15. PUBLIC EMPLOYEE PENSION FORFEITURES ACT 15.1 Introduction 15.2 Crimes Leading to Forfeiture 15.

3 Public Employees and Public Officials 15.4 Crimes Relation to Employment 15.5 Retroactivity and Contract Law 15.6 Conviction 15.7 Restitution Orders 15.8 Enforcement 15.9 Conclusion 15.10 The Statute 15.1 Introduction On July 8, 1978 Pennsylvania enacted a pension forfeiture statute titled the Public Employee Pension Forfeiture Act.1 More commonly known as Act 140, the statute consists of five (5) sections: 1311: the Short Title, 1312: Definitions, 1313: Disqualification and Forfeiture of Benefits, 1314: Restitution for Monetary Loss, and 1315: the Repealer. The primary operative provision of the statute states that: [N]o public official or public employee nor any beneficiary designated by such public official or public employee shall be entitled to receive any retirement or other benefit or payment of any kind except a return of the contribution paid into any pension fund without interest, if such public official or public employee is convicted or pleads guilty or no defense to any crime related to public office or public employment.

Fully known as the Public Employee Pension Forfeiture Act, Act of July 8, 1978, P.L. 752, No. 140, 43 P.S. 13111315.

While this passage may constitute the crux of the statute, and will be the primary focus of this chapter, the Act also includes many minutiae that can serve to confound practitioners until they have a firm grasp of the breadth of Act 140. To help give lawyers a practical guide for applying Act 140, this chapter will present actual and probable cases and questions with which courts and lawyers will likely have to deal. For example, can a cafeteria worker contributing to a pension plan forfeit her benefits if she is convicted of a failure to make required disposition of funds she received working as a tax collector (See Matthews below)? Act 140 is both fair and harsh. It is fair in the sense that it gives reparation to employers, the Commonwealth, and the public when those entrusted with the publics faith abuse their positions; it is harsh in the sense that it indiscriminately applies the same punishment despite what many would consider varying degrees of severity on the part of the lawbreaker. With this in mind, practitioners will need to give difficult advice to clients who will be faced with the possibility of losing their pensionsperhaps their only means of livelihood after retirement. Chapter 15 will first explore the types of crimes that Act 140 enumerates that will lead to a forfeiture. The next section will examine closely who the legislature meant by the terms public official and public employee, and explore how a crime must be related to their employment for forfeiture to occur. Next the chapter will discuss what it means to be convicted of one of the enumerated crimes for the sake of the statute, and discuss some of the attacks made on the statute shortly after it was passed. Finally the chapter will discuss where the monies are disbursed following forfeiture, and what provisions, if any, are in

place to assure that those who need to know about members in violation of the Act are informed. 15.2 Crimes Leading to Forfeiture Most or all of the forfeiture crimes seem to have some sort of logical connection to the public nature of the employment of the individual. For example, a public employee might be privy to insider information that would give him an advantage to wager on some sort of official action; public officials and public employees are often in untoward positions in which to procure or give bribes relating to political matters; and public officials and public employees are in opportune positions to tamper with public records or information. The enumerated forfeiture crimes relating to these criminal behaviors all have a logical reason to be included since public employees and officials have uncommon access to commit these types of crimes, which a non-public employee or official would not have. The legislature, however, chose to snub some of the more obvious crimes that might have been included. For example, crimes of violence, sex, or drugs are not covered by the Act, even if the victims of those crimes were under the charge of the perpetrator. Likewise, a school bus driver could kidnap a busload of children and not risk forfeiting his pension. There might have been many reasons for why the legislature chose to leave many conspicuous crimes out of the Act; however, it seems clear that by enumerating a select group of forfeiture crimes, the legislature enacted a statute not designed to be principally punitive in nature, but rather compensational to repay the public, which had in effect, charged the employee with its trust. Generally speaking, the crimes that result in forfeiture are crimes that in some way violate the public trust that has been given to the public employee by way of his job. There

are 22 enumerated crimes in 1312 of Act 140 that will result in a forfeiture of pension benefits should a public employee or public official be convicted of one or more of them. The crime committed must be specifically enumerated and variations of a type of crime will not suffice for forfeiture. For example, not all theft crimes are covered in the statute. Theft by Unlawful Taking, 18 Pa. C.S. 3921 will not result in forfeiture, while the following, so long as they rise to a culpability level of at least a first degree misdemeanor, will: Theft by Deception, 3922, Theft by Extortion, 3923, Theft of Services, 3926, and Theft by failure to make required disposition of funds received, 3927. Other than these four (4) theft crimes, Misapplication of Entrusted Property and Property of Government or Financial Institutions, 18 Pa. C.S. 4113, is the only other enumerated crime that has a culpability threshold, and must be at least a second degree misdemeanor to be a forfeiture crime. The remaining forfeiture crimes are as follows: Section 4101 (relating to forgery) Section 4104 (relating to tampering with records or identification) Section 4701 (relating to bribery in official and political matters) Section 4702 (relating to threats and other improper influence in official and political matters) Section 4902 (relating to perjury) Section 4903(a) (relating to false swearing) Section 4904 (relating to unsworn falsification to authorities) Section 4906 (relating to false reports to law enforcement authorities)

