Under N.J.S.A. 43:1-3.1, a public official or employee’s conviction of certain crimes serves to forfeit their pension benefits. N.J.S.A. 43:1-3.1a provides in pertinent part that an officer or employee “shall forfeit all of the pension or retirement benefit earned as a member of any State or locally-administered pension fund or retirement system in which he participated at the time of the commission of the offense and which covered the office, position or employment involved in the offense.” In State v. Steele, ___ N.J. Super. ___ (App. Div. 2011), the Appellate Division considered the scope of the pension forfeiture required by the statute.

 

The defendant pled guilty to two charges, second-degree official misconduct and second-degree pattern of official misconduct, arising from crimes that he committed from January 29, 2003, to December 27, 2007. Among other things, as part of his sentence the defendant forfeited his public office and the trial court forfeited his pension benefits earned from January 29, 2003, forward. The offenses arose from misconduct that occurred when the defendant was the business administrator for the City of Irvington Board of Education (“Board”). Specifically, he was involved in two separate schemes involving public contracts in which he received kickbacks.

With respect to the defendant’s pension, he had 28 years and 8 months of service credited to the Teacher Pension and Annuity Fund (“TPAF”) through May 1, 2008. That included 12 years and 7 months service credit that he had earned as a member of the Public Employee Retirement System (“PERS”) from October 1, 1978, through May 1, 1991, that was transferred to TPAF. The defendant’s service as a TPAF member from May 1, 1991, to May 1, 2008, was credited to TPAF directly, which amounted to 16 years and one month, less an 11-month inactive period. The defendant was serving as the Business Administrator for the Board when he earned his direct credit in TPAF.

On appeal, the State argued that the trial court erred in ruling that N.J.S.A. 43:1-3.1a permitted the court to order forfeiture only from the date of the offense going forward. The Appellate Division agreed. After explaining that the offenses to which the defendant pled guilty clearly triggered the pension forfeiture provision, the Appellate Division stressed that the plain, unambiguous language of the statute “does not give the judge discretion to limit the commencement of the forfeiture period to the first criminal act alleged in the indictment.” The Appellate Division reasoned that the trial court effectively re-wrote the statute and thereby “defeated the intent plainly expressed therein – denial of all pension benefit earned as a member of the pension fund that covered the office or employment involved in the crimes he admitted.”

However, that did not end the Appellate Division’s review because the State also argued that the defendant was required to forfeit his entire pension benefit, including the portion that he had earned as a member of PERS. The Appellate Division refused to read the statute that broadly, noting that it “simply does not reach the benefit defendant earned as a member of PERS and elected to transfer to TPAF[.]” The court reasoned that if the Legislature had intended for the result advocated by the State, it simply would have “mandated forfeiture of all of the pension or retirement benefit earned as a member of any State or locally-administered pension fund or retirement system.”

After concluding its analysis of the pension forfeiture issue, the Appellate Division rejected the arguments that the defendant asserted in his cross appeal challenging other aspects of his sentence.