SHARE

Audit: $800K Suspiciously Spent By County Retirement Board On Raises, Travel, Scams, More

Some people are calling for the Chairman of the regional retirement board to resign after an audit found hundreds of thousands of dollars in suspicious expenditures - including $250,000 for “search engine optimization” on a state-run website.

Audit photo illustration (not the audit documents)

Audit photo illustration (not the audit documents)

Photo Credit: Image by Tumisu from Pixabay

Other details that emerged from the audit include:

  • Suspicious travel expenses on Cape Cod,
  • Spending about $450,000 on health insurance and wages for two part-time attorneys who did not qualify for the benefit,
  • and a raise for the chairman that no one seems to have authorized.

The issue has been reported to enforcement agencies, said the audit’s author.

The audit of the Hampden County Regional Retirement System Board (HCRB) was released in February. Conducted by the Public Employee Retirement Administration Commission (PERAC), the audit covered Jan. 1, 2014-Dec. 31, 2017.

It was not stated in the audit report why this timeframe was chosen. However, auditors may have been encouraged to take a close look at expenses when, in 2017, the local board exceeded its budget by $60,507 or 6.5 percent.

The Hampden County Retirement Board is responsible for overseeing the local public employee retirement network consisting of about 3,000 active members as well as 1,500 retirees and beneficiaries. Retirees include teachers, firefighters, DPW workers, and school administrators, among other public servants. The regional board manages tens of millions of dollars for the state.

Current Hampden County Regional Retirement System Board members are Chairman/treasurer Richard M. Theroux, Laurel A. Placzek, Patricia C. Donovan, Karl J. Schmaelzle, and Patrick E. O’Neil. Schmelzle is listed as a member on the group’s website, which also notes that his term expired on Dec. 30, 2020.

On Tuesday, Feb. 23, Hampden Select Board Chairman Don Davenport called for the 5 members of the county’s retirement board to resign over the audit’s findings.

“The audit paints a picture of egregious, lax management and waste and abuse of taxpayer money,” Davenport said in a statement to MassLive. “The retirement board members failed miserably in their duties and their responsibility to the towns, retirees, and members. They should resign and the PERAC should take over administration of the fund until a new reform board is elected.”

WHAT THE AUDITORS FOUND

Here are some of the other questionable spending practices auditors discovered at Hampden County Retirement Board:

  • HCRB paid more than $235,000 to over 50 entities for services generally described as “search engine optimization” or “online directory listings.” The board had no contract for the services or metrics to quantify progress. The HCRB fell for a scam that could have been easily avoided with a Google search of the nonexistent companies receiving payment, the auditors said.
  • Members accepted $10,000 in travel perks from a conference. State employees are banned from taking gifts of value.
  • Auditors could not find a record of board discussion or a vote was taken approving a nearly $2,000 raise for the chairman, whose annual takehome pay went from $25,642 to $27,485. Board members said they had discussed the raise at least 6 years before it was initiated and there was no need to visit the topic again.
  • HCRB paid $87,229 in bank service charges during the audit period. No other regional retirement board pays bank fees. Hampden County’s board transferred funds into a no-fee account in 2018 or 2019. The bank fees were a newer acquisition, auditors noted. The board started paying fees in 2014.
  • The board paid nearly $450,000 in legal fees and health insurance premiums to employ two part-time attorneys. The attorneys should not have been able to take advantage of the state retiree health insurance program, the audit said.
  • The audit also found about $1,800 in suspicious charges for travel and accommodations around members attending a conference on Cape Cod. Payments were made to nonexistent buildings with addresses that abut the chairman’s beach condo.

Read the full audit at mass.gov.

to follow Daily Voice Hampshire Franklin and receive free news updates.

SCROLL TO NEXT ARTICLE