In the News: Teacher Fund Target Of Suit
A former West Virginia delegate and the Variable Annuity Life Insurance Co. are named as defendants in lawsuit filed by members of the Teachers’ Defined Contribution Plan. And the West Virginia Consolidated Public Retirement Board soon could be added to the list of defendants in the suit Charleston plaintiff’s attorney Harry Bell filed in Marshall County Circuit Court this week.
Bell said several Marshall County teachers believe they were tricked into losing thousands of dollars upon switching to the DCP from the Teachers Retirement System, a defined benefit plan, in the early 1990s.
“Teachers and school employees in this state have been mistreated, and this is just not fair. They have all lost thousands and thousands of dollars and need to get their money back,” Bell said.
Bell’s complaint alleges that former Delegate Ramona Cerra, D-Kanawha, acted as an agent of VALIC and its parent company, American International Group Inc. on the grounds of Marshall County Schools in the early 1990s. Investing in VALIC annuities was one of the options teachers were given with the DCP the state Legislature established in 1990.
“She told these teachers that they had to leave the old Teachers Retirement System and enter the Defined Contribution Plan because the state was going bankrupt. As a former legislator and respected member of the community, these teachers trusted her,” Bell said of Cerra.
Bell said that while Cerra earned “exorbitant, front-loaded commissions” on her sales of the VALIC annuities, the teachers lost most of their money for retirement.
Cerra could not be reached for comment Thursday.
Bell said he is looking for additional plaintiffs in the suit that he hopes Circuit Court Judge John T. Madden will declare as class action.
“We have also given a 30-day notice to the state agency overseeing this to let them know that we fully intend to sue them as well because they are just as much at fault for this fiasco,” he said.
Anne Werum Lambright, executive director of the retirement board, confirmed she received the notice that is required before filing suit against a state agency.
“I cannot comment on this yet because I have yet to see the complaint,” she said Thursday.
Bell believes Cerra and others intentionally misrepresented the amounts the teachers could earn by investing in the annuities.
“Had they (teachers) maintained their previously established accounts and not switched to defendants’ annuity, they would have earned significantly more over time and up to their retirement,” he wrote.
Bell claims the defendants engaged in an “ongoing, pervasive, intentional, wanton, illegal and systematic pattern and practice of misrepresenting the annuity.”
“Defendants combined their skill, knowledge, resources, contacts and other attributes and characteristics in order to engage in the single business enterprise of selling the annuity to plaintiff and class members by the use of misrepresentation and deceit,” he continued.
Representatives of AIG and VALIC did not return calls Thursday seeking comment regarding the lawsuit.
While Bell said the final amount sought in the lawsuit is yet to be determined, the goal is to have members of the DCP who switched from the TRS receive the amount they would have received if they would have remained in the TRS. Bell said he would like to see the case settled out of court but does not think the defendants will go along with that idea.
“Right now, we are probably about two years away from actually going to trial in this case. We do have every confidence that officials in Marshall County will give us a fair trial when the time comes,” he said.
The Intelligencer: Wheeling News-Register
Staff writer: Casey Junkins