Federal prosecutors have told Pennsylvania\u2019s school pension system, PSERS, that the U.S. Department of Justice has closed its investigation<\/a> of the $70 billion, state-funded retirement plan, board chairman Chris Santa Maria told plan members in a brief statement Tuesday.<\/p>\n \u201cWe understand from the closure of the investigation that DOJ will not be pursuing civil or criminal charges,\u201d Santa Maria told The Inquirer.<\/p>\n \u201dThe investigation has been closed,\u201d confirmed Jennifer Crandall, a spokesperson for the U.S. Attorney\u2019s office in Philadelphia. She said the office had no further comment.<\/p>\n That report removes a shadow that has hung over the agency for 15 months, as the Public School Employees\u2019 Retirement System piled up more than $6 million in outside legal defense and consulting<\/a> bills.<\/p>\n PSERS\u2019s 15-member board of state officials, legislators, teachers and school board representatives, backed by $5 billion a year from taxpayers and $1 billion in annual staff payroll deductions, approves and oversees investments that help fund retirements for a half-million working and retired school staff.<\/p>\n Pension leaders have been distracted responding to demands by investigators for information, wondering whether the government would press charges. Citing the fund\u2019s performance over the previous decade, some trustees called for terminating its top officers, who retired while the probe was ongoing.<\/p>\n \u00bb READ MORE: PSERS trustees brag plan is \u2018number one,\u2019 staff warns of risk ahead<\/a><\/b><\/i><\/p>\n Santa Maria and senior staffers won\u2019t say more about their reaction to the news, as long as another probe \u2014 by the federal Securities and Exchange Commission \u2014 continues: \u201cWe have no further comment at this time, as the SEC investigation remains ongoing,\u201d Santa Maria said.<\/p>\n \u201dAlthough it is good that the Department of Justice investigation did not identify any criminal wrongdoing, it is not an occasion for celebration,\u201d said state Treasurer Stacy Garrity, a PSERS trustee. \u201cWe must continue pushing for reforms to reduce investment costs and complexity\u201d and \u201cincrease transparency,\u201d so the public can have confidence in the plan, she added.<\/p>\n The Inquirer first reported<\/a> the investigation in March 2021. FBI agents served subpoenas on PSERS and its top officials seeking information about possible \u201chonest services fraud\u201d at the agency.<\/p>\n The subpoenas were sent on behalf of a federal grand jury in Philadelphia, where prosecutors <\/a>sought information on two series of events:<\/p>\n The system\u2019s exaggerated investment returns for 2011-20, which PSERS later revised, forcing higher pension contributions<\/a> from 100,000 mostly younger teachers <\/b>to support their retirement. An internal investigation blamed errors on a consultant<\/a>, Aon<\/a>, which continues to manage<\/a> PSERS data.<\/p>\n<\/div>\n<\/li>\n A series of land purchase<\/a> decisions in Harrisburg, which the internal review<\/a> later found were made by pension system managers who did not share information about the deals with trustees, the way they did with most investments.<\/p>\n<\/div>\n<\/li>\n<\/ul>\n<\/div>\n The news that the government is closing the file was cheered by a lawyer for Glen Grell, PSERS\u2019s former executive director, who announced his retirement last fall.<\/p>\n \u201cThe Department of Justice did the right thing,\u201d said Grell\u2019s lawyer, Marc Raspanti of Philadelphia. \u201cAs we repeatedly said, there was never a case here. My client is very pleased.\u201d Grell is retiring to Florida to be with family, Raspanti said.<\/p>\n A lawyer for chief investment officer James Grossman Jr., who also stepped down, didn\u2019t respond to a request for comment. Grossman was an architect of PSERS\u2019s strategy of relying more on private investments, which critics said reduced PSERS returns<\/a> compared with other funds during the long bull market in U.S. stocks. His supporters said Grossman was vindicated<\/a> when the stock market fell this year. In June, Grossman gave a keynote speech on investments to the CFA Society Philadelphia\u2019s Endowment Foundation and Philanthropy Conference.<\/p>\n Some had hoped the investigation would have yielded more about how public investment decisions are made. \u201cThe industry was eagerly awaiting any additional revelations,\u201d said Ted Aronson, a veteran Philadelphia investor whose past clients included public retirement plans.<\/p>\n\n