PORTLAND, Ore. (KOIN) – The Oregon Department of Justice was awarded $9.4 million in damages after an investigation found a pension fund advisor rigged sales and subsequently bolstered his trust fund, Oregon Attorney General Ellen Rosenblum announced Wednesday.
The complaint was filed against Talmage LLC and the company’s founder Edward Shugrue III for misconduct against the Oregon Public Employees Retirement Fund for violating the state’s antitrust law.
According to the Oregon DOJ, Shugrue and Talmage were responsible for investing over $400 million in pension funds in the commercial real estate sector and served as a pension fund advisor for OPERF between 2007 and 2017.
An investigation by the Oregon DOJ found Talmage “rigged” the outcome of a series of collateralized debt obligation auctions involving the sale of OPERF-owned assets, so a Talmage affiliate fund could acquire the assets at a discounted price.
The Oregon DOJ says Shugrue, his three friends, and his son’s trust fund “strategically timed investments” in the affiliate fund and deprived the Oregon pension fund of millions of dollars in profits when assets re-sold at their true price.
The court concluded that the rigged sales violated the Oregon Antitrust Law and awarded the state over $5 million in damages and ordered Talmage to pay back the investment management fees during the scheme, worth over $2 million.
Additionally, the court said Shugrue breached his fiduciary duties and ordered him to disgorge the profits he earned from the scheme, worth an additional $521,663.
In a statement, Oregon Attorney General Ellen Rosenblum said, “Investment professionals who get caught betraying their duties to the Oregon pension will not get away with it.”
“As fiduciaries, we take seriously our responsibility to safeguard the retirement funds of Oregon’s public employees,” State Treasurer Tobias Read added. “We are committed to ensuring accountability and integrity in all of our investment practices and are pleased with the outcome secured by Attorney General Rosenblum and her team.”
An attorney for Talmage, Phara Guberman of Cadwalader, Wickersham & Taft, said, “We are pleased that the Court recognized the significant errors in the State’s claims, the majority of which were dismissed entirely. The Court determined there were no false claims and there was no fraud. Talmage and Mr. Shugrue have always been proud of how profitable their investments were for OPERF, earning hundreds of millions of dollars for Oregon’s public pensioners. We expect the penalties reduced significantly in due course.”
