Pension funds may be lost to fraud

San Diego County pension officials are scrambling to retrieve millions they invested in a hedge fund for the second time in less than three years.

The San Diego County Employees Retirement Association had $78 million invested with WG Trading Co., but pension officials aren't sure how much they'll get back after two of the fund's principals were arrested Wednesday.

Paul Greenwood and Stephen Walsh of Connecticut-based WG Trading have been charged with conspiracy, securities fraud and wire fraud. Federal prosecutors accuse the two men of raiding up to $1.3 billion in company funds to buy horses, apartments and collectibles, among other things.

The retirement association originally invested $150 million with the hedge fund in April 2004 and cashed out $75 million in 2007.

The retirement fund became leery of WG Trading in October, when one of its consultants visited the hedge fund's offices. The consultant asked Greenwood for fund information but found him “uncooperative and evasive.”

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The association invested $175 million with Amaranth only to see it collapse after bad natural gas trades in September 2006. Pension officials retrieved $80 million and are suing for more.