Members of the Screen Actors Guild are being reassured that their benefits packages are safe and secure amid allegations that the pension plan’s CEO Bruce Dow covered up an embezzlement scheme and used the funds for personal expenses.
The charges first bubbled up in Department of Labor complaint submitted last September by ousted plan executive Craig Simmons, but gained traction after an online petition demanding an “independent” investigation into the charges garnered over 560 signatures in recent weeks.
In response, the board of trustees of the Screen Actors Guild Producers Pension and Health Plans (SAG-PPHP) has written a letter to members telling them that a review of the charges by an outside counsel found that the bulk of the allegations against Dow were false.
“Based on the results of the investigation, we can assure you that the fiscal integrity of the SAG-PPHP remains sound and your benefits are secure,” the letter reads. “In plain English, your Pension Plan is safe; your Health Plan is safe.”
Also read: SAG Members Push for Independent Investigation Into Charges of Pension-Plan Embezzlement
The board does acknowledge that one charge of financial impropriety does carry weight. An investigation found that a former employee misappropriated some $2 million of funds. However, the trustees write that the plans’ administrators investigated the matter immediately.
The letter goes on to say that the matter was “resolved” earlier this year and that nearly all of the money was recovered from the plans’ insurance company.
Simmons, who was fired as SAG-PPHP's executive director of HR, IT and risk management earlier this year, initially claimed that Dow encouraged him to lie to investigators about a $5 to $10 million scheme conducted by a former employee. He charged Dow with overseeing a frat boy culture that encouraged homophobia.
Simmons also accuses Dow of raiding the benefits plan to lavish money on family members and pay for his wife’s breast-enhancement surgery.
“The independent investigator found that most of Mr. Simmons’ allegations are false, including his claims that Mr. Dow is anti-gay, that he caused the Plans to improperly reimburse health expenses for his wife, that he caused Plan employees to work on his home and perform personal chores for him, that he promoted employees who were unqualified, and that he instructed staff to mislead U.S. Department of Labor auditors,” the letter reads.
It is not clear if this will satisfy disgruntled SAG members. The online petition claims that Nancy Solomon, the attorney hired to conduct the investigation, has close ties to SAG’s national executive director, David White and previously worked with him at the law firm of O’Melveny & Myers.
The letter from the trustees doesn't mention Solomon or address those charges directly but characterizes the unnamed investigator as a “…highly regarded independent investigator with extensive experience in workplace investigations.”
Simmons apparently declined to discuss his claims with the investigator.
The investigation has been concluded, and a PricewaterhouseCoopers’ forensic auditor has reviewed the findings, according to the letter.
Further, the trustees write that they are conducting a full review of the plans’ internal operational controls and have created a special subcommittee of the board to review the plans’ policies.
Full text of the letter below:
Dear Plan Participant:
We are writing to advise you of our findings in connection with an investigation of recent allegations made by a former employee regarding the management and fiscal integrity of the SAG – Producers Pension and Health Plans (SAG-PPHP). As the Trustees of your funds, we are guided by the principle that our responsibility is to act in your sole and exclusive interests. To that end, we have conducted a comprehensive review of the allegations with an intense scrutiny that was designed to ensure that your funds continue to be managed in accordance with our obligations as fiduciaries. In summary:
1. We authorized an extensive and independent investigation of the allegations made.
2. We have established a special subcommittee of the Board to conduct a comprehensive review of our policies and guidelines, and ensure they conform to best practices.
3. Based on the results of the investigation, we can assure you that the fiscal integrity of the SAG-PPHP remains sound and your benefits are secure. In plain English, your Pension Plan is safe; your Health Plan is safe.
By way of background, we want to describe to you the allegations, investigative activities, and findings surrounding this matter. A former Plan employee, Craig Simmons, made allegations against certain staff members, including CEO Bruce Dow, regarding inappropriate use of funds and improper treatment of employees. To determine the validity of the allegations, the Board retained a highly regarded independent investigator with extensive experience in workplace investigations. We gave the independent investigator unrestricted access to all Plan employees and records with the instruction to take all steps necessary to thoroughly assess the allegations. As part of her evaluation, the independent investigator offered Mr. Simmons the opportunity to discuss and expand upon his written allegations, which he declined to do.
The independent investigator found that most of Mr. Simmons’ allegations are false, including his claims that Mr. Dow is anti-gay, that he caused the Plans to improperly reimburse health expenses for his wife, that he caused Plan employees to work on his home and perform personal chores for him, that he promoted employees who were unqualified, and that he instructed staff to mislead U.S. Department of Labor auditors. The findings presented by the independent investigator were reviewed by PricewaterhouseCoopers’ (PwC) forensic auditors.
As to Mr. Simmons’ claims of financial mismanagement, while it is accurate that the Trustees discovered in 2008 that approximately $2 million had been misappropriated by a then-Plan employee, the Plans investigated the matter immediately, engaging forensic auditors and legal counsel. The matter was successfully resolved earlier this year and substantially all of the misappropriated funds were recovered from our insurance company. Plan assets were not materially affected.
The independent investigation is now complete and, as a result of its findings, we are evaluating whether any remedial actions are required. The Trustees are committed to carrying out our fiduciary and ethical obligations and are now engaged in a full review of the Plans’ internal operational controls. We have created a special subcommittee of the Board with its own independent counsel to review the Plans’ policies and guidelines to ensure that they remain current with best practices.
Finally, we want to remind you that we have more than 200 employees who come to work every day focused on the core mission of the organization, which is to ensure that your employers are contributing to the Plans appropriately and that those contributions are invested and used in a manner that serves the Plans’ participants as effectively as possible.
We appreciate the trust you place in the Plans to oversee your pension and health benefits.
Sincerely,
The Board of Trustees