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Former legislator, others sued over teacher retirement plan
5/15/2008 12:15 PM
 | | Bell |
CHARLESTON -- Former West Virginia legislator Ramona Cerra and other prominent persons tricked school employees into changing their retirement plans, according to a suit filed earlier this week.
On behalf of teacher Cheryl Dougherty, Charleston attorney Harry Bell proposed a class action against Cerra, five other individuals and insurer American International Group.
Bell wrote in the complaint filed May 12 in Marshall Circuit Court that he would add the West Virginia Retirement Board to the suit.
Bell alleges that Cerra and the others harmed school employees by persuading them to switch from the Retirement Board's old defined benefit plan to a new defined contribution plan.
He wrote that Dougherty found out in an April letter from AIG that her decision hadn't worked out as well as she had expected.
Dougherty "detrimentally relied on the misrepresentations of defendants as they were actually losing retirement funds with defendants' annuity, and/or that defendants' annuity would in reality perform significantly below the levels" guaranteed by the defendants.
"Had they maintained their previously established accounts and not switched to defendants' annuity, they would have earned significantly more over time and up to their retirement," Bell wrote.
A significant number of system members may not yet know that they have suffered damages as a result of misrepresentations, he wrote.
AIG's lawyer gave system members an option to switch back, he wrote, "but at significant personal cost."
He alleged that AIG recruited and trained "undisclosed, prominent representatives" to misrepresent characteristics of the annuities.
He called the annuity "an exorbitantly commission-driven, front-loaded brokerage fee annuity."
Cerra met with school employees at Dougherty's place of work, Bell wrote, "at which time said misrepresentations were made."
"Cerra led plaintiff to believe Cerra was a representative from the WV Retirement Board," he wrote.
Cerra stated that the teachers' retirement system was in grave danger and there would be no retirement by the time she reached the age 55, Bell wrote.
Cerra stated that a new system would allow employees to retire with even better benefits than those who remained in the old plan.
As a result of Cerra's "pressure tactics" Dougherty purchased an annuity, Bell wrote.
In return, he wrote, Cerra received exorbitant commissions.
Bell also accused John Cook, Greg Garrett, Roland Rich, George Edwards, Clarence Burdette and 30 John Does of misrepresentations.
He proposed to certify a class of "all system members to which representations were made regarding the annuity and who purchased or transferred funds to the annuity."
He wrote, "Defendants combined their skill, knowledge, resources, contacts, and other attributes and characteristics in order to engage in the single business enterprise of selling the annuity to plaintiff and class members by the use of misrepresentation and deceit."
He wrote that they "engaged in a joint venture to obtain significant economic gain to the detriment of plaintiff and class members."
William Bands and Tim Yianne of Bell and Bands also signed the complaint, as did former legislator Rusty Webb of the Webb Law Firm in Charleston.
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