One year after the head of Illinois’ largest public employee pension fund resigned due to what the fund has only described at “performance issues,” a recently published report by the state’s chief ethics officer reveals the circumstances behind the departures of two more former high-ranking officials at the pension fund in 2020.
The former chief information officer at the Illinois’ Teachers’ Retirement System repeatedly directed contracts toward the company he founded and also lied about having severed ties with the company, according to a report published last month by Illinois Executive Inspector General Susan Haling. TRS manages the pensions of more than 427,000 current and retired teachers as well as pension beneficiaries.
The report centers on former CIO Jay Singh’s conflicts of interest, but also brings to light the firing of TRS’ former chief financial officer, Jana Bergschneider, who was fired last July as the investigation unfolded. Singh resigned in April of last year, two months after he was interviewed as part of an internal investigation into his conflicts of interest.
Singh began as the pension fund’s CIO in August 2019, but for 10 months before that, worked on a contract basis as a project manager for TRS’ Gemini Project, a custom software program built to administer a new defined contribution plan made available to teachers in a 2018 law.
While he was the contractual project manager on the Gemini Project, Singh steered three contract jobs to employees of Singh3 Consulting, the company he founded in 2015, the investigation found. According to the report, investigators found Singh put his thumb on the scale during the procurement process by electing not to review a submission for the work from a competing vendor and closely overseeing the scoring process for awarding the contract.
The first Singh3 employee was hired as a part-time software developer in November 2018, a little over a month after Singh began his contract as Gemini’s project manager. Investigators also noted that despite the work order’s stipulation that at least 90% of the work for that position be performed on site in Springfield, the Singh3 employee worked from India and was never on site.
That person was eventually hired as a Senior Technical Systems Analyst in April 2019 at a $105 per hour rate — a $30 hourly increase from the previous contract.
Singh also influenced the contract awards for two other Singh3 employees while he was still the contractual project manager, according to investigators, including being present for an interview, directing work orders to be changed to better fit the Singh3 employees and ultimately directing the contract award of at least one of the employees.
The Singh3 employees were subcontractors of two unnamed vendors that TRS has kept on call in order to expedite filling positions that come up, according to TRS spokesman Dave Urbanek, who stressed the pension fund has totally revamped its contracting protocols in the wake of the investigation.
Even with subcontracted Singh3 employees coming through another vendor, an unnamed TRS employee began getting suspicious of Singh’s behavior, according to the report, and started requesting subcontractor information from TRS contractors in late July 2019.
But several days after that, Singh officially began a full-time job as TRS’ chief information officer on Aug. 5, 2019, earning $220,000 annually. The day before, Singh provided TRS a letter stating he “was resigning from his positions at Singh3 and severing all ties, financial interests and management control with the business.”
In the course of an internal investigation, TRS officials and later OEIG investigators found that wasn’t true.
Singh remained involved with his company
Six months after he began as CIO, Singh was still officially registered as a business officer on Singh3’s corporate registration with the state of Georgia, where the company is based. Though Singh said he’d signed over Singh3’s bank account to family members who took over the company, he never transferred his shares of stock to family members.
Additionally, according to accounts subpoenaed by the OEIG during the investigation, Singh3 made more than $30,000 in payments to a credit cared company through transactions that referenced Singh even after he became a full-time TRS employee.
Even so, Singh directed one final contract to a Singh3 employee after he began as CIO, this time awarding a contract for a business analyst position to someone Singh admitted he had told the scoring team had “good skills.” Singh also directed the suspicious unnamed TRS employee to eliminate another vendor from the search process.
Singh has not worked for the state for nearly a year and a half, and the OEIG can only recommend he never be rehired and Singh3 never be used for contracting again. But the report also places blame on TRS’ executive team for turning a blind eye to Singh’s conflicts of interest, and recommends big changes in the contract award process — changes Urbanek said have already been made.
The report found that Ingram was aware of outstanding questions about what steps Singh took to distance himself from his company, and that it was the subject of discussion between TRS’ higher-ups. But ultimately, no one looked into whether Singh had, in fact, removed himself as an officer from the company or was still benefitting financially from Singh3.
Singh could not be reached for comment through either Singh3 or his new venture, a startup based in Marietta, Ga. aimed at “connecting cooks with consumers through shared kitchens,” according to Singh’s LinkedIn account.
The OEIG called TRS’ lack of action on Singh’s conflicts of interest “disconcerting.”
“It appears that managers believed the issue was sufficiently dealt with by solely relying on Mr. Singh’s representation that he was severing ties with Singh 3,” the report said. “No action was taken or follow up conducted by TRS. While the OEIG agrees that TRS managers do not have to be investigators, there is a duty of managers to at least determine an appropriate course of action when presented with an actual or perceived conflict.”
The report noted several high-up TRS employees who should have exercised oversight in the matter no longer work for the pension fund, including Bergschneider, who allegedly carried out some of the contract award business in concert with Singh. Since November, Bergschneider has worked as the chief fiscal officer and human resource director at the state’s Office of the State Appellate Defender.
Bergschneider could not be reached for comment.
Corrective action and a cloud
Bergschneider was terminated from TRS on July 2, 2020 based upon her “work performance and conduct related to the procurement process on the Gemini Project,” the OEIG report said, apparently quoting from a reason given to investigators by the pension fund.
Ingram was placed on administrative leave at the end of that month — a result of the TRS board’s unanimous vote after an investigation into performance issued conducted by Chicago Law firms King and Spalding. He resigned a few days later and TRS remains tight-lipped about the exact reason for Ingram’s departure, calling it a personnel matter.
But Urbanek reiterated to NPR Illinois the same reasoning given every inquiring media outlet in the last year: that Ingram “had difficulties meeting performance metrics in his contract.”
In the 2020 fiscal year — the last four months of which were marked by the COVID-19 pandemic — TRS’ assumed rate of return for its pension investments was 7%, but the actual rate of return was only 0.6%, according to a final report published by the Commission on Government Forecasting and Accountability earlier this summer. However, Urbanek last month August said the pension fund’s preliminary rate of return for the most recent fiscal year that ended June 30 was 23.5%, which represents a $10 billion boon to the fund in a hot stock market year.
According to a response to a Freedom of Information Act request from Illinois Times last year, TRS spent $577,000 on King and Spalding’s investigation between March and September of 2020 aimed at Ingram alone. The pension fund spent an additional $114,000 on an investigation conducted by Chicago law firm Elrod Friedman during the same time period on a probe of both Ingram and Bergschneider.
According to reporting from the Illinois Times, the FBI expressed interest in the matter last year, but it’s unclear what, if anything, came of that interest.
The OEIG report outlines a few changes TRS has made since investigators looked into Singh’s conflicts of interest, including a new contracting process overseen by a hiring committee of five or six senior managers.
“Everything has to be documented, every decision is recorded,” Urbanek said of the hiring and contracting process. “It prevents everything going through one person who can basically manipulate the system.”
While Urbanek acknowledged the new protocol has slowed down contract awards and inhibited the fund’s ability to be as nimble as it was before, he described it as a “necessary tradeoff” to rectify TRS’ “embarrassing predicament.”
In addition to hiring a new human resources director and providing additional procurement training to staff, TRS has also established a whistleblower hotline for employees and contractors to anonymously report fraud.
“One of the things that was concerning abut this incident was that people were raising questions about hiring practices — very brave people raising concerns — and their concerns [vanished],” Urbanek said.
Urbanek stressed Singh’s conflicts of interest were confined to hiring within the pension fund and did not affect TRS members’ pension benefits.