liquidation. But we do not know how much. We do not know the nature of it and we do not know the extent to which that might or might not impact the value of IPERS' account,” he added.

State Treasurer Mike Fitzgerald said he was encouraged by what he heard.

“As anxious as we are to find out our position, we'll just have to bide our time until April 27,” he said. “I'm more encouraged that we're in a better position than we were those first few days. Those very first few days we heard forget it. That's not what the attorney general's office is telling us.”