Thursday, March 14, 2013

Pension Fraud in Illinois is Just Political Business As Usual

Illinois has a long history of corrupt politicians and fiscal mismanagement. The state's history teaches us that simple lesson quite clearly.

So it comes as no big surprise to learn that the state's legislature basically gamed the system and put off required contributions to public sector pension plans. That's just they way they do things in the Land of Lincoln.

SEC nails Illinois, but the snake slithers away is entertaining reading and it also reviews the 'rich' history of corrupt Illinois politicians:

"Squeezy, the Pension Python is a snake, and it is quite common for snakes to settle securities fraud charges without admitting or denying guilt.

On Monday, the Securities and Exchange Commission announced it had settled securities fraud charges with Illinois. The state agreed to pay no fine, admit no guilt, and never again do what it didn’t admit to doing in the first place. Read Illinois hit with SEC charges over public pensions.

"Squeezy the Pension Python" was the cartoon mascot for Gov. Pat Quinn’s campaign for pension reform.

Squeezy was not mentioned by name in the official SEC press release. But the alleged fraud involved misleading bond investors about Illinois’s long-troubled pension system, so you can bet this villainous cartoon snake was involved.

In November, Illinois Democratic Gov. Pat Quinn introduced Squeezy as a mascot in his grassroots campaign for pension reform. Squeezy is putting the squeeze on the state’s finances. Get it?

The campaign offered no solutions and was immediately ridiculed by Mr. Quinn’s critics as juvenile. But what else is the guy supposed to do? Illinois pension funds for public employees — including teachers, judges and state representatives — is $97 billion short, and this liability is slowly bankrupting the state.

The SEC alleged that most of the state’s pension shortfall was not due to economic calamities or declines in the stock market. Instead, it was because Illinois’s “statutory plan structurally underfunded the state’s pension obligations and backloaded the majority of pension contributions far into the future.”

In other words, state leaders flat out decided not to put away the money required to fund these plans. This was much easier than cutting the programs that their voters love. They then failed to disclose this material fact to investors who would buy Illinois bonds and finance more of the state’s follies.

Quinn was not governor when all of this happened. Rather, it was Gov. Rod Blagojevich, who retired to a federal penitentiary in Colorado.

Blagojevich, who was not mentioned in the SEC’s action, was convicted on fraud in an unrelated case, including allegations he tried to sell President Barack Obama’s former U.S. Senate seat. One potential buyer for this seat, according to federal prosecutors, was then-Rep. Jesse Jackson Jr., who recently pleaded guilty to felony charges after standing accused of misusing campaign funds.

Jackson, of course, was only following in the footsteps of other renowned Illinois politicians, including former Rep. Dan Rostenkowski, whose career ended in 1996 when he pleaded guilty to mail fraud.

It has long been common for Illinois politicians to retire to a prison setting. George Ryan, governor from 1999-2003, was convicted of racketeering. Dan Walker, governor from 1973-1977, pleaded guilty to bank fraud. Otto Kerner, governor from 1961-1968, was convicted of bribery. . . .

Illinois . . . does not need Squeezy, the Pension Python. It needs Puff, the Magic Dragon."

Summing Up

As my Dad used to say, when it hurts too much to cry, it's time to laugh.

That sounds like good advice for the good people of the great state of Illinois to follow.

Of course, laughter won't help raise the $97 billion to fund the state's public pension liability, but it may help raise their spirits.

In any event, now we know even more about the way the game of Illinois politics is played and why there's an approximately $100 billion shortfall in the state's pension funds.

Let's just mark it off as another one of the all too many valuable lessons we're constantly learning in why POLITICS SUCKS.

Thanks. Bob.


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