This is a follow-up to a post on Bluegrass Report about the shake up at Kentucky Retirement Systems. More background can be found at the Herald-Leader.
On April 10, 2006 Chief Operating Officer (COO) Gordon Mullis resigned from the Kentucky Retirement Systems. On May 10, 2006, John Krimmel, Chief Investment Officer resigned from the Kentucky Retirement Systems. The reason they resigned was because approved a deal that cost the Kentucky Government Retirees $565,000.00
They approved a loan for $700,000 to buy a piece of property worth $135,000.
According to a draft copy of the Financial Statements of the Kentucky Retirement Systems they did this without documenting the loan with a note, mortgage contract or security interest in the property.
Krimmel and Mullis circumvented internal control policies and procedures to accomplish this deal. Krimmel and Mullis also commingled funds between the Pension Fund and the Insurance Fund at Retirement Systems, a violation of the Internal Revenue Service Code, to make this deal happen.
The bottom line here is Krimmel and Mullis orchestrated a deal where retired Kentucky state employees lost over half a million dollars. They resign their jobs and moved on.
Here is the question:
Why do two guys, with years of experience, willfully and intentionally violate the rules of their agency and common business practices to make a really bad deal and possibly illegal deal?
I don’t think they were just having a bad day.
Where are the Attorney General, the Auditor of Public Accounts, the State Police, and the IRS?
Krimmel and Mullis intentionally shoved a half a million dollars out the door of the Retirement Systems and no one seems to be following up.
By the way, John Krimmel is a member of the Public Company Accounting Oversight Board (PCAOB) and is now senior vice president and consultant at Callan Associates of Atlanta.
Guess who I’m not going to for investment advice.