 Section 4909 (relating to witness or informant taking bribe) Section 4910 (relating to tampering with or fabricating physical evidence) Section 4911 (relating to tampering with public records or information) Section 4952 (relating to intimidation of witnesses or victims) Section 4953 (relating to retaliation against witness, victim or party) Section 5101 (relating to obstructing administration of law or other governmental function) Section 5301 (relating to official oppression) Section 5302 (relating to speculating or wagering on official action or information) Article III of the act of March 4, 1971 (P.L. 6, No. 2), known as the Tax Reform Code of 1971 The statute also has a substantially similar provision that states that in addition to the enumerated forfeiture crimes, all criminal offenses as set forth in Federal law substantially the same as the crimes enumerated herein cause forfeiture. What exactly constitutes a substantially similar federal offense has not yet been clearly decided by the courts. In Roche v. State Employes' Retirement Bd., however, the court overturned a lower court ruling that denied the appellant pension benefits because his federal crime of false declarations before a grand jury or court was not substantially the same as the state crime of perjury.2 Roche is one of the few cases that addresses the substantially similar issue though more cases that more concretely define the phrase substantially similar are imminent. Until then, the substantially similar clause in Act 140 will remain open to constitutional attack for being vague and for giving the legislature additional unauthorized authority. To date, however, courts have not yet reached these issues.

Roche v. State Employes' Retirement Bd., 731 A.2d 640 (Pa. Commw. Ct., 1999)

In addition to being convicted of one of the 22 enumerated crimes, the crime committed must be committed by a public official or a public employee and the crime must be related to public office or public employment.3

15.3 Public Employees and Public Officials While areas of interpretation exist for the terms public official and public employee collectively, it does not appear that there is any real practical difference between the two (2) terms. She implied in her argument that a mere rank and file employee does not rise to the level of a public official or public employeeterms from the Act that at the time seemed to have been applied to an uncanny number of judges in Pennsylvania pension benefits forfeiture cases. Perhaps the legislature included both terms in the statute in an attempt to be inclusive and to prevent any argument that a defendant could be a public employee while not technically a public official. In any event the terms have no substantial difference in meaning and will be treated as though they are the same. Rarely has a defense been raised that an employee does not fall under the heading of public official or public employee. In Apgar v. State Employes Retirement System,4 however, Ms. Apgar asked the court to distinguish between a judge and a rank and file worker, and claimed that because she was a rank and file worker she was not bound by Act 140. Perhaps because the statute specifically mentions judges and justices of the peace and does not enumerate the other employees or officials who are subject to the statute, Ms. Apgar believed she could challenge her inclusion under the statute because she was neither a judge nor justice of the peace. President Judge Collins, writing for the court, however,

3 4

43 P.S. 1312 (2004) 655 A.2d 185 (1994)

disagreed, writing for the court: We note that the Act specifically includes judges as well as rank and file employees. We, therefore, find that petitioner is bound by the Act by virtue of her being an employee of the Commonwealth.5 President Judge Collins must have been speaking figuratively when he said that the Act specifically includes rank and file employees, because those exact words do not appear in the Act. The Act clearly states, however, that all persons who are members of any retirement system funded in whole or in part by the Commonwealth or any political subdivision are deemed to be engaged in public employment6 and are therefore within the reach of the statute. Whether a janitor or judge, so long as the employee or official is a member of a retirement system that is funded in any way by public monies, he falls under the dominion of the Act. By definition the statute applies to: Any county, city, borough, incorporated town, township, school district, vocational school district, intermediate unit, municipal authority, home rule, optional plan or optional charter municipality, and any agencies, boards, commissions, committees, departments, instrumentalities, or entities thereof designated to act in behalf of a political subdivision either by statute or appropriation.7 So too does the statute list the individuals who do not fall under the statute. Section 1312 states that the terms public employee and public official shall not include independent contractors nor their employees or agents under contract to the Commonwealth or political subdivision nor shall it apply to any person performing tasks over which the Commonwealth or political subdivision has no legal right of control .

