This material is lightly edited and abridged.

The drop of 2.5% in the pension fund is a perfect wealth transfer in comparison to the 2.5% gain in Raimondo’s Point Judith Fund. What to say to voters in RI?

As the fund is entering it’s ten year wind-down, the losses are mounting. So eyes should be on what happens to that fund over the next period before it closes down and ultimately shuts down. The point is as it nears its final accounting the loss is growing. So I would just tell you all watch it, watch it closely!


We have a lot of State Representatives going up for reelection even though Magaziner and Raimondo have that midterm [2018] election because of the way they [stagger] out our election cycle.

This [Point Judith] fund should have been dumped a long time ago… It’s a perfect wealth transfer. As you go into an election the real issue is it is now obvious to everybody that’s there going to have to be another pension fix down the pipeline. The pension fix that she [Gina Raimondo] initiated, the COLA cuts and hedge fund ramp-up. The COLA cuts savings have been squandered on hedge funds that have under-performed. So the fix, the “reform” and the fix that was supposed to make the pension fund sustainable has not worked. There’s now going to have to be a new one!… We’re looking at a $2 billion loss on a $7.5 billion fund, this is a massive blunder, so somehow it’s going to have to be covered. The pension is much worse off than it was before Gina Raimondo ever got her hands on it.

Thoughts about your recent real estate audit?

The real estate analysis was remarkably straightforward because the biggest issue was that they simply lied about when they started investing in real estate. They said ‘We started investing in real estate in 2005 and any real estate we invested in before that, forget about it, we’re not going to include it, okay?’

And so one of the things we were able to show was that the pension fund and the treasurers over the last 27 years have always lied about what the pension was investing in and how those investments have done. So each succeeding treasurer incorporated the previous treasurer’s lies and repeated them and so what we see is that for 27 years the pension’s real estate investments were horrific and yet the pension continues to this day, were horrific and earned like .69%, but to this day, 27 years later, they’re still claiming that real estate is expected to return 8.5%!

The real estate gives a very concrete example, literally brick and mortar example, of how the Rhode Island pension fund has been mismanaged for a long time and something as concrete as an office building in downtown Providence…everybody pretends like it doesn’t exist!

And the Treasurer’s [response] that my report was false and misleading because I actually had the audacity to this building you owned for 17 years you never put on your books, you never showed it! To dispute that this building was in fact real estate, that this building was in fact owned by the pension, and that for 17 years it lost money is just outrageous…

On the real estate [current Treasurer Seth Magaziner] said that my analysis was all wrong, it was all hypothetical, and I was like ‘it wasn’t at all hypothetical!’ And then he also said ‘and by the way, that old office building, everybody knew about that already.’ It’s old news? It’s never been reflected in your financial projections!

So just a lot of lying and bobbing and weaving. The truth is not true and even if it is true it doesn’t really matter and it’s all like Raimondo said when I pointed out that all the hedge fund documents had language in them saying that they were high-risk speculative investments, initially she said they’re not high-risk speculative investments. Then I said ‘But all the documents say they are!’ Then she said ‘Well that’s just boilerplate.’ It’s the same thing as Magaziner, ‘Well everyone knows about that office building.’ Yeah everybody knew about it but you didn’t put it in your financial statements. Yes, the warnings on hedge funds are legal boilerplate but guess why they’re there? Because they are legally required warnings to investors that these are not safe, risk-reducing investments, these are high-risk speculative investments…

The pension’s investments have always been politically driven, there has been a profound disregard for fiduciary standards and disclosure practices. There have been massive losses over time and, had this politicization not occurred, the pension would be very well-funded at this point, probably 100% funded easily.

So it occurs to me reading through your stuff, especially this newest audit, two things: a) That the state was using the pension fund for multiple decades apparently as just a giant bail-out fund for really bad real estate moves, but then also b) does it appear to you that Raimondo came in and saw this activity going on and said ‘Excuse me, I want my cut so you have to invest in things like the Point Judith Fund and the hedge funds’?

Yeah, for sure. One of the things you see that Raimondo did was she shut down the real estate, she fired the real estate consultant who the pension had for the prior ten years and she basically said ‘I’ve got investments I want to see in this portfolio’ and she shifted onto that, into those areas. But you do see a very stark, strategic change away. The said in their investment policy statement we will no longer directly invest in real estate.

So that direct investing in Rhode Island real estate came to an abrupt end at that time. And then they also buried the direct investment history and moved on to hedge funds… There’s a long history of politicization of the investments. There’s also a long history of obscuring, politicians misrepresenting the performance and that continues to this day! You saw back when the real estate deal went bankrupt the guy running the pension at the time…said ‘As long as we get back the amount of our original investment, we’re going to get back our original investment more or less.’ And then he says “we will be whole.”

Which is just a blatant lie. If someone gives you back the amount of your investment 17 years later, you’re not whole, you know? If that’s the case, I would say to the state pension ‘Give me $100,000,000, I promise to give you $100,000,000 in 17 years. And you’ll be whole.’

So there’s a long history of lying about investment results, of hiding losses, of misrepresenting the performance and also what I’ve seen with Raimondo and Magaziner is they defend their misrepresentations by calling whoever challenges them a liar, basically. So Magaziner says that my report saying his operation is false and misleading is false and misleading, that’s what he said.

Kind like a school yard?

Yeah kind of except it overlooks the fact that he is the one who has the legal duty to disclose the pension returns, not me! I can say anything I want! It is not my statutory legal fiduciary duty to report to the public about the state of Rhode Island! And they’ve always said that. Even as Raimondo changed the fee disclosure from $10 million to $8 million she still said that my statements, that the fees were grossly under-reported, were wrong. So that’s a real warning to Rhode Islanders, expect continued politicization, expect continued massive under-performance and losses, and expect absolutely no candor, rather defensive misleading misrepresentations [from public officials].

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