Bell & Bands, PLLC, and The Webb Law Firm, PLLC, have filed a class action lawsuit in Marshall County, West Virginia, on behalf of all current or former members of the West Virginia Teachers Retirement System who were bilked into purchasing or transferring retirement funds into an annuity sold by VALIC with the authorization of the West Virginia Consolidated Public Retirement Board.
In 1990, the West Virginia Legislature established the “New” Teachers’ Defined Contribution Plan administered by the West Virginia Consolidated Public Retirement Board. All educational employees hired after July 1, 1991, were required to participate in the “New” plan. All existing employees, including teachers, school service personnel, and professional staff had the option to remain in the “Old” Teachers Retirement System (TRS) or transfer into the “New” Defined Contribution Plan.
The Webb Law Firm, PLLC and the law firm of Bell and Bands, PLLC have explored the circumstances surrounding the marketing by VALIC, and its agents, to induce teachers, school personnel, and professional staff to change from the “Old” Teachers’ Retirement System to the “New” Defined Contribution Plan. Additionally, VALIC agents persuaded these same employees, including new hires, to invest heavily in a VALIC annuity option.
Our research has concluded that VALIC engaged in a systematic scheme of hiring agents, with whom the teachers, school service personnel, and professional staff were familiar with as former colleagues, prominent local citizens, and/or apparently-credible retirement consultants whom they could trust. These same VALIC agents further explained to school employees about the increased benefits of going with VALIC option and the pitfalls of remaining in the “Old” TRS. We believe many of the representations made by these VALIC agents were not factually based and were clearly fraudulent in character.
For example, our investigation has revealed that VALIC agents told employees that the “Old” TRS would be bankrupt by the time they retired and there would be no monies left for their retirement. Moreover, we are advised that these VALIC agents also told employees during meetings that by investing in the VALIC annuity, they would receive far greater benefits by retirement age than they would if they remained in the “Old” TRS.
Due to a calculated pattern of fraudulent inducements, teachers, school service personnel, and professional staff in the state of West Virginia have not realized the growth in their retirement accounts that they would have received had they remained in the “Old” TRS. VALIC, its agents, and the WV Consolidated Public Retirement Board bear a direct and obvious responsibility for this outcome.
We believe that these inducements made by these VALIC agents to school employees were not true and that they amount to fraudulent misrepresentations for the purpose of persuading the employees to transfer their funds to a VALIC annuity. As a result, those employees who transferred their funds into the VALIC annuities have had far less returns on their investments than they would have had realized in the “Old” TRS.
During the 2008 legislative session, the WV Legislature passed a law which allows those affected by these adverse outcomes in their retirement plan, to vote to return to the defined benefit plan under the old teacher’s retirement system. Regardless of whether this vote passes or fails, the employees who have participated in the “New” plan and have invested heavily in the VALIC annuities have been damaged by shortfalls in their retirement accounts that would have otherwise accrued had they remained in the “Old” TRS.
In April, 2008, the WV Consolidated Public Retirement Board sent letters out to those individuals in the “New” Defined Contribution Plan which stated that in order to receive one hundred percent (100%) of the defined benefit at retirement age, many employees would be required to contribute as much as $50,000.00 to receive their full pension in the “Old” TRS.
The lawsuit seeks class action status for all West Virginia teachers, school service personnel, and professional staff, including those who have already retired or are no longer employed, who were induced to invest in VALIC annuities and seeks actual damages for their losses suffered as a result of their purchase or transfer of retirement funds into these annuities, plus punitive damages against VALIC for its fraudulent misrepresentations to the employees.
If you or someone that you know had any contact with VALIC agents, then please contact Bell & Bands, PLLC, at 1-800-342-1701 or The Webb Law Firm, PLLC, at 1-888-344-WEBB (9322) or go to belllaw.com or rustywebb.com for further information on the investigation and submission of a questionnaire on the class action.