Statement issued Wednesday morning:
Indiana Secretary of State Todd Rokita announces complaint filed by his Indiana Securities Division in ongoing investigation; seeks accounting of funds and appointment of conservator or receiver over ISTA assets
(Indianapolis) – Indiana Secretary of State Todd Rokita announced today that his Indiana Securities Division has filed a civil complaint against the Indiana State Teachers Association (ISTA), the ISTA Insurance Trust, and several other related entities. The complaint, filed today in Marion County Superior Court and available online at: http://www.in.gov/sos/files/ISTA_Complaint_12.2.PDF alleges that ISTA unlawfully offered and sold investments in a health arrangement to dozens of Indiana school corporations, violating several provisions of the Indiana Securities Act.
Much of the money paid into the ISTA-controlled trust was intended to be used for health claims with a promise of a return on reserves. But according to the complaint, this money was comingled by ISTA with funds from other sources including long term disability plan payments and invested by ISTA without the knowledge of the school corporations. The complaint alleges that ISTA now is unable to properly account for approximately $23 million intended for school districts.
"The latest evidence indicates that ISTA is now offering these Indiana school corporations pennies on the dollar in an effort to wipe away their liability," said Secretary Rokita. "The purpose of this action is to request that an independent third party be assigned to ensure transparent accounting and equitable distribution of any remaining funds, while not interrupting any payments being made to disabled teachers."
Specific counts allege ISTA and its entities sold unregistered securities and made untrue statements and/or failed to disclose information about the financial soundness of the health arrangement and how the school corporations' contributions would be invested.
The complaint requests that the finances of ISTA and the related entities be frozen until a conservator or receiver can account for investor funds. However, it also requests that the court craft an order that allows for the flow of disability claims to teachers to continue while the investigation continues.
See for yourself
To see the complaint, click here.