5 6 7

Id at 188 CITE 43 P.S. 1312

While rarely do the parties raise the issue whether they qualify as public officials or public employees, since such a determination is usually easily made, courts nevertheless nearly always undergo an analysis to assure that the employee or official qualifies for forfeiture under the Act. The Pennsylvania Supreme Court, for example, in Shiomos v. State Employes Retirement Board8 addressed the issue of whether the defendant qualified as a public employee or official before moving on to the constitutional questions in the case. Shiomos was a judge convicted of extortion who challenged his forfeiture on grounds that his pension had vested and any forfeiture would be considered a breach of contract, prohibited by the Pennsylvania Constitution.9 Citing Act 140, the court wrote: The Act defines Public Official or Public Employee as: Any person who is elected or appointed to any public office or employment including justices, judges and justices of the peace and members of the General Assembly or who is acting or who has acted in behalf of the Commonwealth or a political subdivision or any agency thereof including but not limited to any person who has so acted and is otherwise entitled to or is receiving retirement benefits whether or not compensated on a full or part-time basis. This term shall not include independent contractors nor their employees or agents under contract to the Commonwealth or political subdivision nor shall it apply to any person performing tasks over which the Commonwealth or political subdivision has no legal right of control. However, this term shall include all persons who are members of any retirement system funded in whole or in part by the Commonwealth or any political subdivision. For the purposes of this act such persons are deemed to be engaged in public employment.10 (emphasis added by the court)

8 9

533 Pa. 588 (1993) citing 43 P.S. 1312; P.L. No. 140, 2. Pa. Const. art. 1, 17 10 Id at 593.

The court did not engage in further discussion of the issue other than to say that a senior judge11 clearly fit within the definition of public official or public employee, 12 and let its emphasis on pertinent parts of the statute speak for itself. Only then did the court go on to answer the constitutional question in the case. It found that Shiomos was subject to Act 140 despite his protestations regarding contract law and the Pennsylvania Constitution issues that are discussed more thoroughly in Chapter 5. In Pub. Sch. Employees Retirement Bd. v. Matthews13 the court determined that any person who is elected to any public office or employment qualifies as a public employee or public official. The Matthews case presented an interesting hitch in the typically clear-cut determination of who qualifies as a public employee. It was undisputed that Matthews had been elected to the position of tax collector and that that position fell into the definition of public employment. It was also undisputed that she was convicted of theft by failure to make required disposition of fundsone of the enumerated criminal offenses that forfeits retirement benefits. Had these been the only pertinent facts of the case, Matthews clearly would have fallen under Act 140 and forfeited her retirement benefits; however, her position as a tax collector did not include a pension plan. Her
11

Judge Thomas N. Shiomos entitlement to retirement benefits vested on July 30, 1979. Upon retirement in 1984, he began receiving a gross monthly annuity of $1,883.61 and subsequently assumed status as a senior judge. He was thereafter convicted in the United States District Court for the Eastern District of Pennsylvania of two counts of extortion under the Hobbs Act (18 U.S.C. 1951). On November 18, 1986 his assignment as senior judge was revoked by the Pennsylvania Supreme Court and he was forever barred from judicial office. He had already been receiving his pension when he took the position as a senior judge and the court held that his acceptance of the position effectively renewed his standing as a public employee. Despite the fact that Shiomoss contract with the State was executed, and he had reached the required age and completed the required number of years, and despite his already having received benefits, the court found that Shiomos forfeited his pension retroactively to the time he was convicted of one of the enumerated crimes in Act 140. The two instances of extortion for which charges were brought against him combined netted him $600. 12 Id at 593. 13 806 A.2d 971, 2002 Pa. Commw. LEXIS 796 (Pa. Commw. Ct. 2002)

position as a cafeteria worker, however, did. The court determined that though the crime she committed related to her position as a tax collector, a public employee could, by virtue of the state pension benefits she accrued through her position as a school cafeteria worker, forfeit her retirement benefits. In summary, before a retirement board can withhold a public employee or public officials pension benefits, the public official or public employee must have first been convicted of one or more of the 22 enumerated crimes and those crimes not the monies paid into the pension fundmust be related to the public office or public employment. 15.4 Crimes Relation to Employment As the Matthews case illustrates, monies forfeited need not be related to the crime committed or even the public office held by the public employee or public official. The crime or crimes committed, however, must be related to the public office or public employment. Section 1312 of Act 140 defines crimes related to public office or public employment as: Any of the criminal offenses as set forth [in] Title 18 (Crimes and Offenses) of the Pennsylvania Consolidated Statutes or other enumerated statute when committed by a public official or public employee through his public office or position or when his public employment places him in a position to commit the crime .14 It is possible, then, that a public employee or public official could commit all 22 enumerated crimes in Act 140 and so long as those crimes were unrelated to the public position the individual held, he would not forfeit his pension.

