New law will end pensions for public employees who commit fraud

7 Action News exposed practice in 2014
Posted at 4:41 PM, Jun 09, 2017

Governor Rick Snyder signed into law this week new legislation that will forfeit the pensions of public employees convicted of felonies that breach the public trust.

“Protecting the integrity of retirement contributions employers make is critically important, and this bill helps ensure employer contributions are not allocated to public employees who have been convicted of crimes that break public trust,” Snyder said in a statement.

RELATED: Disgraced public officials still collecting public pensions

The new law, which will also forfeit public contributions made to an employee's 401(k),  follows a 2014 7 Action News investigation that revealed public officials throughout the state convicted of abusing the public trust were still collecting public pensions, some of them significant.

Ex-Detroit City Council member Lonnie Bates went to federal prison for putting ghost employees on the city payroll. In retirement, he’s been quietly collecting an almost $25,000 a year pension, for life.

Former East Detroit Superintendent John Gardiner was found guilty of accepting bribes that cost the district at least $800,000.  He’s made almost that much in retirement: more than $725,000.

Former Detroit Police Sgt. Walter Bates will bank more than $500,000 in retirement if he lives to be 78. Ironically, he went to prison for robbing banksl he and his brother were indicted for planning to hit 13 of them back in 2002.

Rep. Jim Runestad (R-White Lake) introduced the legislation that Snyder signed this week.

"You’ve broken the public trust. You violated the law and you shouldn’t be able to keep public dollars when you behave like that," Runestad said, who introduced the bill after about a dozen Detroit Public Schools principals were convicted of corruption.

The new law can’t automatically forfeit the pensions of those already convicted of a crime, but will take effect starting in September.  Before the new law,  the Attorney General could ask that a public pension be forfeited but, until recently, that virtually never happened.

Runestad expects the new legislation will save communities all across Michigan millions in pension dollars and, more importantly, send a message to the next public employee who misuses their position to

"There’s always people that are going to want to steal public money, take bribes," he said. " And this way they’re going to lose everything financial if you’re going to do this kind of a crime."

Contact 7 Investigator Ross Jones at or at (248) 827-9466.