Dennis Leone to Damon Asbury: Please distribute to STRS Board and administrative staff

From: Dennis Leone

To: Damon Asbury

Sent: Friday, January 06, 2006

Subject: Fw: IL- STRS sues some of its own for breaching their fiduciary duties - Does this Sound familiar, Ohio STRSers?

Damon, I received the article below, courtesy of eagle eye retiree John Curry. I would appreciate it if you could make sure the STRS Board and STRS administrative staff receive a copy.

Thank you.

Dennis Leone

----- Original Message -----

From: John Curry

Sent: Friday, January 06, 2006

Subject: IL- STRS sues some of its own for breaching their fiduciary duties - Does this Sound familiar, Ohio STRSers?

Pension fund sues 3 in alleged scheme

Chicago Sun Times, January 6, 2006

BY DAVE MCKINNEY AND CHRIS FUSCO Staff Reporters

A pension fund for 330,000 Illinois educators on Thursday sued three individuals and a prominent law firm to recover damages from an alleged insider-dealing scheme that led to federal corruption indictments last year.

Former state Teachers' Retirement System board member Stuart Levine; former TRS lawyer Steven Loren; his ex-law firm, Gardner, Carton & Douglas; and former investment company executive Joseph Cari all were sued in Cook County Circuit Court, accused of breaching their fiduciary duties.

"We want to recover all amounts TRS and our members are rightfully due as a result of this venal, criminal scheme," TRS Executive Director Jon Bauman said in a statement announcing the lawsuit, which does not specify an amount that the fund lost.

Loren and Cari already have pleaded guilty to corruption charges. Levine is fighting them.

The scandal has been widely watched because Cari, in his guilty plea in September, alleged that Levine told him Gov. Blagojevich and top fund-raisers Christopher Kelly and Antoin "Tony" Rezko schemed to steer state pension deals to investment firms and consultants who agreed to donate to Blagojevich's campaign.

The governor adamantly has denied that accusation, calling it "triple hearsay." Neither he, Kelly nor Rezko has been accused of criminal wrongdoing.

Levine -- first appointed to the TRS board by former Gov. Ryan and reappointed by Blagojevich in May 2004 -- was accused of steering a $50 million pension fund investment to one firm after a consultant to that firm agreed to share most of a $375,000 "finder's fee" with a Levine associate even though that person played no role in the deal.

The feds also have accused Levine, employing Loren and Cari's help, of trying to extort $850,000 in fees from a Virginia firm that was seeking TRS business. Those fees ultimately were not paid, however.

'This is grandstanding'

A spokesman for Cari, a well-known national Democratic political fund-raiser, denied that he had done anything to hurt the pension system financially. Cari, a lawyer, was a partner and managing director of HealthPoint LLC, which landed $35 million in TRS investments in 2003.

"As it relates to Joe Cari, this is a grandstanding public relations ploy," said his spokesman, Ken Jakubowski. "It is a matter of record that Joe Cari's actions have not resulted in the loss of any revenue of any kind for the Illinois teachers. As a matter of fact, through Joe Cari's stewardship of the HealthPoint investment, the Illinois teachers stand to realize a substantial profit."

A top official with the Gardner, Carton & Douglas law firm, which has offices in Chicago and employed Loren, denied wrongdoing.

"No one presently at GCD was involved in any impropriety in connection with GCD's representation of TRS, and there have been no allegations related to the fine work that other members of the firm did for TRS," Gardner's chairman, Harold Kaplan, wrote in a memo to the firm's staff. "We have every intention of defending that work and fighting for the good name of the firm."

Lawyers for Levine and Loren could not be reached late Thursday.