Lawsuit Alleges Missing Pension Contributions for Chicago Teachers

Prologue Inc. has been hit with a lawsuit alleging Illinois state law violations regarding the Chicago Public School Teachers’ Pension & Retirement Fund, including failure to report and missing pension contributions over three years.

According to the lawsuit, an audit revealed that Prologue, which operates the former Joshua Johnson Charter School for Fine Art and Design, had underreported more than $1.4 million in wages and not paid over $130,000 in pension contributions during a three year period. In addition to the missing pension contributions, the audit revealed that Prologue failed to even report some participants.

Charter schools, alleges the lawsuit, are required to make pension fund contributions to the teacher’s pension fund in Chicago under Illinois state law. Prologue failed to do so for some licensed teachers. In addition, the lawsuit claims that Prologue failed to submit accurate payroll records to the Chicago Public School Teachers’ Pension Plan & Retirement Fund.

The charter school employed between 14 and 16 teachers from 2013 until 2016; however, the school reported zero to six, according to the audit. Schools with licensed teachers are required to contribute to the pension fund, alleges the lawsuit.

Legal Protections for Pension PlansPrologue, says the plaintiffs, skimmed over half of Chicago teachers’ pension contributions – which are required to be nine percent. This resulted in nearly $100,000 lost pension contributions between 2013 and 2016.

In a news release, the president of the Chicago Public School Teachers’ Pension & Retirement Fund said the missing pension contributions on the part of Prologue was “an egregious example of an employer taking advantage of its employees.”

“This wasn’t just sloppy bookkeeping. This was fraud. The employer collected contributions from teachers, but did not turn over all of those contributions to the (CTPF). They also concealed teachers who were entitled to pension benefits. These unconscionable actions allowed Prologue’s leaders to take advantage of our members,” said the news release from the pension fund that handles $10.5 billion for school teachers in Chicago.

Auditors are seeking information about Prologues’ accounting for the years before 2013.

The Chicago Board of Education pulled Prologue’s charter agreement to operate in 2016. Prologue is also facing another lawsuit filed by the Board of Education for refusing to provide financial records in the investigation leading to the agreement being pulled.

Legal Protections for Pension Plans

Both state and federal law protect employee retirement and pension plans to provide workers security in their golden years. On the federal level, the Employee Retirement Income Security Act of 1974 (ERISA) provides protections for retirement and pension plans and also for disability insurance, life insurance, and health plans.

ERISA-protected plans must meet the following requirements;

  • A code of conduct for plan fiduciaries;
  • Accountability for plan fiduciaries;
  • Fiduciaries can be held accountable through legal action;
  • Information must be provided to participants; and
  • Minimum standards must be set for participation, vesting, funding, and benefit accrual.

If you are concerned about your pension, retirement or other ERISA-protected plan, consider contacting an attorney to help navigate the complex laws and rules surrounding the law. The attorneys at Bradley/Grombacher can help investigate ERISA claims.

Note: Bradley/Grombacher is not representing the plaintiffs in this lawsuit.