Retirees May Lose Pension Benefits for Post-Retirement Criminal Activity
Earlier this month, the Supreme Judicial Court held that retirees who engage in certain criminal activity post-retirement may be subject to the pension forfeiture provisions of G.L. c.32, §15(3) and 15(4). The decision, Mahan v. Boston Retirement Board, clarifies that when a retiree is convicted of a crime involving misappropriation of public funds or violation of laws applicable to his former public position, it can result in the loss of retirement benefits even if the individual is fully retired when committing the offense.
In Mahan, the plaintiff was a Suffolk County sheriff’s department correctional officer who was found to be permanently disabled after a 2000 work-related knee injury. He had to stop working and received a combination of workers’ compensation, accidental disability retirement benefits, and assault pay for several years. To continue receiving the workers’ compensation benefits, Mahan had to certify, every six months, that he was not working or deriving any income from work. However, a few years after his retirement, he began working at his wife’s car dealership. Mahan sold cars, hired employees, and bid on cars for resale. Following an investigation, he was indicted in February 2013 for workers’ compensation fraud and larceny. He pled guilty to both offenses and was ordered to pay more than $300,000 in restitution to his former employer. Following these convictions, the Boston Retirement Board revoked his retirement benefits. Mahan appealed this decision, arguing that the forfeiture laws did not apply to him because he was not an active public employee at the he committed the crimes—he was already retired for more than two years before the crimes commenced.
A Boston Municipal Court judge found in favor of the retirement board. Mahan appealed again, and the matter was transferred to the Superior Court, where a judge denied the petition. Mahan then appealed to the Appeals Court, but the SJC transferred the matter on its own motion.
The SJC explained that by its plain language, G.L. c.32, §15 applies to a “member” of a retirement system. A person can be a “member in service” (an active, current employee) or a “member inactive” (retiree from public service). Thus, section 15 applies to both active employees and retirees. The court further held that G.L. c.32, §15(3) applied because Mahan was a “member” convicted of a criminal offense involving the funds of the public employer; thus, he was ineligible to receive retirement benefits until full restitution was made. G.L. c.32, §15(4) also applied because it makes any “member” that is convicted of a crime tied to their current or former public office permanently ineligible for retirement benefits. Here, the SJC upheld the retirement board’s decision that but for Mahan’s work-related injury, he would not have been in the position to complete his workers’ compensation attestation documents and lie on them. For that reason, his public employment facilitated his crime—in other words, absent his public employment, he would not have been eligible for workers’ compensation, and would not have been in the position to commit the workers’ compensation fraud.
This decision clarifies that the forfeiture provisions of section 15, by their clear terms, apply to retirees whose criminal conduct occurred after retirement from public service.