Tina Sablan Joins Retirement Fund Lawsuit

February 21, 2010

Former Representative Tina Sablan has joined the retirement fund lawsuit. On August 27, 2009 Attorneys, Bruce L. Jorgensen and Timothy R. Lord filed an amended class action lawsuit against the CNMI Government, the NMI Retirement Fund, the CNMI Department of Finance, Governor Benigno Fitial, Retirement Fund Chair Pedro Dela Cruz, the Fund Trustees, and Acting Secretary of Finance Robert Schrack.

The Plaintiffs' Motion calls for: (1) Appointment of L.R. 66.1.a.1 Emergency Receiver Pending Appointment of Permanent Receiver; (2) Fed.R.Civ.P.65(b) Temporary Restraining Order With or Without Notice; (3) Fed.R.Civ.P.23(c)/(g) Order Certifying This Action, Appointing Class Counsel, and Defining the Class and the Class Claims and Issues; (4) Issuance of a Judgment Creditors Bill to Reach CNMI Property and Permitting Plaintiffs Discovery and/or Providing Fed.R.Civ.P.64 or Additional Remedies; (5) Expedited Hearing and/or Briefing Schedule.

On June 29, 2009, Superior Court associate judge Kenneth Govendo ruled that the CNMI government owes the Fund $231.6 million and that the law suspending government contributions to the Fund is unconstitutional. The government and the fund were ordered to negotiate a payment schedule to meet the obligation. (See this post, Retirement Fund Mess.) Instead of reducing the obligation to the fund, the amount that the government owes has grown. As of February 2010 the government owes the Fund $280 million.

The Plantiffs in the case, Jane and John Doe, were identified as former CNMI employees who wish to remain anonymous "due to concerns relating to personal safety and fear of retaliatory and retributive misconduct and/or persecution as a consequence of the decision to exercise their rights by commencing and perpetuating this legal action." They represent themselves on behalf of all other class members in this class action.

The lawsuit was amended to include Attorney David Price as a plaintiff. Last week former Representative Tina Sablan joined the lawsuit as a taxpayer and pension beneficiary. The Marianas Variety quoted her as saying, “I also decided to join as a result of much personal worry, not only about my own security as a beneficiary and taxpayer, but about the future retirement security of my mother and many other members of my family who have together contributed decades of service to the CNMI government and people.”

Ms Sablan stated as reasons for joining the lawsuit:
To be very frank, I simply do not have any reason to believe that there is enough political will at any level in the local government to decisively address the severe crisis that has beset the Fund and that has placed every single retiree, active government employee, and taxpayer at risk. I have sat through too many meetings of the Fund trustees, members of the legislature, and the administration that were little more than exercises in futility and denial. And consider, especially, the following:
  • The almost complete lack of scrutiny that goes into appointments and confirmations of Fund Board members;
  • It took the Fund Board more than two years of zero government contributions before they finally filed the lawsuit;
  • Fund trustees have actually admitted during meetings with the legislature that they had felt compelled to make riskier investments at higher returns because of the government's failure to pay contributions, and as recently as last year were seriously contemplating investing in a bankrupt CUC;
  • Even after Govendo had issued his order compelling the remittance of hotel occupancy and beverage container taxes to the Fund, there were members of the legislature who still resisted passing a budget that would explicitly provide for that;
  • After the Fund trustees had finally filed their lawsuit in Superior Court, lawmakers still tried to pass legislation to increase retirement benefits without identifying a source of funding, and to provide for only partial payments of benefits to retirees for whom the government had failed to pay contributions in full despite questions about the constitutionality of this proposal;
  • As recently as a few weeks ago, lawmakers actually suggested borrowing from the Retirement Fund to pay off delinquent housing loans;
  • Even today, the administration, some lawmakers, and some Fund trustees are describing the pension obligation bond proposal as "the solution" to the Retirement Fund's woes;
  • The administration has insisted on conducting its negotiations with the Fund trustees regarding the Superior Court judgment in secret, for reasons that are totally unclear and unjustified;
  • Even today,the CNMI government is still failing to pay contributions to the Retirement Fund at the actuarial rate.
These are just a few of the facts and circumstances that I took into consideration before deciding to join as a plaintiff in the lawsuit that has been filed in federal court. Enough is enough.
Attorney Bruce Jorgensen said that the "members of the Fund’s board of trustees are all political appointees beholden to the governor," which is a reason that a federal equity receiver should be appointed to oversee the operations of the Fund.

