Wednesday, May 20, 2015

Providence Rhode Island Schematic of Pension Scam there is also a version on scribd

Here is how the scam works…( this probably dates back to 1999 or later)

-2007 June-July(fy2008)                                                                                                                       In 2007 beginning July the Mayor and Council divert pension dollars of $50,000,000 ARC to pay for  general operations and use instead of funding pension. From July 2007 to June 2008 the pension fund receives nothing. Pension assets decline due to lack of contribution combined with paying out to retirees. The Investment Commission complains "we dont have any assets and you "the city"  didnt contribute all year long."  City says ok we will create and asset Enron Style . Now you're fine .We'll pay you next year for having taken your funds this past year.                                                                                                                                                                                                                                                                          
  • 2008 July thru June (fy 2009)  
    The same routine happens all over again .The Mayor and Council Knowingly again divert 2008 pension dollars now equaling $55,000,000 (ARC) use for general operations in fy 2009 after making a ”late payment” to pension fund for 2007 debt of  $50,000,000. The Actuary then creates  "new asset of $55,000,000” for 2008 in Providence Pension fund which is the “late payment” to be paid  sometime in 2009.                  and   once again
    Pension assets decline by $55,000,000 due to lack of contribution. Invest Commission Complains again . Providence says they will catch up in October.   Cycle continues......

    •       This process is  repeated for at least ten years.Probably 15 years. This is clearly  a  "loan" that is never paid off or more accurately a theft of funds that is never returned. The interest rate due to taxpayers and retirees is the Discount rate of the Pension fund currently 8.25%. Segal recently correctly ruled that this asset created in year "1" is not really an asset but a late payment by a borrower perpetually in arrears.

Status in May 2015

      Providence owes $62,000,000 to the Providence Pension Plan immediately (in fact its 10 months past due) Providence also likely owes  interest on the “float” @ between 8.5% and 8.25% for as long as this scam has been running. Let’s assume 15 years. The interest owed to the pension plan on average float of $50 million dollars is between $65 and $150 million dollars. If Providence did not pay interest on this illicit loan then the City owes the pension fund between $127 million and $212 million.
This consist of the theft and then the "float" on the stolen funds. 
   $62 million + float = {$127 mil to $212 mil}

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