Feds drop probe of Pa. teachers’ pension fund property purchases

Pennsylvania’s $76 billion teachers’ pension fund said Tuesday that federal investigators have closed a probe into the fund’s purchase of millions of dollars in downtown Harrisburg real estate.

In a statement, a Public School Employees’ Retirement System spokesperson said the U.S. Department of Justice has informed PSERS that it has closed its investigation of the fund. 

“We understand from the closure of the investigation that DOJ will not be pursuing civil or criminal charges,” PSERS board Chairperson Chris Santa Maria said.

The Philadelphia Inquirer first reported in 2021 that PSERS was the target of a grand jury investigation run by the U.S. Attorney’s Office in Philadelphia in conjunction with the FBI.

The Inquirer reported that subpoenas issued in the case indicated the focus was on fund administrators’ purchase of $13.5 million worth of property surrounding the fund’s headquarters blocks from the state Capitol.

A spokesperson for U.S. Attorney Jennifer Williams Arbittier confirmed the investigation is closed but had no further comment. The PSERS spokesperson said the fund would have no further comment because of an ongoing U.S. Securities and Exchange Commission investigation.

That investigation focuses on whether fund managers unlawfully provided gifts or paid for travel for PSERS staff.

The fund has been beset by controversy in the last two years. In late 2020, the pension’s board voted to approve performance benchmark numbers that proved to be wrong. The board reversed its vote five months later. The error resulted in members contributing an additional $180 each year, on average. An internal investigation concluded in January found no wrongdoing.

In November, two longtime managers announced they would retire, transitioning into advisory roles as the fund searched for replacements. 

Executive Director Glen Grell had served as executive director since 2015. Previously, he was a member of the Pennsylvania House and served on the fund’s board. Chief Investment Officer Jim Grossman, the commonwealth’s highest-paid employee, at $485,421, worked for PSERS for more than 24 years. 

The fund named Terrill J. Sanchez, the former executive director of the state employees’ retirement system, as its executive director in June. Robert Devine, the fund’s fixed-income managing director, has been serving as interim chief investment officer since December.