I-Team: Convicted School Administrator's Case Falls Through Cracks, Keeps Receiving Pension Payouts

BOSTON (CBS) - When public employees in Massachusetts commit crimes related to their jobs, state law requires them to lose their pensions.

However, the I-Team discovered a case that slipped through the cracks for years. The communication breakdown allowed the convicted employee to continue collecting more than $350,000 of the taxpayer-funded benefit.

After learning of the conviction, state retirement officials have already moved to revoke the former public official's pension and possibly recoup some of that money.

In 2009, Joseph Giordano pleaded guilty to the federal crime of making a false statement. The former administrator at Whittier Regional-Technical School in Haverhill used his position to fraudulently obtain school funds, according to a summary of the case on the Massachusetts Inspector General's web site.

As part of the plea deal, Giordano agreed to pay back the funds he wrongfully obtained, along with a $10,000 fine. He also received three years of probation.

The conviction also probably should have spelled the end of his $70,000 annual pension.

However, by the time Giordano was convicted, he had already been retired from Whittier for several years, so nobody at the school notified the Massachusetts Teachers' Retirement System (MTRS).

Records the I-Team obtained show the Department of Elementary and Secondary Education revoked Giordano's license after the conviction. But nobody with the state communicated his conviction, either.

As a result, Giordano has received $352,587.58 in pension payouts since his conviction, according to figures the MTRS provided.

"That's a significant breakdown. And I think you doing the story is a great eye-opener," said Kevin Blanchette, the CEO of the Worcester Regional Retirement System.

Blanchette is the former lawmaker who wrote the 1988 legislation that strips convicted public employees of their pensions. The key to the law is the crime has to be directly related to an employee's position.

"If you violate the public trust, you don't have the right to a pension that's taxpayer supported for the rest of your life," Blanchette said.

In late December, the MTRS had a private forfeiture hearing to review the facts surrounding Giordano's federal conviction.

Following the hearing, Giordano declined to comment to the I-Team about his case. However, his attorney said her client had already admitted responsibility for his actions and paid back the school. She also argued the crime was not directly related to his job.

When public employees typically forfeit their pensions, they receive the personal contributions they put into the system (without interest). Because Giordano has collected the full pension for several years, retirement board officials could ask him to pay back some of the money.

A decision about Giordano's pension is expected on February 26.

State law mandates that local district attorneys communicate convictions of public employees with corresponding retirement boards.

But no such requirement exists for federal prosecutors. Similarly, there is also no reporting requirement for school districts or the Department of Elementary and Secondary Education, which oversees the license disciplinary process.

"We coordinate with the MTRS as closely as possible, and we are using Mr. Giordano's case as a catalyst to review whether there is more we can do," department spokeswoman Jacqueline Reis said in a written statement.

A spokesman for the Inspector General's office said he is not aware of a specific policy, but it is common practice for the agency's investigators to notify retirement boards.

Blanchette supports the idea of expanding reporting requirements to make sure other cases don't fall through the cracks.

"The minute someone knows that a public employee is eligible to receive a pension and there's a conviction, red flags should go up," he said.

Ryan Kath can be reached at rkath@cbs.com. You can follow him on Twitter or connect on Facebook.