Michigan State Police investigate former employee of Detroit pension system in theft case

The city of Detroit's retirement systems — covering both police and fire, as well as general retirees — have possibly lost as much as "several hundred thousand dollars" to a payment-card scheme that is part of an ongoing Michigan State Police investigation.

A former staff person who worked for the combined Police and Fire Retirement System and the General Retirement System — which both cover some 19,000 current retirees and some 8,000 current employees — was the target of an investigation by the Michigan State Police, according to a statement issued late Friday afternoon by the Retirement Systems of the city of Detroit.

The former staff person was taken into custody by Michigan State Police on Wednesday, according to the release. No further details were given. Michigan State Police were not able to respond to questions as of Friday afternoon.

The situation being investigated involves money disbursed on prepaid payment cards that typically are used by retirees who do not have bank accounts, or so-called unbanked consumers. Roughly 120 retirees use such prepaid cards, according to Bruce Babiarz, a spokesperson for the Police and Fire Retirement System of Detroit.

The former employee became a target of the Michigan State Police investigation after other law enforcement agencies worked on a separate, unrelated criminal probe. State police contacted the retirement system July 3 to alert the system of potential fraud and request assistance. The system is cooperating with state police in the ongoing investigation.

State police also issued a search warrant for specific retirement system records. The Retirement System of the city of Detroit's management, according to the release, provided documents and fully cooperated with state police.

The system said it has adhered to the request to "only discuss the investigation with those who needed to know for the purposes of their preliminary investigation."

"The former staff person allegedly reissued payments onto payment cards — pre-paid credit/debit cards," according to the release. Upon learning of the investigation, the Retirement Systems of the city of Detroit took "immediate steps to abate any further fraudulent or unlawful actions," the release stated.

The extent of the card theft remains under investigation. But the release stated that it "could be as much as several hundred thousand dollars."

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Officials with the city retirement systems have been asked by state police to not comment further given the active investigation, according to the release.

The city's General Retirement System and Police and Fire Retirement System are separate entities that share a common staff and offices to reduce overhead costs and streamline operations.

The General Retirement System's board oversees the $1.7 billion fund serving some 11,000 retired members and approximately 5,000 active members.

The Police and Fire Retirement System's board oversees the $2.7 billion fund serving some 8,000 retired police and fire and approximately 3,000 active duty first responders.

Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X (Twitter) @tompor.