FBI investigating PSER’s real estate purchases

As part of an FBI probe into the state’s largest pension fund, authorities are looking at some real-estate purchases that include the former Patriot-News building in Harrisburg.

The former Patriot-News building at 812 Market Street had been empty for eight years when the property was purchased by Twenty Lake Holdings, a New York commercial real estate company, for $644,286 in 2017. It was sold seven months later to L & B Realty Advisers LLP, of Dallas.

The Pennsylvania School Employees Retirement System announced in January 2018 that L & B had purchased the eight-parcel property on its behalf, paying $1.6 million.

PSERS earlier this month confirmed that it is the subject of a grand jury investigation.

Now, the Philadelphia Inquirer is reporting that as part of an FBI probe, authorities are digging into the PSERS fund’s authorization of $14 million to purchase and demolish that property and others near its headquarters in Harrisburg.

The agency has not made clear its plan for the properties.

At the time of the purchase, PSERS issued a statement saying the previous $644,00 purchase price “bears no direct relationship to the true value of the property. The $1.6 million purchase price paid by PSERS represents the fair value of the eight-parcel property.”

PSERS is also under scrutiny in the probe for the purchase of other properties, including several parking lots on and around Market Street and a property formerly owned by the Pennsylvania Housing Finance Agency, according to reports.

PSERS has been criticized in recent years for its lagging returns and an increasing reliance on handouts from taxpayers and school employees to pay pensions.