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ISTA TRUST
ISTA Trust, the insurance arm of the union, had been a house of cards long before being investigated by the FBI.
According to widely published reports, ISTA Trust is facing $67 million deficit, which, the Indianapolis Star says could make Indiana taxpayers liable.
An Indiana Business Journal article attributed ISTA Trust’s troubles to a board of directors that was not knowledgeable of investments or insurance.
The board, as published in IBJ, included the president of the union, the now-former executive director, a superintendent, and six current or former school employees, including Darvin Stilwell, brother of House Majority Leader Russ Stilwell (D-Boonville).
That naturally raises the question: what did legislative leaders know and when did they know it?
Source: Indiana Business Journal
Inappropriate…inappropriate…inappropriate
State regulators began investigating ISTA Trust when “they found several red flags, including an increase in fees when the fund was not performing well and an unusually high number of transactions,” according to an Associated Press story.
“ISTA Deputy Director Dan Clark confirmed that there have been allegations of ‘inappropriate fees and inappropriate trading as well as inappropriate investments,’” the story said.
The Indianapolis Star noted now-former ISTA executive director Warren Williams approved a 50% fee increase by its investment broker, “despite large losses in the portfolio."
Check out ISTA Trust's 2007 and 2006 990 tax returns.
Districts left holding the bag
Some districts have it written into their contracts that ISTA Trust will be the provider of health insurance. From the Indianapolis teachers' contract:
What they'll be required to do to break free of it remains to be seen. And worse yet, the union's putting its financial interests above those of schools and taxpayers.
Hampering districts seeking competition
With ISTA Trust’s financial ship sinking—and school boards and the public gaining a better understanding—a memo was sent to UniServ directors across the state in an attempt to fortify the troops.
By suggesting local unions hamper the process of schools spending their money wisely, they’re trying to bring local schools down with them.
The memo’s likely intent was to remind school districts that they could not “unilaterally” dump its insurance product for another.
At least one school corporation, Bloomfield, did just that after they were slapped with a 26% increase for the next year, according to the Greene County Daily World.
Superintendent Dan Sichting noted an “outstanding” claim year and couldn’t figure out the hefty increase. His corporation went with another company to save significantly.
Was ISTA imposing huge increases to cover their losses?
That's a spicy meatball
Remember the old Alka Seltzer commercial? As Indiana school districts cope with the heart burn that is ISTA Trust insurance, an ISTA Trust document spells out just how bad it is for Indianapolis. How bad? According to ISTA, the annual premium for Indianapolis Public Schools employees is a whopping $26,020.32.
...
View the entire ISTA document here.
Racketeering accusations
The ISTA Financial Services Corporation, the entity overseeing ISTA Trust, was sued by teachers in September 2008, accusing it of racketeering.
According to an attorney for the teachers, the Uniserv director gave false information in promoting a plan which was paying the union a promotional fee. From The News Dispatch:
"ISTA Financial Services Corp. used UniServ directors to sell securities and other investments to plaintiffs. UniServ directors frequently serve as negotiators in contract talks and as business agents for ISTA members. ...
"Simply put, [the attorney] said, MetLife and UniServ directors are accused of selling teachers the MetLife plan by allowing them to believe that the cost of investing in MetLife was less than the cost associated with some other plans."
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