Former TSP chief sues board members

The former executive director of the Federal Retirement Thrift Investment Board is suing several of the board's members for allegedly "breaching their fiduciary duty."

In a lawsuit filed in federal District Court on Jan. 24, Roger Mehle accused TSP board members Andrew Saul, Thomas Fink, Alejandro Sanchez and Gordon Whiting of failing to act with "care, skill, prudence and diligence" as trustees of the TSP fund.

Mehle served as executive director of the board for nearly nine years before resigning the position in November 2002 to return to his private law practice. His lawsuit also accuses those members of wrongly ousting his successor, James Petrick, former director of the board's Office of Benefits and Investments and now the acting executive director of the TSP board. Mehle declined Friday to discuss the lawsuit.

At issue is the TSP board's litigation with American Management Systems, the Fairfax, Va.-based company hired in 1997 to modernize the TSP computer system. The TSP board fired AMS in July 2001 after four delays and a tripling of the project's estimated cost. The thrift board then sued AMS, asking for $350 million in damages, but a federal judge dismissed the case, ruling that the board could only sue AMS through the Justice Department. Nearly 3 million civilian and military participants have about $100 billion invested in the TSP.

In the lawsuit Mehle claims that prior to their appointment to the TSP board in November, Saul, Sanchez and Whiting never sought out Mehle or other TSP board members to gain an understanding of the ongoing legal wrangling with the Justice Department over the AMS situation. According to Mehle, that lack of communication was irresponsible.

The lawsuit said: "At his confirmation hearing on Nov. 15, Saul, never having discussed the matter with the sitting fiduciaries, reportedly identified the board's considered legal position on its independent litigating authority as 'very embarrassing,' and said that one of his top priorities would be 'to do whatever is necessary' to resolve the problem. . . . Whiting, likewise having avoided any discussions with the sitting fiduciaries, reportedly said 'confusion exists when government agencies do not speak with one voice on controversial matters.'"

The four board members forced Petrick to resign from his role as executive director and remain as acting executive director while they found a replacement, Mehle also alleged in the lawsuit.

"Petrick did not resign voluntarily, he held the important and statutorily protected position of executive director, the summit of his 25-year federal civil service career for less than a month, and he wanted very much to retain it," the lawsuit said.

Mehle asked that the TSP board reinstate Petrick as the executive director, and that the board be prevented from ending the lawsuit against AMS.

A spokesman for the TSP board said that the lawsuit was referred to the Justice Department and that "counsel finds the suit frivolous."