DALLAS (AP) — The Dallas Police and Fire Pension System has filed a lawsuit accusing a financial advisory firm of risky deals and high fees that caused more than $320 million in write-downs and losses.
The city’s police and fire pension fund filed the lawsuit late Tuesday against CDK Realty Advisors in response to the firm’s lawsuit accusing the fund of failing to pay $139,479 in management fees, The Dallas Morning News reported.
The fund’s lawsuit alleges “multiple breaches of fiduciary duties” by CDK Realty Advisors.
The fund claims the firm managed some investments that led to huge losses but “should have been safeguarded for the benefit of Dallas’s loyal and hardworking police officers and firefighters.” It also claims the firm benefited from improperly high fees.
Attorney Steven A. Schneider, who’s representing CDK Realty Advisors, said in a statement that the firm believes the fund’s allegations “are totally without merit and untrue. We intend to dispute them vigorously in court.”
The fund’s board and management approved the investment deals, which “in the aggregate, have substantially increased the retirement funds of Dallas’s police and firefighters in the Pension System,” Schneider said.
CDK Realty Advisors isn’t responsible for some of the Dallas Police and Fire Pension System’s bad investments, including luxury houses in Hawaii, which were managed by the fund itself. But the fund claims the bad investments managed by the firm includes the purchase of thousands of acres of undeveloped land outside of Boise, Idaho, in which the firm overvalued the property in periodic reports and charged inflated management fees.
The firm’s lawsuit against the fund, which was filed in February, claims the fund “knows it owes the fees, but has wrongfully, knowingly and intentionally withheld payment.”
The firm formerly managed more than $700 million for the fund and for many years had its offices in the fund’s headquarters building.