The Louisiana Supreme Court has ruled that the city of New Orleans must pay $17.5 million for its 2012 share of the city fire department's pension fund.
The high court's 4-2 ruling Friday upheld decisions last year by Civil District Judge Robin Giarrusso and a state appeal court demanding the city pay its 2012 share to the New Orleans Fire Fighters Pension & Relief Fund.
The decision leaves Mayor Mitch Landrieu's administration with little choice but to pay the $17.5 million, which the mayor and the City Council did not account for in the 2014 city budget.
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"In these tough times, it is particularly offensive that the city's taxpayers are on the hook for this extraordinary sum, largely because of the Firefighter Pension Board's reckless investments," Landrieu's chief deputy, Andy Kopplin, said in a statement.
Those investments have included $15 million put into a hedge fund run by Wall Street financier Alphonse Fletcher Jr.; the FIA Leveraged fund was offering a 12 percent guaranteed return secured by a third-party investor.
Fletcher's hedge fund has since been described by a court-appointed bankruptcy trustee as having elements of a Ponzi scheme. In 2012, Fletcher's main fund, Fletcher International, filed for bankruptcy protection.
But the firefighters have argued that the Landrieu administration has shortchanged the fund since 2010.
"(Firefighters) need that money," Lousis Robein, an attorney representing the pension fund, told the Times-Picayune. "It's payday."
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