14

43 P.S. 1312 (2004)

To date there have been no cases that rejected forfeiture solely because the crimes were not related to public office or public employment. In Roche v. State Employes Retirement Board15 the appellant was employed as a correctional officer with the Pennsylvania Department of Corrections at the State Correctional Institution at Graterford,16 where, during the course of employment, he became a member of the State Employes Retirement System (SERS). He was subsequently called to testify before a federal grand jury about an incident he had witnessed while at Graterford, and he was later determined to have made false declarations before a grand jury or court,17 in violation of 18 U.S.C. 1623.18 Following a plea agreement, Roche was informed that his monthly annuity payments would cease and that his retirement account would be turned over for collection of the annuity payments received by him since the date of his conviction.19 Roche unsuccessfully appealed the decision of SERS Appeals Committee. He then requested an administrative appeal of the decision and an adjudication by the board. The hearing officer issued an opinion, later adopted by the board, that said, inter alia, Roches crime of false declarations before a grand jury or court was substantially similar to the Pennsylvania crime of perjury and, further, that Roches crime was committed in relation to his position as a public employee or public official.20 Roche filed an appeal to the Commonwealth Court of Pennsylvania where he argued that the federal crime of false declarations before a grand jury or court is not substantially similar to the Pennsylvania

15 16

731 A.2d 640 (1999) 731 A.2d 640, 641 17 Id at 642 18 The statute provides in pertinent part: Whoever under oath in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration shall be fined under this title or imprisoned not more that five years, or both. 19 731 A.2d 640, 642 20 731 A.2d 640, 643

crime of perjury. Instead, he argued, the federal crime of perjury is substantially similar to the Pennsylvania crime of perjury. The court agreed. Roche also argued, in essence, that his federal crime was too far removed from his actual job at the State Institute of Graterford and did not fit the description of a crime related to public office or public employment, because his job had nothing to do with testifying before federal grand juries. In what amounted to a judicial afterthought, having already disposed of the case based on Roches first issue, the court ruled in the last sentence of the opinion that the Board also erred in affirming the hearing officers determination that the federal crime to which Roche pleaded guilty is included within the definition of crimes related to public office or public employment and compels the forfeiture of his retirement benefits under section 3 of Act 140.21 The decision and in particular the last sentence of the opinion made it nearly impossible to commit a crime of perjury or obstruction of justice that was related to public office or public employment. In a related case, Gierschick v. State Employees Retirement Board,22 Gierschick, a member of SERS, was a corrections officer at the State Correctional Institution at Graterford who was supposed to videotape inmates as they left a bus. Gierschick testified, without counsel, before a federal grand jury that he believed he had taped the last inmates leaving the bus, and learned the following day that prison guards had assaulted some of the prisoners. His testimony was critical to establish the veracity of the assaulted inmates testimony. The federal grand jury subsequently indicted Gierschick for perjury, and after retaining counsel Gierschick pled guilty to the perjury charge in exchange for a probationary sentence and a fine. The following year Gierschick received a letter from

21 22

731 A.2d 640, 648649 (1999) 733 A.2d 29 (1999)

SERS notifying him that his total credited state service was forfeited as of the day after his conviction the previous year. Gierschick appealed but after hearing testimony a SERS hearing examiner concluded that Gierschicks guilty plea for the federal crime of perjury was related to his public employment and that his benefits were therefore subject to forfeiture under Act 140. Gierschick then appealed to the Board but to no avail. The Board concluded that the crimes to which Gierschick pled guilty did relate to his public employment and, further, that it was substantially similar to the Pennsylvania enumerated crime of perjury. Gierschick then appealed to the Commonwealth Court of Pennsylvania where he asserted that his plea of guilty to perjury did not constitute a crime relating to his public office or employment; therefore, Act 140 did not apply to him. The court disagreed and in a decision filed two (2) months after Roche, breathed new life into the enfeebled 1312 of Act 140, writing: There is substantial evidence supporting the Boards finding that the perjury occurred when Claimants (Gierschicks) public employment placed him in a position to observe the events that were later the subject of his false testimony. While Claimants job duties may not have included testifying before a grand jury, the fact that he was before the grand jury and not at Graterford did not sever the relationship between his conduct and his public employment. Claimant perjured himself before a federal grand jury about a work incident that Claimant both observed and videotaped. Based on these finding, we conclude that the Board correctly determined that the crime of perjury is related to public office or public employment.23

