Pension fund chair: Fire bribe trial witness

Robert Snell
The Detroit News

A powerful lawyer who factored into the Detroit pension fund bribery scandal and continues to wield influence over the Police & Fire retirement system could soon be out of a job.

Critics of the retirement system's general counsel, Joseph Turner, say his continued involvement in the pension board raises questions about the city's ability to move past a history of corruption, mismanagement and bad investments that helped push Detroit into bankruptcy.

Detroit Police & Fire pension fund Chairman Mark Diaz said he is prepared to ask board members to fire Turner and his law firm Clark Hill PLC, now that a corruption trial has ended in six convictions and Detroit has emerged from bankruptcy.

The pension board's next meeting is Thursday.

Turner testified during the two-month trial that ended with guilty verdicts Dec. 8 against former Detroit Treasurer Jeffrey Beasley, ex-pension trustee Paul Stewart and Turner's predecessor Ronald Zajac, the former pension system's general counsel.

The corruption and pay-to-play scandal cost Detroit's retirement system more than $97 million.

Turner, whose firm led the retirement system's fight against pension cuts during Detroit's bankruptcy case, contributed cash during birthday parties for pension board members before receiving a pay raise, according to a federal indictment. He was never charged with a crime.

"Very simply: we don't have confidence in him," Diaz told The News Wednesday. "This is a multi-billion-dollar corporation and we cannot have the air of impropriety whatsoever."

Fellow Trustee Georze Orzech was blunt when asked about Turner.

"He's got to go," Orzech said. "I don't trust him."

Turner said he and his firm are committed to implementing Detroit's debt-cutting plan next year.

"Each trustee is entitled to an opinion," Turner wrote in an email Wednesday to The News. "However we serve the board as a whole. We are proud of our critical role representing the retirement systems in what (Detroit Bankruptcy) Judge (Steven) Rhodes described as a nearly 'miraculous' outcome in the bankruptcy settlement with the pensioners."

Turner noted that police and fire retirees and beneficiaries emerged from the bankruptcy with pensions intact and a small cost-of-living-adjustment cut.

It is unclear if there are enough votes to oust Turner on the 16-member board, which includes seven members appointed by the mayor.

The effort to oust Turner did not draw support from Mayor Mike Duggan on Wednesday.

"He is not aware of this and doesn't have any comment at this time," Duggan spokesman John Roach said.

The pension funds have seen extensive turnover since the corruption scandal. Post-bankruptcy, both funds also will get new independent committees to oversee and manage the investments.

Turner and Clark Hill were hired in June 2013 following Zajac's indictment in the pension scandal.

Turner's hiring was controversial and approved by a 9-6 margin.

According to the indictment, Turner — identified as "Attorney B" — contributed cash during birthday parties held in 2007 for Beasley and trustees Stewart and Marty Bandemer before receiving a pay raise. Zajac solicited large cash gifts for Beasley and the trustees during "birthday" parties attended by people with financial ties to the pension funds.

During the corruption trial last month, Turner testified he gave Zajac two envelopes at the party for Stewart and Bandemer, according to a trial transcript obtained by The News. Each envelop contained $500 cash.

Later, he joined Zajac in a back room during the party.

"There were two piles of cash and Mr. Zajac indicated those were the gifts, and each pile, he indicated, had $5,000 in each stack," Turner testified, according to the transcript.

Turner also testified that he contributed $500 cash at Beasley's birthday party.

During the corruption trial last month, Beasley testified that Zajac handed him a birthday card at the January 2007 party filled with $100 bills.

"Tell us how much was inside," Beasley's lawyer Walter Piszczatowski said.

"Nine thousand dollars," Beasley testified. "That's what I used to take my family on vacation."

Months after the party, Beasley made a motion during a pension fund meeting to "substantially increase the hourly rate of "Attorney B...," according to the indictment.

The raise bumped Turner's hourly rate as the pension fund's special legal counsel from $225 to $300 an hour, according to meeting minutes.

On Wednesday, Turner called the birthday parties "yesterday's news" and said he fully disclosed his involvement to the board in 2012.

Turner has previously said he did not request or receive any benefit from the birthday parties.

Beasley, Zajac and Stewart will be sentenced in April. The men face up to 20 years in federal prison.

Diaz is outraged that Turner could continue to be involved with the pension system but does not know if mayoral appointees will support removing the lawyer and his firm.

"If their idea is have 'Attorney B' ... sitting at the end of our table handling legal services for the pension system, it's going to reflect badly on all of us," Diaz said.

Clark Hill's contract can be terminated with 30 days notice, a pension fund spokesman said.

The pension fund corruption case drew complaints that the FBI and U.S. Attorney's Office didn't go far enough in charging people involved in the pension system during former Mayor Kwame Kilpatrick's administration.

U.S. Attorney Barbara McQuade would not talk about Turner specifically, but defended the investigation and prosecution.

"Criminal prosecutions can't solve every problem. We can't punish every act of misconduct," McQuade told The News Friday. "Our burden is a very high one. We're required to convince 12 strangers of guilt beyond a reasonable doubt. As a result, there is lots of misconduct that goes unpunished.

"So even if there is behavior or allegations that did not amount to misconduct, our city is not without recourse," McQuade added.

People also can be held accountable by the public and their bosses, she said.


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