Over the last few months, the Dallas Police and Fire Pension System has tanked, with reports saying the fund turned into a catastrophe after a string of bad real estate investments. To make matters worse, participants attempted to withdraw hundreds of millions of dollars, forcing Dallas Mayor Mike Rawlings to take legal action to stop the bleed off. Now Rawlings is asking for a full-blown criminal investigation led by the Texas Rangers.
Tristan Hallman, reporter for the Dallas Morning News, says the Texas Rangers have also expressed that they’re ready to start the investigation, which is unusual. The FBI is looking into transactions related to the pension fund. And the pension fund hired a law firm to look into what went on.
“Some people think this might be redundant, others say what’s one more law enforcement agency at the party here,” Hallman says. “But this also comes right before [the city] wants to go to the state legislature and propose their own solution on how to fix the pension fund.”
The legislature has ultimate control, Hallman says. The fund isn’t governed by the city, so they don’t get to make the decisions in terms of how to fix it. The legislature can’t force the city to bail out the pension fund but can impact the solution.
Hallman says there’s a benefit to Rawlings drawing attention to the pension fund’s previous actions. It’s possible that he’s pulling out all the stops so he can avoid saddling the city with the burden of having to cover massive losses and avoid bankruptcy.
“The mayor has made clear in the past that the city should not be on the hook, should not be liable for this, but will participate in the solution,” he says. “That seems to fit with what he’s doing here.”
The problem with the fund that exacerbated some of the overly generous benefits paid out over the years was that they invested heavily in non-traditional real estate, Hallman says. The fund had to write down some very significant losses within in the past few years.
“They had massively overvalued it,” Hallman says. “They didn’t follow accounting standards so the criminality, you would think, would be somewhere in there if it exists.”
Post by Beth Cortez-Neavel.