INDIANAPOLIS – The Indiana Secretary of State’s Office has finalized a $14 million settlement of a federal securities fraud lawsuit against the Indiana State Teachers Association and the National Education Association.
The groups have 10 days to cut checks to 27 Indiana school corporations who lost more than $27 million in investments.
No northeast Indiana schools were affected.
“Today’s announcement is a victory for cash-strapped school corporations and a moment of closure for teachers whose health care premiums were misused,” Secretary of State Connie Lawson said.
A statement said the ISTA and the NEA sold health plans with benefits – which were unregistered securities – to 27 school districts. Then the groups used the money from the health plans’ reserve funds for their own benefit to cover funding shortfalls in their long-term disability plan and for risky investments.
“This is a classic example of a Ponzi scheme,” Lawson said.
She noted that ISTA and NEA have denied responsibility and she hopes they cover the rest of the losses out of a moral obligation.
Lawson forwarded the case to federal authorities, who chose not to bring criminal charges.