23

733 A.2d 29, 33 (1999)

The court distinguished the case from Roche by pointing out that Roche hinged on the claim that the federal statute to which Roche pled guilty was not substantially similar to the Pennsylvania perjury statutean issue not raised on appeal to the court in Gierschick. In a concurring opinion by Judge Pellegrini, he wrote: In Roche, the Retirement Board only found and argued that the federal crime of false swearing was substantially similar to the federal crime of perjury and not that it was comparable to any of the other crimes enumerated [in 1312]. No other claim was made by the Retirement Board that the federal false swearing was comparable to any other disqualifying crime. Answering the question presented to us of whether the federal crime of false swearing was substantially similar to the state crime of perjury and, if not, whether Roche was entitled to he pension, we reversed the Boards decision forfeiting Roches pension benefits finding that the federal crime of false swearing was not substantially the same as the state crime of perjury. In this case, however, the issue is whether a federal crime of perjury is the same as the state crime of perjury.24 The courts narrow interpretation of 1312 in Roche was greatly widened in its Gierschick ruling. To rule otherwise, the court observed in hindsight, would remove from the scope of Act 140 any cover-up, obstruction of justice or perjury unless the specific employment duties included giving testimony when required.25 15.6 Conviction The triggering mechanism that acts to forfeit a public employees or public officials pension benefits is a plea of guilty or no defense to, or upon initial conviction of, any crime related to public office or public employment and enumerated in 1312 of Act

24 25

733 A.2d 29, 34 (concurring opinion by Judge Pellegrini) 733 A.2d 29, 33

140.26 Should a public official or public employee wish to avoid pension forfeiture, it is prudent to do so pretrial or before entering a plea. If possible it is often advisable for the public employee or public official to plea bargain away any and all of the enumerated crimes in 1312 with which he is being charged or risk forfeiting his pension benefits. Once the member submits himself to the court by entering a plea, he risks a swift and draconian forfeiture of benefits, regardless of which of the enumerated crimes were committed or to what extent they were carried out. In Shiomos v. State Employes Retirement Board27 for example, after being convicted of two counts of extortion, which garnered Shiomos approximately $600, the court ruled that he forfeited his nearly $1,900a-month pension. Section 1313(a) provides for the return of only the monies the public official or public employee paid into the fund, minus interest and any employer contributions. The statue states: [N]o public official or public employee nor any beneficiary designated by such public official or public employee shall be entitled to receive any retirement or other benefit or payment of any kind except a return of the contribution paid into any pension fund without interest, if such public official or public employee is convicted or pleads guilty or no defense to any crime related to public office or public employment. While all pension benefits paid before a conviction or a plea of guilty or no contest remain the property of the member, all future payments are forfeited. In other words, SERS interprets Act 140 prospectively insomuch as only pension benefits that have not been paid to the member are forfeited. In addition, while the plain meaning of the Act clearly states that forfeiture occurs the moment a member pleads guilty or no defense, the State
26 27

43 P.S. 1313(b) (2004) 626 A.2d 158 (1993)

Employees Retirement Board will typically wait until sentencing to impose forfeiture in case the pleas are changed or withdrawn. Additionally, imposing forfeiture upon the plea of guilty or no contest would make those options considerably less attractive and contesting the charges would become more appealing. Mere allegations of criminal misconduct will not result in forfeiture.28 If a criminal conviction is finally dismissed, then a forfeiture action cannot be brought under Act 140.29 If a member enters a plea of guilty or no contest, or is convicted of one of the enumerated crimes, 1313(b) of the Act states that [N]o payment or partial payment shall be made during the pendency of appeal. If a verdict of not guilty is rendered or the indictment or criminal information finally dismissed, then the public official or public employee shall be reinstated as a member of the pension fund or system and shall be entitled to all benefits including those accruing during the period of forfeiture if any. Additionally, if a member is convicted of one of the enumerated crimes and subsequently wins an appeal, any pension benefits that were withheld are reinstated with interest. Section 1313(b) goes on to say, however, that guilty and no contest pleas and convictions, if sustained, will be considered a breach of contract between the member and his employer and forfeiture will ensue. 15.5 Retroactivity and Contract Law In the first few years following the enactment of Act 140, the primary challenges to Act 140 were on the grounds that the Act should not be applied retroactively and that the Act infringed on contract rights of the public employee or public official. The courts were
28 29

