New Jersey Creates Unit To Investigate Employee Pension Fraud

Posted On Thursday, August 8, 2013
By: Christopher A. Iacono

New Jersey Governor Chris Christie has created a new unit to investigate fraud and abuse in the state’s pension and benefit systems and spur civil and criminal prosecutions against violators.  Christie framed the Pension Fraud and Abuse Unit within the state Treasury Department as a companion measure to the pension reforms that he and the Democratic-controlled state Legislature hammered out in 2011.

Jim Scott, a former Internal Revenue Service criminal investigator, will head the unit, which Christie created through an executive order. Scott, who will report to state Treasurer Andrew Sidamon-Eristoff, is moving from the state attorney general’s office, where he has been responsible for investigating public corruption and white collar crime.  Sidamon-Eristoff will assign investigators and other staff to help Scott probe public pension claims and payments, including disability pension claims and improper participation in the state’s retirement systems. Based on its findings, the unit can recommend civil and criminal penalties and seek the denial of pension or disability applications or the repeal of benefits that should not have been granted.

The unit will not only work with the Treasury’s Division of Pension and Benefits and the attorney general’s office but also take referrals from the Office of the State Comptroller, which has expressed concerns in recent years about inappropriate pension practices. For example, an audit that Comptroller Matthew Boxer announced in May revealed more than $350,000 in pension payments that may have improperly gone to incarcerated individuals.  Last July, another comptroller investigation found that numerous towns and school districts had failed to comply with a 2007 law that required local governments to determine whether their professionals were bona fide employees instead of contractors who were not eligible for pension benefits. The office found that 202 pension enrollees might have improperly racked up credit in the system, including 176 attorneys.