(AP) - State Auditor Pat Anderson called for a criminal investigation into those who led the Minneapolis Teachers Retirement Fund Association, a troubled pension fund that was folded into a statewide teachers fund earlier this year.
Anderson's own probe centered on a $1.5 million liquidating trust set up by the Minneapolis teachers fund's board in 2005. That money remains in legal limbo while the rest of the fund's assets were transferred to the state Teachers Retirement Association on June 30.
"This is pensioner money -- it's not appropriate," Anderson said Tuesday at a Capitol news conference. "This was not their money, period. They took it. They made excuses as to why they took it."
An attorney for one of the fund's trustees has said the liquidating trust was created to protect the board and executive director from legal claims and to repay creditors. But Anderson has questioned whether the trust improperly shielded assets that should have been turned over to the merged pension account.
Anderson also said the Minneapolis teachers fund failed to turn over a computer hard drive, a CD containing private data, tapes of board meetings and other records.
The auditor said she forwarded her findings to Hennepin County Attorney Amy Klobuchar for possible criminal charges. Chief Deputy County Attorney Pete Cahill said Klobuchar's office had yet to receive Anderson's report, but would look into it.
The probe was initiated at the Teachers Retirement Association's request.
In a letter attached to Anderson's report, TRA executive director Laurie Fiori Hacking wrote, "We agree with your conclusions that there is simply no reason for the liquidating trust to continue and to incur additional and unnecessary legal fees."
Tom Heffelfinger, the former U.S. attorney who is representing the trustee of the liquidating fund, accused Anderson of misleading the public and standing in the way of a negotiated settlement.
"Pat Anderson's investigative report was unnecessary, it's unsupported and it's motivated by her personal political goals, not by public policy," Heffelfinger said.
Karen Kilberg, the Minneapolis teachers fund's former executive director, had no comment and referred calls to her attorney, Paul Rogosheske. He said Anderson's charges were "totally blown-up, out-of-proportion political posturing."
"She's very mistaken," Rogosheske said. "There weren't any laws broken and I don't think any county attorney would charge this."
The liquidating trust's status is currently in litigation in Hennepin County with a hearing slated for Oct. 11.
After years of low investment returns and unfunded pension liabilities for the Minneapolis teachers fund, lawmakers voted this year to fold it into the Teachers Retirement Association. More than $700 million of assets were transferred.
(Copyright 2006 by The Associated Press. All Rights Reserved.)