Detroit's underfunded pension now at center of class-action lawsuit
DETROIT – While it's looking like Detroit is well on its way to exiting bankruptcy, the legal wheels keep spinning.
Local 4 has learned the city's general pension, which is grossly underfunded, is now at the center of a class-action lawsuit.
Gabriel Roeder Smith and Co. is getting sued for its work advising the general pension fund. The class-action suit Detroit retirees are looking for money from the actuarial company outside of the bankruptcy.
Former Mayor Kwame Kilpatrick borrowed nearly $1.5 billion in the so-called "cops" deal to prop up both of Detroit's pension funds -- general and police and fire. That deal brought on the bankruptcy.
Gabriel Roeder Smith and Co., of Southfield, started advising the pension plan 75 years ago and is now facing Detroit pensioner's wrath.
The retirees said Gabriel Roeder helped cause the mess "by negligently, willfully, recklessly, wantonly and repeatedly committing gross errors and failing to exercise due care and skill in providing actuarial services to the plan, and in failing to promptly discover and disclose those errors to the trustees, defendant Gabriel Roeder breached its duties to the plan."
They also claim the General Retirement System "knowingly acted in concert with the plan trustees to further their self-interest, and by agreeing to allow an underfunding scheme, which has greatly impaired the system's financial soundness, the plan is one of the nation's worst performing public pension systems.
The defendant's conduct has reportedly already resulted in the loss of hundreds of millions of dollars of the plan's funds and damages continue to mount.
Gabriel Roeder Smith and Co. released a statement in response, "We deny all of the allegations in these lawsuits. In our judgment, they are based upon a complete misunderstanding of our role in serving our clients. We intend to vigorously defend against these charges and are confident that we will prevail."
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