Tuesday, January 19, 2010

Robert Shumake: Investigating Detroit Pension Fund Fraud

Robert Shumake asks, “Is your pension plan safe?”

Pension Fund Fraud: The Detroit Free Press investigation of public pensions in Detroit has led to Lansing lawmakers to demand reform. The investigation revealed pension trustees traveling the world without restriction. When the books are closed, the boards destroy travel records. Lawmakers want to require that these records be kept for at least five years.

Pension trustees have been discovered ignoring their own rules and investing with companies that do not disclose fees paid to middlemen. The Securities and Exchange Commission wants to ban such payments.

Pension Fund Fraud and 401K Losses

Pension fund fraud is the last thing you would expect from your employer who you trust to manage your pension fund. Pension funds are often misrepresented when a city is in legal trouble. Elected officials want to keep their civil service employees happy by offering pensions and healthcare benefits. On the other hand, they are under pressure to keep taxpayers happy with a lean budget.

Here is what happens when city officials try to please employees and taxpayers:

They under-fund the pension plan and use the savings to offer workers and retirees more benefits. They also commit pension fund fraud when they use surplus earnings during boom years to pay extra benefits to retirees.

The scheme escalates when city officials ignore warnings from outside groups and analysts who are commissioned to oversee pension funds. When the pension fund is in financial trouble city officials typically do not like to disclose this to investors or bond analysts.

Pension fund fraud and 401K losses occur when fund managers misappropriate the funds for their own personal gain.

Robert Shumake Saved Detroit Pension from Disaster when GM Filed Bankruptcy

In a record breaking six-week negation, Robert Shumake, Michigan business professional, headed off what would have been a major loss for Detroit Pension Funds. Robert Shumake, with his team, was one of few businessmen able to keep GM to only a 10% reduction in the rents for 5 state of the art plants.

At the same time Mr. Shumake was able to maintain the security for equitable and Detroit pension fund mortgages by doing a loan modification. This allowed both mortgages to maintain cash flow and keep GM in the plants so the security did not lose value. The bottom line is that Robert Shumake’s negotiations kept plant open, providing jobs and keeping security in place at its highest value while maintaining a cash flowing asset for the pension fund.

Robert Shumake is the CEO of Inheritance Capital Group, a Michigan based private equity real estate investment and development firm. ICG manages nearly 3 million square feet and a $200 million dollar real estate portfolio.

5 comments:

  1. congratulations on a major undertaking.

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  2. I recently listened to a book called While America Aged. interesting history . What a mess.

    ReplyDelete