On Your Side Investigation: Pensions of prisoners

HATTIESBURG, MS (WDAM) - Former Mississippi Department of Corrections Commissioner Chris Epps pleaded guilty to conspiracy to money launder, and in return lost his two houses and luxury cars. But there is one thing that he got to keep, and Mississippi taxpayers are paying for it.

"If you are embezzling, you're taking kickbacks, betraying the public trust, then why should you be entitled to tax dollars for your retirement for the rest of your life?" Mississippi State Auditor Stacey Pickering said.

According to Pickering, The Public Employees' Retirement System of Mississippi (PERS) allows state workers to collect their pensions after roughly 25 years of service, including workers who have been charged and found guilty of public corruption.

"We have actually had over 105 public officials - employees, elected, appointed - who have pled guilty or have been found guilty by a jury of their peers that are drawing retirement in the state of Mississippi today," he said.

Pickering said that 105 includes four former agency heads, including Mississippi Department of Corrections Commissioner Chris Epps and Mississippi Department of Marine Resources Director Bill Walker, 19 elected officials, like former Warren County Circuit Clerk Shelly Palmertree, 26 public officials and 56 public employees, including former Camp Shelby cafeteria manager Jerry Howard.

"Shelly Palmertree, former circuit clerk of Warren County, is sitting in state prison right now in Rankin County, the women's correctional facility, and she embezzled almost if not over $6 million from the taxpayers of Warren County. She's drawing her retirement while she's in prison," Pickering said. "There's an issue of justice here."

"Right now, over six individuals who've plead guilty during my time in office are all making over $100,000," Pickering said. "That means their retirement initially, their base retirement, will be $50,000 plus. Then they'll get the cost of living increase that every other retiree gets, often called the 13th check is the form that it comes, for the rest of their life. They'll even pass this benefit onto their dependents."

Epps, Palmertree and Walker are classified as "Top Offenders" by the state auditor's office. All three pleaded guilty to felony corruption charges and are receiving at least $50,000 a year in retirement benefits.

"When you have someone who has served out, they're eligible for retirement," Pickering said. "They plead guilty to corruption, as we've had happen in the Chris Epps case, as we had happen in the Department of marine Resources case. These individuals have gone to jail and are sitting in federal prisons or will be sitting in federal prisons drawing $50,000 plus a year in taxpayer money for the rest of their life, even after they get out.  The question is: Is that fair and just to the taxpayers of Mississippi? I think common sense is pretty clear. The answer's got to be no."

Twenty-five states currently have laws that remove state pensions from public officials who have betrayed the public's trust.

In 2015, Rep. Greg Haney introduced House Bill 31, which would have stripped Mississippi public officials of their PERS benefits, stating "a member's conviction of or plea of guilty...to a felony that is related to or in connection with the member's employment in the state service is considered to be a breach of the public trust and a breach of the member's contract with the state."

"House Bill 31 last year would have precluded anybody who pled guilty or was found guilty of public corruption in Mississippi of accessing and withdrawing the taxpayer portion of their retirement," Pickering said. "The taxpayers should not subsidize their retirement, their lifestyle if their trust had been betrayed. It put a lot of teeth into it. It was a good piece of legislation."

However, the bill never made it out of the House Appropriations Committee.

"We thought it was an excellent way to persecute the beneficiaries who might be innocent, and so we chose not to act on it," said Herb Frierson, house appropriations chairman. "I mean, I think the bill would need a lot of work. If one of the (public officials) does something stupid and commits fraud or crime, it penalizes the innocent, and I've got a problem with that."

Alaska's law makes an exception for dependents, saying the convicted official "may award the forfeited pension to a spouse, a dependent or a former spouse."

Seven on Your Side asked Frierson if Mississippi law could be written similarly.

"Yeah it could be," Frierson said. "It could be, but it seems like the people who keep drafting it don't want to be creative about it. And the committee system, the appropriations committee, we're pretty hurried up on everything. We spend most of our time on 106 bills that deal with the budget. 106 appropriations bills that make up what is the budget, and we also deal with the retirement system, the PERS system. So it's just a limited amount of time that we've got to put into those things, and you know, maybe the people who are drafting it need to hear what we're saying and try to address those concerns."

Sen. Joey Fillingane, chairman of the senate finance committee, agreed dependents should be protected, but said he did not think drafting legislation to protect them would be difficult.

"I think you would have to make a distinction between the person himself or herself from receiving the benefit, which I would be totally in favor of cutting off if they've betrayed the public trust, but I do think you have to make an inquiry as to 'OK, are we talking about the wrongdoer or are we also penalizing maybe a child or a spouse?'" Fillingane said. "And I think we can probably without too much trouble, look into that and make exceptions for dependents, because I don't think it's fair for them to suffer personally for the wrongdoing of a family member."

Another concern for Frierson is how to handle private money invested by the individual into his or her pension.

"Whether they commit a crime or not, they have money from their own pocket in there," Frierson said. "How are we going to deal with that?"

However, Fillingane explained PERS is a large trust fund that is mostly invested in the stock market. That means, in addition to Mississippi paying its required portion of every pension, the state also uses tax dollars to prop up PERS during national economic downturns.

"I would say at least five or six times in 17 years where the PERS group would come to the legislature and say 'hey guys we need an infusion of state general tax dollars to help solidify our fund,'" Fillingane said. "Probably four or five years ago, we did a general appropriations to PERS probably in the $20 to $30 million dollar range, and so it's not a small amount of money when we do have to infuse cash into the PERS system. So anyone who says it's all paid in by the individual, well that's not true. The state does have to pay the state share, and then on top of that, we infuse cash from time to time, like in emergency fashion, to shore up the funds in bad economic times."

Pickering said, "We're not talking small potatoes here. Significant dollars that belong to the taxpayers are being absconded by people who have already betrayed their trust to the tune of hundreds and millions of dollars."

When asked about the state paying a portion of state employee pensions, Frierson said, "Mississippi probably has the most generous state match in the country at about 15 percent, and the individual matches at a little over nine percent."

Seven on Your Side asked Frierson if that ratio would play into the state's ability to revoke pensions.

"It would give you cause to do it, but like I say, every bill I've seen drafted so far was aimed at the beneficiaries as well as the person who might have committed the crime," Frierson said. "So that needs to be addressed. I mean a lot of thought has to be put into this other than just, you know, somebody reads something in the newspaper where somebody's been bad and thinks they're going to pass a good law that's going to stop people from being bad. It's not the laws that stop people from doing bad things, they choose. So you can only put so many roadblocks up there. You'd think prison would be enough of a road block."

"What is the penalty?" Pickering asked. "There has to be some penalty, some consequences, and if we're not going to keep them in jail doing hard time because they're nonviolent, because many of them this is their first offense, then there has to be some really financial penalties in place. Not just the principle, not just the interest on the money that they stole and not just covering our investigative cost. You know, we've recovered over $24 million dollars in eight years. There ought to be some true penalty and fine in place, and this is one way that we could really put some teeth in Mississippi law."

Frierson said he was not sure if similar legislation was being proposed this session.

"Haven't seen it yet," he said. "Haven't seen it. It may be out there, I'm not saying it's not. There's thousands, several thousand bills out there."

Rep. Greg Haney told Seven on Your Side he made some changes to his bill from last year, and resubmitted it as House Bill 385 this year. However, Haney said he was told by Frierson that "it will not come out of committee again."

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