US court says it now controls Fund

THE federal court has taken over the dying Retirement Fund, according to U.S. District Court for the NMI designated Judge Frances Tydingco-Gatewood.

“This is a takeover, period,” she said during yesterday’s status conference of the lawsuit that seeks to place the Fund under federal receivership.

The governor, she added, could have appointed Fund board members, but did nothing.

She said she will appoint a trustee ad litem who will act as the Fund board.

She is expected to announce her choice when the hearing resumes today.

On her shortlist were Hawaiian lawyer William Plum, who is the choice of the plaintiffs, and former CNMI Public Auditor Mike Sablan.

But because Sablan has many off-island commitments, the CNMI government withdrew his name.

The judge said she has also included attorney William Fitzgerald on her shortlist.

During the hearing yesterday, Tydingco-Gatewood appointed Lilian Pangelinan as acting Fund administrator, but withdrew the order in the afternoon.

Tydingco-Gatewood said she will allow the trustee ad litem to choose an acting  administrator to manage the pension agency’s daily operations.

The trustee ad litem will consult and report directly to the federal judge.

Today, the judge  will establish a briefing schedule regarding the receivership issues.

During the global settlement conference with Superior Court Judge Kenneth L. Govendo last Monday, Tydingco-Gatewood was asked by CNMI Assistant Attorney General Reena Patel who would shoulder the relocation expenses if the trustee ad litem is from off-island.

“It’s the [CNMI] government. The government brought us here,” the judge told Patel.

Patel said “given the proposed duties of the trustee ad litem and the statutory duties of the board of trustees, the commonwealth defendants strongly believe that financial experience is extremely important.”

She said CNMI government registered its opposition to attorney William J. Plum as trustee ad litem “on the basis that Mr. Plum is not a Saipan resident.”

Patel added, “Considering the already distressed financial situation of the Retirement Fund and the commonwealth government, such expenses would be an unnecessary burden.”

Patel said Plum “is not a certified financial professional.”

She said they are also  unaware of attorney William Fitzgerald’s experience, if any, with financial matters.

The commonwealth’s nominees, she added, are Joshua Sasamoto, Joseph C. Santos and Nhing B. Reyes.

Fund legal counsel Carolyn Kern asked the court to consider David J. Burger, a certified public accountant.

On Tuesday, plaintiff Betty Johnson, also known as Jane Roe, filed her second amended complaint in federal court.

She’s asking the court to certify this matter as a class action; appoint a federal equity receiver to manage the Fund; issue a creditor’s bill in equity; order the Fund and the CNMI government to collect the Superior Court judgment; to pay or otherwise satisfy and bring current all CNMI obligations to the Fund; to distribute appropriate retirement benefits; and enjoin the CNMI government from engaging in further conduct detrimental to the plaintiff and the class.

The action seeks an award for the plaintiff, reasonable attorney’s fees and class punitive damages against the defendants  “deemed to have acted unlawfully, wantonly, and willfully with or in concert with others.”

The CNMI government owes the Fund over $300 million.

Johnson is represented by attorneys Margery Bronster, Robert Hatch, Bruce Jorgensen, and Stephen Woodruff.