715 A.2d 528 (1998) Bellis v. Board of Pensions & Retirement, 634 A.2d 821

faced with a number of cases that dealt with attempted forfeitures based on criminal conduct that occurred prior to July 8, 1978the date of enactment. The court quickly restricted the application of Act 140. In Burello v. State Employes Retirement System,30 the court ruled that the Act could not be applied ex post facto to crimes committed before July 8, 1978. The contractual issue was addressed in Bellomini v. State Employees Retirement Board and Cianfrani v. Commonwealth, State Employees Retirement Board31the cases were heard together by the Supreme Court of Pennsylvania. The appellees were retired state employees whose pension rights had vested prior to the enactment of Act 140, but who had been convicted of criminal activity while employed by the State. The court held that because Pennsylvania recognizes retirement provisions for public employees as deferred compensation for service actually rendered in the past, and because the appellees pension rights had vested prior to enactment, they had contractual entitlement to their pension benefits. Challenges to the forfeiture relying on contract law still surface, and are dealt with in more depth in Chapter 5. The passage of time and the broad interpretation courts have given to 1313(c) have made the challenges to retroactivity all but extinct. Section 1313(c), however, provides that, Each time a public officer or public employee is elected, appointed, promoted, or otherwise changes a job classification, there is a termination and renewal for

30

411 A.2d 852, 856; [T]he retroactive purport of this act is such that we must find the act to be constitutionally infirm as an ex post facto law in itself, namely one which renders an act punishable in a manner in which it was not punishable when committed. 31 445 A.2d 737 (1982); see also Burello v. State Employes Retirement System, 411 A.2d 852 (1980); Miller v. State Employees Retirement Board, 411 A.2d 1300 (1980); and Commonwealth ex rel. Zimmerman v. Officers and Employees of Retirement Board, 469 A.2d 141.

the contract for purposes of this act.32 While possible, it is highly unlikely that any pre1978 member will not have had a promotion or change of employment by now. Courts have not been presented with the issue of whether a demotion or involuntary job change constitutes a change in job classification for the purpose of 1313(c), but the State Employees Retirement Board has decided that changes in job title that do not affect duties or salary do not constitute a change in job classification under 1313(c). 15.7 Restitution Orders Generally speaking, when a member forfeits his pension plan he only receives the money he put into the fund minus interest and matching contributions. When, however, the members crimes have caused either penalties to be imposed on the member or a loss of money on the part of the retirement system, then even the money the member paid into the fund may be forfeited in part or in whole. Section 1313(d) of Act 140 reads: The appropriate retirement board may retain a members contributions and interest thereon for the purpose of paying any fine imposed upon the member of the fund, or for the repayment of any funds misappropriated by such member from the Commonwealth or any political subdivision. While it is clear that the members contribution to the fund can be used to pay fines and restitution, it is unclear which funds the legislature meant to make available in 1314(c), which provides: [W]henever the court shall order restitution or establish the amount of restitution due after petition, all sums then credited to the defendants account or payable to the defendant including the contributions shall be available to satisfy such restitution order.
32

43 P.S. 1313(c)

It would seem that this part of the Act would make it possible for the Commonwealth to draw funds from the total value of the accrued benefit, including the reserves funded in anticipation of the payment of the benefit. While this issue is untested, it would seem that the Commonwealth could use monies that employers had contributed to the fund to pay restitution, giving the member the advantage of not having to pay restitution out of his own pocket. Every other mention of payment of fines and restitution in the Act specifically stipulate that any monies needing to be paid come from the members contributions and any interest thereon. Section 1313(e) states: [T]he State Employees Retirement Board shall not disburse any funds to any person who has forfeited their [sic] right to benefits until the Auditor General and the Attorney General have determined and certified that there has been no loss to the Commonwealth as a result of the conduct that resulted in forfeiture of benefits. If there is a loss to the Commonwealth, the board shall pay the amount of the loss to the State Treasurer from the members contributions and the interest thereon. (emphasis added) The State Employees Retirement Board seems to have recognized this potential problem and administers Act 140 as though only the members contributions and interest thereon are available to pay fines and restitution. The State Employees Retirement Board interpretation of the Act seems to be more logical since any money paid to the Commonwealth or to the employer would really be a windfall for the employer since it would be money he would not have to pay from his own funds. In effect, the employer would be paying itself. 15.8 Enforcement

