Providence Rhode Island Schematic of Pension Scam

https://drive.google.com/file/d/0BzdofmnDtEkOMnlZYVhzZDJNUGM/view?usp=sharing 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}

Providence Pension Scam..Now for the rest of the Story

We all loved his style and stories with the shocking twist at the end. Paul Harvey was fantastic and loved by nearly all who heard him. I say "nearly all" because on rare occasion he would reveal uncomfortable facts about corruption and criminality that certainly would not have pleased the subject of his story. Most of the Stories involved happy and optimistic stories with success as the outcome and perseverance the lesson. Alas this story has no such happy ending , although the final chapter has not yet been written.
          This is the story of Providence Rhode Island , long considered to be the most corrupt City in America.It is the story of a $100 million dollar theft of taxpayer funds and Pension Plan money designated for retirees mostly Police and Firemen. The scam is right out of Enron and Ponzi lore. It is the people involved that is so surprising and has happens so often, Like Watergate its the coverup that shows how corrupt our officials can become. Could they really steal from their own family? Could a ill advised accrual to cover up illicit borrowing from the pension fund evolve into fraud? The answer is a resounding yes. Under what circumstances did Buck consulting get fired and sued yet the actual Actuary Dan Sherman of Buck consultants was immediately appointed the Actuary for the  RI Municipal Pension Crisis Commission ? Who is Dan Sherman and when did he decide on the accrual accounting idea? Was he pressured? By who? Did he recommend the same accounting for any of his hundreds of other clients? Why not? Why did every actuary and 2 commissions on "Category 5 " miss what Segal called inflated Assets in the pension fund?

The rest of the Story goes deep and involves several officials in Providence Politics.

Providence Pension scam may exceed $100 million

total arc due to plan  $540,000,000  $54,000,000 <<<<< Average Float        interest due to plan on  "float"  $45.3 Million  actually paid to plan since 2006    $477,000,000  $63,000,000  <<Shortage  after 10 years  $45,300,000 interest on float city owes pension funds  $108,300,000 TOTAL DUE TO Providence  PENSION PLAN

Cicilline,Buck Consultants and Dan Sherman

           Here is a snippet from the Actuarial valuation of Providence pension system. The author is Dan Sherman and he has a huge resume certainly accredited but i would like to know why Dan reported this  and when it started because not only do i believe this accounting improper apparently so does Segal Consulting. When Segal was pressed last week about disallowing 62 million in assets attributed to the pension plan. they agreed with my view.
          I believe Providence is bankrupt and for sometime has been playing with the float and various accounts just to get by. Somehow , sometime this lack of payment of the ARC turned into an asset. If Dan Sherman did not suspect fraud he should have or maybe , just maybe somebody forced him into doing this. The last Valuation available on line is 2007. I am sure if we go back we will find how this started. The valuation in 2007 is titled the "eightieth valuation report"  

 http://www.providenceri.com/efile/299
please copy paste to read

from that report this nugget

2. The market value of the assets of the

  pension system as of June 30, 2007 on a “cash basis”

was $413,539,963. 

To convert this amount to an “accrual basis,”

this amount should be increased by the discounted value of the City’s contribu

tion already appropriated for the July 1, 2007 -June 30, 2008 fiscal year                                                 

  ($55,328,995) but assumed not to be deposited until June 30, 2008.

The discounted value of this contribution is   $50,994,465. Therefore, the market value of the

assets of the system as of June 30, 2007 on an “accrual basis”

was $464,534,428. 

 In 2007 the Mayor was David Cicilline, Bruce Miller was the director of Finance,the valuation report(audit) was conducted by Dan Sherman of Buck Consultants. The internal auditor was James Lombardi and the Director of Administration was John Simmons. This is where the SEC and United States Attorney or FBI should focus.

from 2012 to 2015  Dan Sherman  was appointed the Actuary for  Rhode Island municipal pension and OPEB commission . Talk about covering your tracks. Buck consultants where Sherman was in 2007 was fired in 2012 by Angel Taveras and both the city and Buck are suing each other .

Expect Providence Mayor Elorza to admit Providence over-stated Assets in Pension Fund

Remember these articles,
 http://www.golocalprov.com/politics/riley-providence-pension-scam-is-unraveling


http://www.golocalprov.com/politics/michael-riley-from-head-start-to-harvard-to-the-hoosegow-part-2

http://www.golocalprov.com/politics/michael-riley-from-head-start-to-harvard-to-the-hoosegow


  According to the minutes of the finance committee meeting on Tuesday April 28  the Providence Council was informed by the auditor Segal Co that there is in fact $61 million missing from Providence Pension Plan assets as I had charged . I expect the Mayor to have to inform MSRB,the SEC and retirees this week that they have overstated assets in the Pension plan for as many as 10 years.
      The feds should move in here because misleading municipal bond investors is fraud and a criminal offense.