U.S. Bankruptcy Judge Larry Lessen on April 11 ordered Miami police union officials to repay $909,000 they got back from their crooked accountant’s investment fund before the other investors learned of his fraud.
Ronald Stern was hired to handle the Miami Police Relief and Pension Fund (MPRPF) in 1990 by its then-president, Donald Warshaw. In 1996, Stern began diverting funds from the MPRPF into an investment account he called the Florida Fund. He gained other clients for the fund with bogus reports of high returns. In November 1998, union officials found discrepancies in the pension fund’s certificate of deposit accounts. In January 1999, an audit revealed that Stern had stolen $1.4 million from the pension trust.
But according to Judge Lessen, union officials placed a higher priority on getting their money back than protecting the 27 outside investors in the Fla. Fund. Minutes from a Nov. ’98 meeting of the MPRPF revealed the officials’ intention that “All monies will be taken out of this [Fla. Fund] investment as quickly as possible.” Lessen also cited a 2001 deposition by frmr. MPRPF president Warshaw, since convicted of stealing from a police children’s charity, in which he testified that he was asked to press Stern to return the MPRPF’s money. “The strategy was…he who gets there first is going to get the money and we need to move quickly,” Warshaw testified. According to Judge Lessen, Stern repaid $771,757 to the pension fund by fleecing the outside investors in a Ponzi scheme
MPRPF officials did not contact the FBI about Stern’s embezzlement until after the Jan. audit, two months after they first became suspicious of the accountant’s activities. Stern committed suicide on July 28, 1999. Judge Lessen ordered the MPRPF to repay the funds Stern originally paid to them, plus $137,243 in back interest, to the 27 creditors of the Fla. Fund’s bankrupt estate. Since the MPRPF is funded under state law by 1 percent of all casualty, theft and auto insurance premiums paid in the state, and currently has nearly $90 million in assets for about 1,100 retired police officers, fund officials should not have a problem coming up with the money. [Miami Herald 4/15/03]