Enforcement of the forfeiture for the sake of the Commonwealth is left largely to the courts. Section 1314(a) of Act 140 states that the court shall order the defendant to make complete and full restitution to the Commonwealth or political subdivision of any monetary loss incurred as a result of the criminal offense. While the Commonwealth is specifically mentioned in the statute as receiving its fines or reimbursements through court order, there is no mention of under what authority employers are supposed to receive compensation. It is likely, however, that an employer would treat the monies owed as any other outstanding debt and simply send it to a collection agency, should any outstanding balance remain after the pension fund contribution are depleted. The enforcement of Act 140 is problematic in the sense that there is a communication breakdown between the court system and pension administrators. Once a court makes a determination that a member is guilty of one of the enumerated crimes, or when a member has pleaded guilty or no contest to one of the enumerated crimes, there is no system in place to inform pension administrators that one of their members is subject to forfeiture of pension benefits under Act 140. Nicholas Marcucci, Deputy Chief Counsel to Pennsylvanias State Employees Retirement System, has suggested that this communication gap sets up the potential for a dont ask dont tell scenario where employers never discover that their employees are subject to Act 140. Marcucci writes that it is important that SERS counselors remain alert to potential forfeiture situations. SERS, he says, relies on a number of sources of information, including the serendipitous spotting of news articles.33 Other than serendipity, however, SERS counselors are left to their own devices to seek out and discover potential Act 140 situations. Employers, it would seem, should take a more active
33

CITE

role in seeking out such situations since the Act provides them with remedies to recoup losses incurred by their employees misconduct. Short of asking employers if they had recently been convicted of an enumerated crime, however, there would be no way of knowing. While there is a strong possibility that whatever enumerated crime committed by the employee would come to the attention of the employer since, for the crime to produce forfeiture, it needs to be related to the members employment, there are numerous scenarios in which an employee could be convicted without an employers knowledge. Even if an employer were to ask employees in a regular basis if they had been convicted of an Act 140 crime, there would be no incentive for the employee to either offer the information or to be forthright when asked, since doing so would result in the loss of their pension benefits and likely their jobs. 15.9 Conclusion Some might argue that Act 140 provides indiscriminate punishment regardless of the severity of the crime committed. In some regards, the Act provides a rather arbitrary and overly simplistic standard for determining who forfeits his pension benefits. The simplicity of the statute has provided courts with the opportunity to broadly interpret the Act, and it has also raised the question of why many more severe crimes committed by public employees or public officials are not included and some of the more benign crimes are punishable? While certain challenges to Act 140 are slowly becoming obsoletesuch as the issue of the retroactivity of the statuteother areas of attack on the Act have yet to be tapped. It would be surprising if the statute were not attacked on grounds that it violates double jeopardy protections. In a sense, public employees and public officials are being

punished for the actual crimes committed and then again for violating the Act. Courts have effectively limited the constitutional challenges against the Act, but savvy lawyers will undoubtedly find more chinks in the courts rulings that allow Act 140 to defeat obligation of contracts attacks. The Act could also be attacked on the grounds that it is cruel and unusual punishment. As the Shiomos case demonstrates, the former judge forfeited perhaps tens of thousands of dollars in pension benefits for extorting a mere $600. Most of these challenges have yet to see the inside of a courtroom, but in the near future courts will likely have to respond to these and other attacks on Act 140 15.10 The Statute 43 P.S. 1311 (2004) 1311. Short title This act shall be known and may be cited as the "Public Employee Pension Forfeiture Act." 43 P.S. 1312 (2004) 1312. Definitions The following words and phrases when used in this act shall have, unless the context clearly indicates otherwise, the meanings given to them in this section: "CRIMES RELATED TO PUBLIC OFFICE OR PUBLIC EMPLOYMENT." Any of the criminal offenses as set forth in the following provisions of Title 18 (Crimes and Offenses) of the Pennsylvania Consolidated Statutes or other enumerated statute when committed by a public official or public employee through his public office or position or when his public employment places him in a position to commit the crime: Any of the criminal offenses set forth in Subchapter B of Chapter 31 (relating to definition of offenses) when the criminal offense is committed by a school employee as defined in 24 Pa.C.S. 8102 (relating to definitions) against a student.

Section 3922 (relating to theft by deception) when the criminal culpability reaches the level of a misdemeanor of the first degree or higher. Section 3923 (relating to theft by extortion) when the criminal culpability reaches the level of a misdemeanor of the first degree or higher. Section 3926 (relating to theft of services) when the criminal culpability reaches the level of a misdemeanor of the first degree or higher. Section 3927 (relating to theft by failure to make required disposition of funds received) when the criminal culpability reaches the level of a misdemeanor of the first degree or higher. Section 4101 (relating to forgery). Section 4104 (relating to tampering with records or identification). Section 4113 (relating to misapplication of entrusted property and property of government or financial institutions) when the criminal culpability reaches the level of misdemeanor of the second degree. Section 4701 (relating to bribery in official and political matters). Section 4702 (relating to threats and other improper influence in official and political matters). Section 4902 (relating to perjury). Section 4903(a) (relating to false swearing). Section 4904 (relating to unsworn falsification to authorities). Section 4906 (relating to false reports to law enforcement authorities). Section 4909 (relating to witness or informant taking bribe). Section 4910 (relating to tampering with or fabricating physical evidence). Section 4911 (relating to tampering with public records or information).

