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Cypen & Cypen
NEWSLETTER
for
February 6, 2014

Stephen H. Cypen, Esq., Editor

1.  TIM LIBERATORE NAMED FLORIDA LAW ENFORCEMENT OFFICER OF THE YEAR: Attorney General Pam Bondi has named Master Deputy Tim Liberatore of the Marion County Sheriff’s Office the Attorney General's 2013 Law Enforcement Officer of the Year. Deputy Liberatore was joined by eight fellow officers from around the state at a ceremony recognizing them for their dedication to law enforcement and public safety. Deputy Liberatore was conducting a security check when he observed a vehicle with an expired tag that had pulled into a business. Deputy Liberatore made contact with the suspect and noticed a small amount of blood on his clothing. The Deputy became more suspicious, and was able to convince the suspect to take him back to his residence. While at the residence, Deputy Liberatore began questioning the juveniles who were at the residence, as well as neighbors. Deputy Liberatore's interview revealed that at least one of the juveniles had been sexually assaulted by the suspect. The Deputy received a full confession from the suspect, which revealed that the abuse had been occurring for years and would have continued had it not been for Deputy Liberatore's thoroughness. The suspect was later sentenced to more than two life terms in prison. Each nominee for the Attorney General's award had previously been recognized as an “Officer of the Year” by a Florida law enforcement agency or organization that sponsors such a statewide award. Deputy Liberatore was nominated by the Florida Sheriffs Association. The other law enforcement officers recognized are

          Sergeant Alvaro Feola, Florida Highway Patrol

          Trooper Robert Ivey, Florida Highway Patrol

          Sergeant Sam Gereg, Tallahassee Police Department

          Officer Lee Lawshe, Florida Fish and Wildlife Conservation Commission

          Officer Edward Messina, Department of Homeland Security, Enforcement and Removal Operations

          Lieutenant David O’Dell, Florida State Fire Marshall, Bureau of Fire  and Arson Investigations, Northwest Region

          Special Agent William Powell, Florida Department of Law Enforcement, Orlando Regional Operations Center

          Sergeant Richard Rossman, Broward County Sheriff’s Office

These officers are a small part of those who deserve recognition for their commitment to protecting others and selflessly serving their communities.  Thanks to them all.
 
2. DETROIT DEBT PROPOSAL FAVORS PENSION FUNDS:Bankrupt Detroit is proposing to favor pension funds at roughly double the rate of bondholders to resolve an estimated $18 billion in long-term obligations, according to The Wall Street Journal. The plan's balance sheet projections show the base scenario designed by the city calls for $4.2 billion to be divvied up among the city's unsecured creditors, including some bondholders and the city's pension funds. The pot of money would be divided to allow Detroit's two municipal pension funds to recover more than 40% of the money the city says they are owed. In contrast, less than 20% of the money owed to unsecured bondholders would be paid. If the city completes a deal to lease its water and sewerage department to a new regional authority with its suburbs, the recovery for pension funds and bondholders would grow slightly. The plan could be key for more than 20,000 on city pensions, after U.S. Bankruptcy Judge Steven Rhodes ruled pensions are not entitled to special protection from potential cuts, despite a Michigan state constitutional provision aimed at shielding pensions. Unions and pension funds argued the pensions essentially are untouchable, and have appealed the judge's ruling.

3. DETROIT SUES TO VOID PENSION DEBT: The City of Detroit has filed a lawsuit in U.S. bankruptcy court seeking to invalidate $1.44 billion of debt sold to fund public worker pensions. The move could also void the ill-fated interest-rate swap contracts that were a factor leading Detroit into bankruptcy, according to a report from the Washington Post. The lawsuit contends that the city and its retirement systems violated Michigan law when they set up sham service corporations and funding trusts to facilitate debt sales in 2005 and 2006. All other contracts or obligations connected to the debt are also void, the suit claims. The city alleges that the pension debt was nothing more than a borrowing by the city, which violated borrowing limits imposed on the city by the state.  Detroit has asked bankruptcy judge Steven Rhodes to issue a judgment declaring that the city is not obligated to continue making payments on the pension certificates of participation. The swaps were meant to hedge interest-rate risk arising on variable-rate COPs. But Detroit asserts that any contract arising from the COPs would be invalid ab initio, since all other obligations occurred by the city in connection with the COP transactions are unenforceable and void.  This one should be interesting: Detroit has conceded to be a part of the legal scheme that it now seeks to invalidate.

4.  CORPORATE PENSION PLANS MARK SAD MILESTONE:Corporate America's move away from defined benefit plans hit a dubious milestone: for the first time since Pensions & Investmentsbegan listing the largest U.S. retirement plans, not a single corporate name appears in the ranking of the 10 largest defined benefit plans. General Motors Co. was the final company to make the top 10. But GM transferred $29 billion to a group annuity in the fourth quarter of 2012. As a result, its DB assets fell to $73.5 billion as of September 30, ranking it 12th. The previous year, GM ranked seventh, with $101.9 billion. The corporate-less top 10 is the inevitable result of a retirement plan landscape that has changed drastically in the last 30 years, when P&I began providing rankings of the largest defined benefit and defined contribution plan assets. Back then, four corporate plans were among the 10 largest defined benefit plans: GM; American Telephone & Telegraph Co.; International Business Machines Inc.; and General Electric Co. At that time, A&T had the most assets of any U.S. pension plan -- corporate, public, union or miscellaneous -- with $53.9 billion as of September 30, 1983. It was the last time a corporate plan would lead the ranking, thanks to the U.S. government-mandated breakup of the company into eight baby Bells the following year. IBM fell from the top 10 in 1988; GE, in 1991. After its breakup, AT&T remained in the top 10 until 1996, when the company split again, into three separate companies with three separate plans.  Total assets of the 1,000 rose to $8.35 trillion, an increase of almost 11%, with defined benefit assets ($5.67 trillion) doubling defined contribution assets ($2.68 trillion).  Again, the list was headed by Federal Retirement Thrift Savings Plan, California Public Employees' Retirement System, California State Teachers' Retirement System, New York State Common Fund and Florida State Board of Administration. The largest corporate plan was Boeing Co., with $98.92 billion in assets. The largest union plan was Western Conference of Teamsters Pension Trust with $35.52 billion. 
 
5. ENLIGHTENED PERSPECTIVE BY ANDY ROONEY: I have learned... that we should be glad God does not give us everything we ask for.

6. CLEVER SIGNS: On an electrician's truck: "let us remove your shorts."
 
7. TODAY IN HISTORY: In 1952, Queen Elizabeth II succeeds King George VI to the British throne.

8. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.

9. PLEASE SHARE OUR NEWSLETTER: Our newsletter readership is not  limited  to  the   number  of  people  who  choose  to  enter  a  free subscription. Many pension board administrators provide hard copies in their   meeting   agenda.   Other   administrators   forward   the   newsletter electronically to trustees. In any event, please tell those you feel may be interested that they can subscribe to their own free copy of the newsletter at http://www.cypen.com/subscribe.htm.

 

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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