Democratic U.S. vice presidential candidate and current Minnesota governor Tim Walz is facing yet another integrity issue. As chairman of Minnesota's $146 billion state retirement system, which includes the State Investment Board (SBI) and the Minnesota Teachers' Retirement Association (TRA) plans, he is the We have done everything in our power to prevent access to important information. His investigation of those funds.
The abhorrent misconduct of Walz and his henchmen is ripe for rot, and to find out just how deep and pervasive Minnesota's corruption really is, a group of teachers are seeking the services of Edward “Ted” Seidle. A GoFundMe page has been created to help pay for the charges. They raised $75,000 in 19 days, and Seidle got to work.
For the record, Mr. Seidle is one of the most talented pension plan fraud investigators in the country. Seidle, author (alongside Robert Kiyosaki) of Who Stole My Pension?, was instrumental in winning two of the biggest whistleblower awards in history. $30 million and $48 million as part of JPMorgan Chase's $367 million settlement. The bank was charged with failing to disclose certain conflicts of interest to some wealth management clients.
sabotage
From the beginning, Siedl said, he was stonewalled on all sides. He wrote:
Transparency…could quickly resolve all the things that plague both pension plans: highly questionable performance claims. Large amounts of undisclosed, excessive and potentially false investment fees and expenses. Reckless risk-taking. unaddressed conflicts of interest, (and) mismanagement and potential misconduct;
Mr Seidle sought the necessary information through freedom of information requests from both the TRA and SBI. I was told that information did not exist. He was then told that the information was deliberately withheld from the board members responsible for overseeing the management of the fund because it was deemed irrelevant. It said boards should focus on overall returns rather than excessive fees or self-dealing that may be involved. on getting those benefits.
He pointed out:
Our investigation shows that the TRA and SBI have long abandoned transparency, instead watering down Minnesota's public records laws and working with politicians, public pension industry officials, and others to avoid accountability to stakeholders. It has become clear that they have chosen to cooperate with Wall Street.
Predictably, tens of billions of dollars that would have been earmarked for state retirement payments are being squandered because transparency is no longer a top priority.
The breakwater effectively kept the cider at bay. He wrote:
In conclusion, TRA claims that it has no data to disclose regarding its investments and that SBI has chosen not to respond to (my) repeated requests for such data. It is not even clear whether SBI has the requested data. (emphasis in original)
Notably, Seidle testified at the trial of Bernie Madoff, who was convicted of similar crimes. Madoff kept everyone in the dark to keep the Ponzi scheme alive for decades until it was discovered. The same is true of Minnesota under the Walz administration.
As Cider began searching for information, he noticed panic starting among the villains. SBI Chief Information Officer Jill Schultz tried six times to thwart teachers' efforts to fund Seedle's investigation. During a meeting or phone call,
Schultz has repeatedly asked the group to withdraw public records requests, saying they would “link their names to investigators who took a 'scorched-earth' approach to investigating misconduct.” I didn't want that.”
What did the authorities know?
If they were men of honor and had nothing to hide, the authorities would and should have welcomed Mr. Seidle's investigation. But that's not the case. asked Cider.
Why did Minnesota government officials immediately assume that independent experts would uncover serious mistakes, such as mismanagement or fraud? They were so concerned that they were forced to take a preemptive strike. What did we know about state pensions?
Some of the information was publicly available. The plan has a significant funding shortfall, widely reported to be around $40 billion. In just the last year alone, TRA funding rates have plummeted from a low of 82 percent to a dismal 76.9 percent.
Cider smelled a rat. When performance was reported, it was “net of fees,” obscuring the actual costs of managing, operating, and investing the fund’s assets. He explained:
The only reason to only report total return after fees is to hide the total amount of fees that have gone up in recent years.
He also found a strange warning in SBI's annual report. (These are available to plan participants, so Siedle is also available.):
SBI's annual report states that the pension has chosen to withhold important fee information from the board because the pension incorrectly believes that the board should “focus” only on net profit. Contains an unusual and conspicuous warning indicating that Just a distraction.
As a result of its “focus”, the SBI Board apparently does not know the total amount paid.
hidden charges
With at least a quarter of pension plans' funds invested in hedge funds, private equity investments and venture capital funds, fees are both large and opaque. A recent investigation by the Securities and Exchange Commission (SEC) found that half of these funds were charging unreasonable fees and expenses without notifying investors.
Seidle estimated that:
For example, in 2023, TRA disclosed total investment fees of just $24 million.
Total fees associated with TRA's private equity funds for the same year alone were estimated to range from $334 million to $467 million.
Undisclosed private investment fees in 2023 alone significantly exceeded all fees disclosed by the fund since 2013 ($262 million) in a single year.
We estimate that TRA and SBI have paid Wall Street undisclosed investment fees in the tens of billions of dollars over the past several decades.
In our opinion, given the public attention to the poor disclosure of public pension management fees and the large number of expensive experts hired by the TRA and SBI to advise, it is clear that pensions It is inconceivable that they are not aware of the huge fees that they have failed to disclose. — even if they were ignorant about the exact amount.
He concluded:
Given the serious and ongoing concerns identified, interested parties are generally encouraged to contact the State Auditor, the Legislative Auditor, and the Attorney General.
But this issue could potentially put all three state governments at odds.
Based on this conclusion, Mr. Seidle filed reports with the SEC and FBI. He hopes desperately that they aren't “potentially at odds” either, and will actually take some action on his revelations.
Let's not forget that Governor Walz himself was once a teacher. But Seidle said the school has shown “zero support” for teachers' pleas for more transparency.
It is also worth noting that rats have already come out of the sunken ship. Jay Stoffel, who was appointed by Walz as TRA's executive director, abruptly announced his resignation at the June board meeting, shortly after his fellow directors reelected him to serve another term.