Section 4952 (relating to intimidation of witnesses or victims). Section 4953 (relating to retaliation against witness, victim or party). Section 5101 (relating to obstructing administration of law or other governmental function). Section 5301 (relating to official oppression). Section 5302 (relating to speculating or wagering on official action or information). Article III of the act of March 4, 1971 (P.L. 6, No. 2), known as the "Tax Reform Code of 1971." In addition to the foregoing specific crimes, the term also includes all criminal offenses as set forth in Federal law substantially the same as the crimes enumerated herein. "POLITICAL SUBDIVISION." Any county, city, borough, incorporated town, township, school district, vocational school district, intermediate unit, municipal authority, home rule, optional plan or optional charter municipality, and any agencies, boards, commissions, committees, departments, instrumentalities, or entities thereof designated to act in behalf of a political subdivision either by statute or appropriation. "PUBLIC OFFICIAL" or "PUBLIC EMPLOYEE." Any person who is elected or appointed to any public office or employment including justices, judges and justices of the peace and members of the General Assembly or who is acting or who has acted in behalf of the Commonwealth or a political subdivision or any agency thereof including but not limited to any person who has so acted and is otherwise entitled to or is receiving retirement benefits whether that person is acting on a permanent or temporary basis and whether or not compensated on a full or part-time basis. This term shall not include independent contractors nor their employees or agents under contract to the Commonwealth or political subdivision nor shall it apply to any person performing tasks over which the Commonwealth or political subdivision has no legal right of control. However, this term shall include all persons who are members of any retirement system funded in whole or in part by the Commonwealth or any political subdivision. For the purposes of this act such persons are deemed to be engaged in public employment. 43 P.S. 1313 (2004) 1313. Disqualification and forfeiture of benefits (a) Notwithstanding any other provision of law, no public official or public employee

nor any beneficiary designated by such public official or public employee shall be entitled to receive any retirement or other benefit or payment of any kind except a return of the contribution paid into any pension fund without interest, if such public official or public employee is convicted or pleads guilty or no defense to any crime related to public office or public employment. (b) The benefits shall be forfeited upon entry of a plea of guilty or no defense or upon initial conviction and no payment or partial payment shall be made during the pendency of an appeal. If a verdict of not guilty is rendered or the indictment or criminal information finally dismissed, then the public official or public employee shall be reinstated as a member of the pension fund or system and shall be entitled to all benefits including those accruing during the period of forfeiture if any. Such conviction or plea shall be deemed to be a breach of a public officer's or public employee's contract with his employer. (c) Each time a public officer or public employee is elected, appointed, promoted, or otherwise changes a job classification, there is a termination and renewal of the contract for purposes of this act. (d) The appropriate retirement board may retain a member's contributions and interest thereon for the purpose of paying any fine imposed upon the member of the fund, or for the repayment of any funds misappropriated by such member from the Commonwealth or any political subdivision. (e) Notwithstanding any other provision of this act, the State Employees' Retirement Board shall not disburse any funds to any person who has forfeited their right to benefits until the Auditor General and the Attorney General have determined and certified that there has been no loss to the Commonwealth as a result of the conduct that resulted in forfeiture of benefits. If there is a loss to the Commonwealth, the board shall pay the amount of the loss to the State Treasurer from the member's contributions and the interest thereon. 43 P.S. 1314 (2004) 1314. Restitution for monetary loss (a) Whenever any public official or employee who is a member of any pension system funded by public moneys is convicted or pleads guilty or pleads no defense in any court of record to any crime related to a public office or public employment, the court shall order the defendant to make complete and full restitution to the Commonwealth or political subdivision of any monetary loss incurred as a result of the criminal offense. (b) If the court fails to order such restitution the Commonwealth, through the Attorney General, or a political subdivision shall petition the court pronouncing sentence for an order establishing the amount of restitution due it. If the court does not have authority to order restitution, the Commonwealth or the political subdivision shall bring an original action for restitution.

(c) Notwithstanding any law or provision of law exempting the pension account or benefits of any public official or public employee from garnishment or attachment, whenever the court shall order restitution or establish the amount of restitution due after petition, all sums then credited to the defendant's account or payable to the defendant including the contributions shall be available to satisfy such restitution order. (d) The retirement board, administrator of the pension fund or employer of the defendant, upon being served with a copy of the court's order, shall pay over all such pension benefits, contributions or other benefits to the extent necessary to satisfy the order of restitution. 43 P.S. 1315 (2004) 1315. Repealer All other acts or parts of acts inconsistent with the provisions of this act are repealed to the extent of their inconsistency.