Lawsuit alleges millions of dollars stolen from Kentucky Public Pension Authority

LOUISVILLE, Ky. (WDRB) -- A whistleblower lawsuit alleges millions of dollars in theft from Kentucky retirees.

The lawsuit, filed Friday in Franklin Circuit Court, includes allegations of a coverup, mismanagement and millions of dollars stolen from the Kentucky Public Pension Authority.

"The lawsuit is against KPPA, the pension organization that administers pension funds for county and state former employees and the Kentucky State Police," said Louisville attorney Thomas Clay. "The lawsuit is alleging that there has been mismanagement of funds within KPPA and its predecessor, the Kentucky Retirement System, to the point where money has been misappropriated and possibly stolen."

Clay filed the suit on behalf of a former Chief Investment Officer with KPPA. It alleges the plaintiff, Steven Herbert, was hired to oversee billions in KRS funds.

"And so he assumed that position and started conducting examinations of how these funds were being treated," Clay said.

The suit alleges Herbert uncovered millions of dollars in theft and says an independent internal audit from 2019 corroborated his concerns.

"That fund has $20 billion dollars in it and covers 410,000 members," said Clay.

The lawsuit also claims efforts to clear up processes at KPPA were consistently slowed or blocked, up to and including the highest level of the organization.

"The lawsuit indicates a substantial lack of oversight on where these funds are going. Lack of accountability, lack of proper auditing." Clay said. "And, in return for his bringing those to the attention of people who were in a position to do something about it, he was terminated."

While no one from KPPA was available for an interview on Friday, a spokesperson sent a statement to WDRB News saying "This Complaint, filed by former employee, Steven Herbert, contains demonstrably false allegations. KPPA regrets that it will be forced to spend resources to defend against Mr. Herbert's lawsuit, but we are confident in our defense of the claims he has asserted."

Clay said he thinks the things alleged in the complaint "indicate an intent," and that he stands behind the claims and believes there is more to come.

"I think this is only the tip of the iceberg," he said.

Despite the allegations in the lawsuit, no criminal charges have been filed.