Commission report castigates Quincy and others for $3.5 million pension theft

Basic measures could have prevented the theft of $3.5 million from Quincy Retirement Board pension funds last year, according to a new state report investigating what is believed to be the biggest theft in a public pension board in Massachusetts history.

The report, from the Public Employee Retirement Administration Commission, or PERAC, says money is still missing from Quincy’s pension fund, which has represented more than 3,000 people since it was robbed in February 2021. It didn’t was discovered only in October 2021.

The report reveals that the hacker gained access to the email account of the former executive director of the pensions commission, who had resigned two months earlier but still had an active email account.

The perpetrator has not been identified and the money has not been found.

PERAC executive director John Parsons said the theft was not a sophisticated ploy.

“It was a combination of lack of controls, but also human error, lack of due diligence in the roles of each of the parties involved in the transaction,” Parsons said in an interview.

The report shows the emails that show the theft took place.

The person posing as the chief executive wrote to an investment manager at Aberdeen Standard Investments, now known as abrdn: “We would need to redeem $3.5m…”

The investment manager’s response “…that amount shouldn’t be a problem.”

And it wasn’t.

The $3.5 million was eventually sent to an account listed with Standard Chartered Bank Hong Kong.

“This transaction could have been discovered in several places along the way,” Parsons said.

“Is anyone at risk of not receiving their pension?” 5 Inquiry Mike Beaudet asked.

“They’re not,” Parsons replied. “Quincy is a $900 million retirement fund. So I would never say it was a small loss. Certainly not. But operationally, there’s more than enough funds for retirees to receive their checks.”

But PERAC says this should be a warning to everyone.

“We have to match the efforts of the scammers. They are professionals,” Parsons said. “That’s what they do day in and day out. The resources are there, the expertise is there, the common sense is there. And we have to match that every day because they are constantly knocking on the door.”

The Quincy Retirement Board did not return a request for comment.

Chris Walker, a city spokesman, said in a statement: ‘PERAC’s in-depth report is a damning condemnation of the private companies engaged to protect our retirees’ investments. It includes a long list of red flags that should have prevent this transaction from ever taking place, leading to what was undoubtedly a systemic failure I am aware of the only item in the report criticizing the city for not immediately shutting down an email address when our IT department did not was not asked to do anything outside of normal policy, and she is well taken and will be corrected. But she pales in comparison to the gross and utter neglect perpetrated on our pension system so well articulated by the PERAC report.

In a response to PERAC, a lawyer representing abrdn disputed that there were many red flags that should have been detected before the funds were disbursed.