ABC15 Investigates: Former police and fire pension fund manager accused of inflating his own pension

PHOENIX - The former manager of Arizona’s police and fire pension fund may have inflated his own pension to collect millions of dollars he was not entitled to, according to current fund officials and court records obtained by the ABC15 Investigators.

The current manager of the Arizona Public Safety Personnel Retirement System , PSPRS, tells ABC15 the fund has suspended more than $18,000 a month in pension payments to Jack Martin Cross, the former administrator of the police and fire pension fund.

Jack Cross ran the fund from 1983 to 2004, but according to court records he actually filed for retirement benefits in 2002.

Hacking says Cross inappropriately added bonus pay and other forms of compensation to his salary, which is used to determine pension payouts.

Court records show Cross earned more than $263,000 a year as fund manager.

After he retired, Cross began collecting an annual pension of more than $215,000.

“We believe Jack Cross inflated his pension benefits,” said current PSPRS administrator Jim Hacking.

During an internal audit, Hacking says he and the fund’s lawyers discovered “problems” with Cross’ pension payout.

According to PSPRS estimates, Cross had collected $600,000 dollars in overpayments.

Court records show the fund wants Cross to repay that money.

Last year, Hacking suspended future payments to Cross until the fund recoups the overpayments.

Cross filed a lawsuit challenging that decision.

In his lawsuit, Cross claims his pension was actually under-calculated. He alleges in the lawsuit that he is owed another $5,000 a month.

He has offered to settle the case for $1.7 million.

In court records, Cross says he relies on his monthly pension benefit payments "to meet his daily and ongoing living expenses," and that without those funds it will result in "harm to Cross and his family, including an inability to meet daily financial obligations."

But the ABC15 Investigators found records from the Security and Exchange Commission, showing Cross has been running an investment company, called JAT Investments, since the mid-1990s.

In company reports, Cross claims to manage more than $30 million in investments for approximately 100 clients.

ABC15 attempted to talk to Jack Cross about his lawsuit but he declined repeated requests for comment. He directed us to his lawyers, who have not returned our calls.

Read Cross’ lawsuit and the pension fund’s response .

Last night, ABC15 Investigators exposed years of failed investments and poor oversight of the PSPRS system—mistakes that left taxpayers on the hook for billions of dollars.

Watch and read our original story .

Our investigation revealed that Cross made almost all the investment decisions for the fund.

We documented how risky investments, a lack of outside investment advisers and annual outside audits in addition to a lack of effective oversight by the pension system's board and legislators all contributed to serious financial trouble for the fund.

Under Cross’ management, PSPRS lost $1.6 Billion in just two years – one-third of the fund’s total assets.

The pension fund was once fully funded -- with 130 percent of what it needed to cover all claims and costs. No taxpayer contributions were necessary.

Now, with the fund only 65 percent funded, Arizona taxpayers will have to make up the difference.

If you have information about this story or you have a suggestion for another story for ABC15 Investigator Dave Biscobing, write to him at dbiscobing@abc15.com .