Is the Federal Bureau of Prisons Scamming Taxpayers With Its Pension System?

The Open Secret That May Have Been Siphoning From Your Paycheck for Decades

Bernie Madoff and the warden at his federal prison may have something in common. Except Bernie didn’t have the Justice Department backing him and a nearly unlimited supply of taxpayers whose paychecks he could tap into to keep the money flowing.

You see, when I first got to the Federal Bureau of Prisons MCC New York facility, which is curiously located in Park Row, Manhattan on some of the most expensive real estate in the world, it seemed that nearly all of the mid-level bureaucrats there were quite sure of when the warden would retire - almost down to the exact day. And he hadn’t yet announced his retirement nor been at the facility for very long.

You see, there’s been a sizable list of wardens at that facility, and certain other places in the Federal Bureau of Prisons (FBOP) system, who retire a conspicuously short time into the gig before collecting lavish lifelong federal pensions.

Here’s how the system works and what perhaps needs to change.

Like many public employee pension systems, the yearly retirement payout for a given worker at the FBOP is not actually based on the total amount, which they paid into the system across their entire career. That would be fair, make common sense, and, one would hope, lead to the fiscal solvency of the pension fund, at least as long as it’s properly managed.

Instead, the yearly payout for a given FBOP retiree is based on their 3 highest years of salary. Once again, this is not uncommon in the public sector and it often leads to lavish golden parachutes, which have frequently become the subject of public scrutiny, especially when newly-promoted top earners retire shortly into their latest role and then collect disproportionately far more out of the pension system.

However, for its favorite wardens and other high-ranking officials, the Federal Bureau of Prisons appears to be taking things at least one step further.

You see, unlike state and local public sector agencies, the FBOP is a national organization with a nationwide footprint. And it pays higher cost of living adjustments to wardens who operate facilities in expensive parts of the country, like New York City.

So, perhaps it shouldn’t come as much of a surprise that many of these facilities, which are also money pits in a multitude of other ways and which have frequently proved very problematic for the bureau to operate, tend to see wardens who come from other parts of the country and who stay on the job for just long enough to max out their federal pensions.

This leads to questions about the seemingly inevitable shortfall in any Ponzi-like scheme where the withdrawals will exceed the available funds. For instance, how much of any such difference has been siphoned out of the pockets of taxpayers and for how long has this been happening?

My team is issuing federal Freedom of Information Act (FOIA) requests in an effort to find out.

Further, the timing may be very good to ask these questions now. Very recently federal prison reform was the subject of a rare, successful, bipartisan bill which passed both houses to seemingly thunderous applause emanating from both sides of the aisle and that was just before incredibly poor management at the highest levels of the Federal Bureau of Prisons and its Metropolitan Detention Center (MDC) in expensive downtown Brooklyn led to yet another homegrown humanitarian crisis in one of the wealthiest cities in the world. 

Somehow, an electrical fire led to a week-long blackout and loss of heat and hot water during a cold snap in a northeast winter. It seems this was only possible due to the blatant disregard of years-old calls for random, unannounced surprise audits and inspections of all the FBOP facilities in the region.

Yet, despite apparent on-the-job performance like the above, Warden Herman Quay stands to retire with a full federal pension which may have been enhanced by gaming FBOP’s retirement system. Did he deserve that job as a warden at such a high-profile facility? Is he competent to handle it?

Or was Warden Quay moved here for other reasons, leaving the inmates and the American public to pay the price through blackouts, tax dollars, and the tarnishing of America’s image abroad when it comes to humanitarian standards?

The author, Martin Gottesfeld, is an Obama-era federal political prisoner and conservative journalist. He wrote this article in “the hole” at MDC Brooklyn, into which he was thrown upon his arrival at the facility on Friday, February 15th, 2019, ten days after the aforementioned blackout. Warden Quay now claims that he is keeping Gottesfeld in “the hole” due to so-called “security concerns.” However, there are reasons to doubt Quay’s word in light of the dishonesty demonstrated during the blackout, not to mention his likely desire to keep his pension despite the millions of tax dollars which may be spent on the lawsuits originating during his tenure.

Warden Quay did not immediately respond to a request for comment as to whether he plans to reimburse taxpayers.

The Federal Bureau of Prisons did not immediately respond to a request for comment as to whether Warden Quay was transferred to MDC Brooklyn to maximize his pension and whether it is considering firing him.

 Correction: This article stated that employees BOP employees contribute into their pensions, which they do not. We regret the error.