INDIANAPOLIS – It appears that the Indiana State Teachers Association may finally repay Indiana schools some of the money it swindled from them through its illegal insurance scam.
The Indiana Secretary of State this week reached a tentative agreement with the teachers union, and its parent organization – the National Education Association, to repay 27 Indiana schools a portion of what’s owed to them after the collapse of ISTA Insurance Trust, the union’s insurance arm, CNHI news service reports.
“The tentative amount puts roughly 50 cents for every dollar lost from this mismanagement back to the school corporations,” Indiana Secretary of State Connie Lawson announced in a press release.
“While $14 million is a significant amount, it does not cover ISTA’s or NEA’s full financial obligation to the school corporations. We remain confident in our case, but took the leadership step to get this money in hand for schools as soon as possible.”
The Secretary of State sued the ISTA and NEA in 2009 to recover $27 million the now defunct ISTA Insurance Trust owed to school districts in future insurance premium credits. ISTA officials sold schools health insurance plans that allowed them to collect credit for the difference between claims and premiums.
The Trust allowed districts to invest the money saved to offset future insurance costs, but instead comingled the funds with other accounts to cover shortfalls in the union’s long-term disability plan. The Trust also put some of the money into risky investments that lost substantial value, the news service reports.
As the union was losing money through the Trust, they repeatedly lied to schools about their investments with phony quarterly and annual statements, the Secretary of State alleges.
“ISTA and the NEA have made several attempts to have the case dismissed and skirt their financial responsibilities to the schools,” Lawson said. “ISTA has tried to portray themselves as the victim and tried to push all of the blame on (investment manager) David Karandos and state-level ISTA employees who managed ISTA’s investments,” according to CNHI.
The tentative settlement between the state and its teachers union hinges on gaining agreement from all school corporations that lost money in the ISTA’s Ponzi scheme. If they don’t, the case goes to trial in U.S. District Court in October.
By Victor Skinner at EAGnews.org