Feds may go after pensions in DPS bribery scheme case

Jennifer Chambers
The Detroit News

The U.S. Attorney’s Office in Detroit says it may go after the state pensions of 13 former and current Detroit Public School officials after they have been sentenced for their crimes in a $2.7 million bribery scheme.

Gina Balaya, spokeswoman for U.S. Attorney Barbara McQuade, said Tuesday the federal government still does not have legal standing to request the forfeiture of their pensions, as previously reported by The News.

“However, once the defendant has been sentenced and restitution ordered by the district judge, the government can and will take steps to enforce the restitution order, which may include garnishment of their pensions,” Balaya said.

Thirteen school administrators face federal charges or have accepted plea agreements in connection with a scheme uncovered by an FBI investigation into the financially beleaguered district. Five of the 13 DPS officials retired from the district this spring after being criminally charged in March.

The federal government is seeking full restitution from all 13 defendants in the case as well as school supplies vendor Norman Shy, who is accused of paying $908,518 in exchange for $5 million in business with his company, Allstate Sales.

Shy has pleaded guilty in the case and ordered to repay DPS $2,768,846.23 in restitution.

Sentencing in most of the cases has been set for September.

Michigan is one of a few states that has a pension forfeiture law for public employees.

State law says a public employee or retiree convicted of a felony arising out of official duties “is considered to have breached the public trust” and may have his or her rights to a vested retirement benefit in forfeited.

Under the law, passed in 1994, a felony can be defined as misusing public funds or resulting from the receipt of a bribe or other financial benefit in that person’s capacity as a public employee.