The Marianas Variety reported:
Last week, Jorgensen notified the federal court and the counsels of the Fund’s board and administration about Sablan’s decision to join his case as a named plaintiff.
“Ms. Sablan, like Mr. Price, is keenly familiar with and knowledgeable about the U.S. court proceeding, has expressed her utmost support for the claims being raised and asserted on plaintiffs’ behalf in the U.S. court proceeding,” Jorgensen said.
“In addition to Ms. Sablan, other Fund retirees and beneficiaries, situated both within and without the CNMI —as well as multiple attorneys formerly employed by the CNMI — have expressed willingness/interest as to the prospect of joining the U.S. court proceeding as plaintiffs though, at present, joinder is being sought only as to Mr. Price and Ms. Sablan,” he added.
Considering the failed state of the retirement fund and the apparent mismanagement it is amazing that not every person who expects to receive benefits from the fund has not joined the lawsuit.


Anonymous said...

Bruce Jorgensen might sincerely desire to amend his Complaint (yet again) and include Glenn Price and Tina Sablan, but nothing has been filed yet because of the 60-day stay. Let us hope he never gets the chance.

Frankly, as a NMIRF member and beneficiary, I think the whole Jorgensen lawsuit is extremely ill-considered and merely perpetuates and accelerates the further dissipation of the retirees’ money on attorneys fees. This reeks of further gamesmanship by Tina.

On the bright side, the NMIRF, NMIRF Board of Trustees, and three named Trustees have appealed to the Ninth Circuit Judge Munson’s order denying their Motion to Dismiss.

Anonymous said...

Who the heck is Glenn Price?

If you are pissed off about all these lawsuits dissipating the Fund, then you should be pissed not only about Jorgensen but also about the three attorneys employed by the Fund, the two Assistant AG's defending the government, the five attorneys who are suing Merrill Lynch and the Retirement Fund for negligence and dereliction, and probably many more to come.

As a NMIRF member and beneficiary, I am more pissed off at:

the CNMI government for still failing to pay contributions at the actuarial rate,

the Fund trustees and adminstrators for wasting a lot of money and making a lot of bad investment decisions,

the CNMI legislature for passing a lot of bad laws,

the so-called negotiations taking place in secret between the Fund and the administration which still have not addressed a penny of the $280M judgment MONTHS after the order was issued,

the CNMI judge who ignored the law that says the government must pay at the actuarial rate and ordered the government to pay a rate far less than what is required,

the administration which is still hiring new employees, and the CNMI judge who said in his court that it is not practical to reduce the size of government because this past election was all about giving out government jobs, and he said this to the Fund attorney who had very publicly endorsed the reelection of the current governor,

and everyone (the Fund, the government, the judge, CRA) who seem to think today that we are actually making progress and there is no need for federal intervention.

NMIRF Member since 1993 said...

Would-be co-plaintiff David "Glenn" Price was Teno's legal counsel in the late 1980s and then CPA counsel in the early 1990s.

Two (or multiple) wrongs don't make a right. The mistakes of the past cannot be undone. We shouldn't make more of the same or similar mistakes -- which is what this federal lawsuit is.

The AAGs' salaries don't come out of the Fund, but I agree that the original NMIRF v. CNMI lawsuit was also bogus. The NMIRF trustees were simply trying to immunize themselves against potential charges of breach of fiduciary duty: "See, we're trying to get more money from the central government!"

All the original lawsuit really did was enrich E. Viola Alepuyo and the campaigns of Juan Pan for Governor last year and Joseph J. N. Camacho for Delegate this year. So now Jorgensen wants on the bandwagon. (!)

