Missing Teacher Pension Funds Probed
An Ohio finance executive believed to have committed suicide last month is being investigated on suspicion of embezzling retirement account payments made by teachers and other employees from San Bernardino County schools, authorities said.
Officials at the San Bernardino County Superintendent of Schools office said they had yet to determine how much money was allegedly stolen by Michael Duffy, former chief financial officer of the Cleveland-based National Employee Benefit Services Inc.
The company manages tax-deferred retirement accounts for school districts throughout the country, said Vice President Tracy Woolbright. Many of the company’s accounts, including 31 school districts and four community college districts in San Bernardino County, have been affected, she said.
The company has promised that the money will be repaid with interest, Woolbright said.
“Any impacted clients will be made whole through insurance,” she said.
Woolbright said the company was still trying to determine how much money Duffy may have embezzled but denied news reports that the losses run in the millions of dollars.
About 11,800 workers at San Bernardino County schools contribute $5.3 million a month to retirement accounts managed by the Ohio company, but not all employees were affected, said Christine McGrew, a spokeswoman for the San Bernardino County Superintendent of Schools.
The financial irregularities came to light last month when a San Bernardino County employee complained that a deposit into a retirement account had either not been made or was delayed, McGrew said.
National Employee Benefit Services investigated and found that it was not an isolated incident.
In a letter addressed to county schools employees earlier this month, the district explained that some employee retirement account payments were missing for June through October.
“We’re telling [employees] that NEBS has assured us they will make good on any individual contributions” that may have been affected, McGrew said.
The school retirement accounts affected are called 403(b) accounts, which are similar to 401(k) plans offered by private employers.
Duffy had served as chief financial officer for four years and worked as a consultant to the company for about 20 years, Woolbright said.
He died Oct. 13, but the coroner provided no details of the death late Monday.
The allegations caused the company to stop doing business with many of its clients and to lay off more than 40 of its 61 employees, Woolbright said.
The Associated Press contributed to this report.