Watchdog: Another tough year for CalPERS as retirement fund loses billions - Public workers are pumping more money into retirement funds. Public agencies are pumping more money into retirement funds. Yet the market seems distinctly unimpressed.
The California Public Employees Retirement System – the nation’s largest – lost about 2 percent of its market value in the fiscal year that just ended, according to unofficial numbers published last week on the CalPERS website. This came despite doubled-down efforts to beef up its bottom line.
The value of CalPERS investments was $293.7 billion on June 30, down from $301.9 billion one year earlier, according to CalPERS’ daily valuation report. That number accounts for daily movement of some assets but not others, which are updated quarterly.
Challenges are expected to continue for years, even as the wave of graying baby boomers heads into retirement.
CalPERS is slated to release its official 2015-16 numbers next week, and declined to discuss details with the Register beforehand (though officials noted that the fund’s July 7 value was nearly $295.7 billion.) But last month, Ted Eliopoulos, CalPERS’ chief investment officer, tried to prepare officials for a bumpy ride going forward.
“Last fiscal year, our return was 2.4 percent,” Eliopoulos said during a committee meeting. “And this fiscal year, as we head into July, we’re likely to be flat, which is a nice way of saying zero.”
The next three to five years are shaping up to be “a challenging market environment, not just for CalPERS, but for all investors,” Eliopoulos added. “It’s going to test us.”
Projections from independent third parties are “materially lower” than what CalPERS forecast just two years ago, he said. With its current mix of investments, CalPERS can expect a total return of just 6.4 percent over the next decade.
It has assumed a return of 7.5 percent.
That difference is of great import, because investment income is the bulk of public pension payments. And since pension payments are guaranteed, any shortfall would have to be made up by taxpayers.
For the rest of this O.C. Register article click here.
Gem Coins Update!
USFIA Ponzi fraud balloons out to $164 million - On July 7th the USFIA Receiver filed his third report and recommendations. Spanning the first quarter of 2016, the Receiver’s report covers the scope of USFIA’s business operations, the legitimacy of USFIA, seized real-estate, Steve Chen’s lawyer funds, USFIA investor funds spent on Chen’s family and a Mercedes S550 belonging to Chen.
The scope of USFIA’s business operations
Unfortunately the precise scope of the USFIA Ponzi scheme has yet to be determined.
Owing to ‘the volume of electronic data and disorganized manner in which it was kept by‘ USFIA, the Receiver has yet to put together a complete picture of the business.
This includes the total number of investors and funds invested into USFIA.
What we do know is so far is that the Receiver has ‘identified approximately 65,000 unique email addresses‘ in the USFIA investor database.
No doubt many of them belong to the same investor, with the Receiver set to send an email out to each of the addresses to establish ownership of the accounts they are attached to.
The SEC’s initially estimated USFIA to be a $32 million dollar Ponzi scheme back in October 2015. This figure appears to have been vastly understated, with the Receiver now estimating some $164 million was deposited into the scheme.
"The accounting is ongoing and the Receiver’s goal for completion is September 30, 2016."
The Receivership had $26.9 million held as of March 31st, 2016.
No legitimate business in USFIA
In his second filed report, the Receiver established that he couldn’t find any legitimate business within USFIA. This included GemCoin and USFIA’s fabled amber mine operations.
Three months later that is still the case.
"At this point, there is no indication there was any legitimate Gemcoin or other viable business operated by the Receivership Entities.
Aside from some income generated by the hotel and rental properties, the Receivership Entities had no significant source of income other than money raised from investors."
As to USFIA’s infamous amber mines;
"The Receiver has verified that virtually none of the assets described in online and written marketing materials actually exist.
Instead of mines located around the world, millions of dollars in precious gems, and houses and cars available to be awarded to investors, the Receiver has found only costume jewelry, boxes of rocks, and bins filled with tens of thousands of little rings of nominal value.
As for the amber mine in the Dominican Republic the Defendant professed to own, no mine has been discovered.
The Receiver has learned that the address of the purported mine is a residential address of a house purchased by Ammine, S.R.L.
The house is located in a residential area and there are no mines adjacent to it.
Moreover, the Receiver has learned that Ammine, S.R.L. is not registered to operate a mine."
What little assets there are to seize in the Dominican Republic, the Receiver is in the process of obtaining through a domesticated preliminary injunction order.
Mod: To date there has been little information available about the legal fate of John Wuo, the former Arcadia Mayor who advocated loudly for investing in GemCoins. We will be keeping an eye out. For the rest of the above story click here.