The "actuarial rate" is another red herring, because as more and more people retire or withdraw, and new employees are members of the DCP vice DBP, there will be hardly anyone paying in, and that rate will go up in the hundreds or thousands of percentage points.

What we need are agreed contribution amounts, or a pension bond, or both -- not some artificial "actuarial rate".

All of this litigation is absolutely wasteful and frivolous. No one gets rich except the lawyers. The members lose.

Under the Constitution the central government is the guarantor of the NMIRF, so there is no point in them suing each other. In fact, the Legislature would be well advised to simply dissolve the fund and transfer it to the CNMI Department of Finance.

There isn't really anything that bad about "secret" negotiations between NMIRF, CNMI Government, and the Legislature. I recommend Tony Muna as one of the participants, once he gets CUC straightened out. He is honest and has a good understanding of the situation.

The feds have no role in this fiasco, which was wholly of our own making -- starting with the extraordinarily generous benefits designed to ensure the reelection of Jesus P. Mafnas, who got the decrepit legislative building named after him as a "reward."

Ultimately, the only solution is to grow the CNMI economy. If this fails, the Fund fails.

No amount of court orders could counter that. You can't tax yourself to prosperity, whether the tax is imposed by the legislature or a federal judge.

As with so many things here in the CNMI, that's simple economics, poorly understood. Those who think a court will solve the NMIRF's problems are deluded. It's the economy, stupid!

David L. Price said...

I was the Legislative Counsel for the House and Senate for the First Northern Marianas Commonwealth Legislature, Senate Counsel for the Second Northern Marianas Commonwealth Legislature, Special Legal Counsel for Governor Pedro P. Tenorio for eight years and House Counsel for the Commonwealth Ports Authority for five years.

Glen Price aka Glen "David" Price was a prosecutor in the CNMI AG's Office when I was employed by the CNMI Legislature. I believe that he left for the Mainland, USA in the late 70's or early 80's.

I recently joined as a co-plaintiff in the suit filed in the Federal District Court as I believe that it is the most efficient and impartial judicial body to collect and enforce the $231 Million judgment awarded the NMI Retirement Fund seven months ago. It has the expertise of US Marshals and other experts at it's disposal at little or no cost.

Most of the parties to the lengthy on-going negotiations in the CNMI Superior Court either have conflicts of interest or stand to make large sums of money in the process. For example, I noted that two attorneys in private practice signed off on the appeal of Judge Munson's ruling as well the RF's recently hired counsel. It reminded me of some tasteless jokes about how many people it takes to change a light bulb!

Some of the facts that I took into consideration before becoming a co-plaintiff in the Federal District Court are as follows:

1. The CNMI Judiciary has secured a loan from the NMI Retirement Fund and may even be behind in its payments. All of the sitting Judges and Justices , and their staff are members of the NMI RF.

2. The CNMI Governor appoints all of the members of the Board of Trustees of the NMI RF as well as all of the members of the Judicial Branch with the advise and consent of the Senate. As such, they all owe some degree of loyalty to the individual who appointed them.

3. The Legislature and the Executive Branches of the CNMI government have budget authority and oversight over the NMI Retirement Fund and can pass laws affecting the Retirement System.

4. The Legislative and the Executive Branches of the CNMI government annually appropriate funds for the personnel costs as well as for operational expenses for the CNMI Judiciary. In fact, the Governor, a party to the Superior Court lawsuit, has the authority to approve ,in whole or in part, the CNMI Judiciary's annual budget

This is hardly a neutral and impartial environment to transact negotiations

The Federal District Court, on the other hand is totally free of the economic, political and social entanglements which are so common in a small, isolated community such as the Northern Mariana Islands. These conditions also exist in many small communities in the Mainland,USA and I would feel the same way if this was happening in the small community that I now live in!

My comments are not intended to be disrespectful as I really love the Northern Mariana islands and its people and greatly miss the many friends that I made over a thirty year period.

David L.Price