On May 14, 2009, the Appellate Division decided Harry G. Parkin v. Board of Trustees, Public Employees Retirement System, Docket No.: A-2466-07T1. In the case, Harry Parkin appealed from the final agency decision of the Board of Trustees of the Public Employee Retirement System (“Board”) resulting in the partial forfeiture of his service and salary credits. Specifically, Parkin contended that the Board failed to follow its own regulations governing partial forfeiture of pension benefits and further contended that the Board “adopted a rule regarding the partial termination of pension benefits without going through the regulatory process.”
With the exception of a four-year break in service, from 1972 to January 1, 2004, Parkin was continuously employed in various public positions until he retired as Mercer County Chief of Staff. Based upon his veteran’s status, his service time, and additional credit he received as part of an early retirement incentive program, he had accumulated twenty-eight (28) years and nine (9) months of service credit equating to a monthly pension of $5,864.49.
On March 11, 2004, Parkin was indicted by a Federal grand jury and charged with having participated in a wide-ranging, corrupt scheme utilizing his office as Chief of Staff to defraud Mercer County and its citizens. The indictment alleged numerous acts Parkin committed in furtherance of the plan while employed as Chief of Staff. After a jury trial, in March 2005, he was convicted of all charges. In August 2005, he was sentenced to a period of ninety (90) months imprisonment.
The Board considered Parkin’s entitlement to pension benefits at its September 2005 meeting. Applying the factors set forth in N.J.S.A. 43:1-3(c), the Board determined a partial forfeiture was warranted for the period of time Parkin served as Chief of Staff, i.e., from June 1, 1994, to the date of his retirement. As a result, Parkin became ineligible for veteran retirement status and additionally lost early retirement incentives. His monthly pension was significantly reduced and he no longer qualified for lifetime medical benefits.
Thereafter, Parkin appealed to the Office of Administrative Law, wherein he argued that the Board had arbitrarily chosen the forfeiture period to run from his first day as Chief of Staff, rather than the time his misconduct allegedly first occurred, i.e., in September 2000. The Administrative Law Judge (“ALJ”) initially recommended the Board supplement the record regarding its selection of the date upon which to commence the forfeiture period. In September 2007, the Board filed a supplementary statement of its reasons for selecting the initial date of Parkin’s employment as Chief of Staff as the operative date of forfeiture, relying heavily upon the statements made by the sentencing judge in which he outlined the nature and extent of Parkin’s criminal conduct. Subsequently, the ALJ issued his initial decision in November 2007 ordering forfeiture of all of Parkin’s service from the date he became Chief of Staff. The Board adopted the ALJ’s recommendations and this appeal followed.
On appeal, the Appellate Division agreed with Parkin that the Legislature intended “the date the misconduct first occurred” as the initial, operative date from which the Board “shall” order that “the accrual of pension rights terminate.” However, the Court also noted that the Legislature also provided for the Board to specifically use its discretion and choose a different date “if termination as of [the date the misconduct first occurred] would in light of the nature and extent of the misconduct result in an excessive pension…”
Consequently, the Court determined the Board appropriately considered the statutory factors in imposing only a partial forfeiture upon Parkin’s pension benefits. Specifically, the Court indicated the Board considered the eleven (11) statutory factors in light of all the circumstances, including the serious and pervasive nature of Parkin’s criminal enterprise. As such, the Court concluded that the determination of the Board ordering forfeiture of Parkin’s pension benefits from the first day he served as Chief of Staff until his retirement was entirely consistent with the statutory and regulatory scheme, was well-founded on the evidence in the record, and was not arbitrary, capricious, or unreasonable. Therefore, the Board’s determination was affirmed.
The case illustrates the ramifications for public employees who are involved in criminal conduct and the resulting impact upon their pension benefits. As explained above, should a public employee, to include public safety officers, be convicted of criminal charges, it is likely their pension benefits will be forfeited, either partially or in their entirety. Therefore, it is imperative that if any public employee finds themselves in this situation, they contact a qualified, experienced attorney who can maximize their pension recovery.