Former Rep. Joe Armstrong’s state pension would provide him with $28,744 annually under the application he has filed, but state officials have not decided whether he is entitled to receive the benefits after a felony conviction for filing a false federal tax return.
Shelli King, spokeswoman for the Tennessee Consolidated Retirement System, said Armstrong’s application was received on Tuesday and officials are conferring with attorneys to decide whether it will be approved.
King said that Armstrong’s application opts for receiving maximum monthly benefits with no survivor benefits upon his death. If approved, she said in an email, “Rep. Armstrong will receive $2,395.34 per month based on 27 years, 10 months of service in the General Assembly” – or $28,744.08 per year.
Those making the decision will include state Treasurer David Lillard, who oversees the pension system, TCRS Executive Director Jill Bachus and others, she said, and “not just a single person.” She estimated that the process of making a consensus decision – one that might generate political controversy — could take four to six weeks.
Under state law, a legislator forfeits his or her pension benefits when “convicted in any state or federal court of a felony arising out of that person’s official capacity, constituting malfeasance in office.”
That raises the question of whether Armstrong’s federal court conviction arises out of his “official capacity” as a state legislator. The filing of his tax return, of course, was not an official duty as a legislator.
But the conviction was based on a failure to pay federal income taxes on more than $300,000 profit Armstrong made by buying, through a tobacco wholesaler, Tennessee cigarette tax stamps at the rate prior to a 2007 increase in the state cigarette taxes – which he supported as a legislator – then selling them after the increase was approved.
The jury acquitted Armstrong on two separate charges of conspiring with his accountant, Charles Stivers, to defraud the IRS and of “evading” taxes, which, unlike the false return charge, required a “willful,” or deliberate act. Armstrong testified in his own defense that Stivers told him the taxes were paid, but the accountant lied and instead kept the money for himself.
The veteran lawmaker declined comment personally Tuesday, referring questions to his attorney, Greg Isaacs, who is appealing the conviction. Isaacs said in a telephone interview that the conviction had “absolutely nothing to do with Mr. Armstrong’s official duties” and he is entitled to a pension based on service as a legislator since 1988.
He said the jury’s conviction on the “lesser charge” of a filing a false return while acquitting on the more serious charges amounted to “rejection of the prosecution’s theory” that the legislator’s tax situation was tied to his legislative activities. The attorney also said Armstrong’s vote for the tax increase made no real difference in approval of the bill by a solid majority and the questioned tax activity came well after the legislative vote.
The current state law was enacted in 2006 during a special legislative session on ethics, called by then-Gov. Phil Bredesen after seven current or former legislators were charged with felonies – in most cases including bribery — following an FBI sting operation with the code name “Tennessee Waltz.”
The lawmakers who had vested in the state retirement system at the time were allowed to draw pensions despite their convictions. Officials cited court rulings generally prohibiting new laws that retroactively deprive a person of benefits already acquired before the new law was enacted.
The 2006 statute declares that, even if a legislator has already vested in the state retirement system, when seeking reelection “such person shall, as a condition of such election, be deemed to consent and agree to the forfeiture of such person’s retirement benefits from the Tennessee Consolidated Retirement System” if convicted of a felony related to official duties.
Sen. Randy McNally, R-Oak Ridge, who chairs the state Council on Pensions and Retirement and who has advocated denial of pensions to legislators convicted of felonies, said in an interview that Armstrong’s application should be rejected.
“My thinking is it (the conviction) is certainly related to the event of a law being passed” with Armstrong’s involvement, the senator said.
Legally speaking, McNally said a decision on Armstrong’s pension eligibility is a civil law proceeding and subject to a different standard than a criminal case, where the defendant must be found guilty “beyond a reasonable doubt.” In such civil cases, he said, the rule is to decide a case on a “preponderance of the evidence” and, by that standard, Armstrong should be denied a pension.
McNally said he contacted TCRS officials recently to ask about Armstrong’s pension status and got no definitive answer. The senator said he was left with the impression that “Treasurer Lillard and his staff” would make the decision on eligibility, though King in a telephone interview and an email exchange repeatedly declined to elaborate on the decision-making process or procedures for an appeal should Armstrong’s application be rejected.
“You’re getting into questions that we’re not prepared to answer,” she said at one point.
As a general proposition, any administrative decision by a state agency can be appealed under the Uniform Administrative Procedures Act – first to the agency itself and, if then rejected, to an administrative law judge who conducts a hearing. The administrative law judge’s ruling can then be appealed to the regular court system.
Note: This expands, updates and replaces a previous post.