Indiana Teachers Union: By the Way, We Have a Secret Settlement Fund With $14 Million In It
posted at 12:46 pm on August 14, 2013 by Mike Antonucci
I don’t buy this for a minute, but I’m obligated to report it in case I got it wrong:
ISTA spokesman Mark Shoup said settling the state’s lawsuit is an attempt “to put it behind us.”
“It’s the last bit of litigation related to the trust,” he said.
He said ISTA and the NEA will pay the $14 million from a fund ISTA created with settlement payments it received from the union’s lawsuits against Williams, ISTA trustees and others over their handling of the insurance trust. The settlement will be “paid by those folks that caused this meltdown,” Shoup said. “The people who created the mess will be responsible for paying.”
No state settlement money will come from member dues or other ISTA or NEA income, Shoup said.
Williams, who moved to South Carolina after leaving ISTA, said in an interview last year that he didn’t “suffer financially” in the settlement of ISTA’s lawsuit against him. He said ISTA’s insurance carrier defended him in the lawsuit.
Williams also countersued ISTA. That case was settled out of court under terms that haven’t been disclosed.
He contended that ISTA spent more money pursuing him in court than it collected in the settlement of the lawsuit against him, but that claim couldn’t be verified.
The ISTA settlement fund from its own lawsuits doesn’t have enough money to cover the full $27 million in losses that ISTA and the NEA could be found liable to pay if the state case went to trial and the unions lost, Shoup said.
Asked if the settlement amount of $14 million is approximately equal to the amount of money in the fund, Shoup said: “I assume, yes. I assume that kind of adds up.”
As you can tell from the questions asked, the Indianapolis Star reporters were also taken aback by the revelation that ISTA had somehow accumulated almost exactly $14 million in settlement money from entities it sued without ever mentioning it to anyone. But if it’s true, who did that money come from?
Not from former executive director Warren Williams, if you believe his tale:
ISTA quietly settled the lawsuit involving its former executive director, Warren Williams, last year. Terms were confidential, but Williams said he got ISTA to pay his substantial legal fees, and then some.
Still, Williams is upset the settlement didn’t cover the value of retirement benefits that he says ISTA stripped from him when he left in 2009. He was one of the longest-serving state NEA executives in the country at the time.
…Williams contends ISTA shelled out far more in legal fees pursuing him and others in court over the insurance fund collapse than it recovered in settlement money.
“A lot of members should be really upset and should be asking for a total accounting,” he said. “It’s just an absolute total waste of money.”
Pike wouldn’t discuss details of the settlements with Williams or others, other than to say Williams’ account is “incomplete and inaccurate.”
Probably not from David Karandos, who was the financial adviser for the ISTA insurance trust. We don’t have the terms of his settlement with ISTA, but he settled with the state of Indiana for $50,000.
Maybe Morgan Stanley coughed it up. But then why didn’t ISTA make this known, and why doesn’t it show up in any financial disclosures made by ISTA or NEA? Morgan Stanley settled with the state for $210,000, so a multi-million dollar deal with the union certainly would have leaked.
That leaves UBS, which reached a settlement with ISTA in June 2011 and agreed ” to purchase from ISTA a number of the Funds and to otherwise take steps to provide liquidity to ISTA.” Except no revenue from UBS or anyone else shows up in ISTA’s IRS filings that end on August 31, 2011.
Admittedly public information about the interlocking finances of ISTA, NEA and NEA Properties, Inc. is incomplete. Maybe four years of multiples lawsuits as both plaintiff and defendant, with a $14 million price tag tacked on to the end of it, won’t cost union members a dime. I’m skeptical.