According to a statement on the Web site for Bell & Bands PLLC: “… VALIC engaged in a systematic scheme of hiring agents, with whom the teachers, school service personnel, and professional staff were familiar with as former colleagues, prominent local citizens, and/or apparently-credible retirement consultants whom they could trust.” The statement said the VALIC agents touted increased benefits of going with VALIC option and pitfalls of remaining in the TRS.
The law firm said it believes the representations made by VALIC agents were not based on facts and were “clearly fraudulent.’ Bell & Bands said its research revealed, for example, that TRS members were told that the TRS would be bankrupt by the time they retired.
The suit was brought on behalf of current and former TRS members that transferred into the TDC and invested in VALIC annuities by Bell & Bands and The Webb Law Firm, PLLC. The suit claims that as a result of the fraud, those employees have had far less returns on their investments than they would have in the TRS.
The lawsuit seeks actual damages for member losses suffered as a result of their purchase or transfer of retirement funds into these annuities, plus punitive damages against VALIC for its fraudulent misrepresentations.
An Associated Press news report said Consolidated Public Retirement Board Executive Director Anne Lambright was told by the lawyers behind the suit that they plan to sue the board as well.
According to the AP, AIG Retirement Services spokesman John E. Pluhowski said in a statement: “VALIC offered a fixed annuity product to the plan and we are confident that we met the obligations we were contracted to provide.’ The news report said VALIC also balked at the idea of helping pay some of the costs of moving TDC members into the TRS suggested by Gov. Joe Manchin after meeting with AIG officials last month.
State legislators have approved a measure allowing teachers to transfer back into the TRS from the TDC, but estimates show the switch could cost as much as $78 million (See WVA Pension Transfer Bill Delayed for Cost Analysis).