Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, September 25, 1994                   TAG: 9409260053
SECTION: VIRGINIA                    PAGE: D-10   EDITION: METRO 
SOURCE: Associated Press
DATELINE: RICHMOND                                LENGTH: Medium

EX-PENSION FUND OFFICIALS ACCUSED OF DEAL, COVER-UP

The three Virginia Retirement System officials, including a close ally of then-Gov. Douglas Wilder, illegally covered up the purchase of $35 million in stock in RF&P Corp. as the first stage of a $548 million takeover, prosecutors said.

By failing to publicly disclose the acquisition, the officials effectively cheated RF&P shareholders who sold stock to the pension fund for less than it would have been worth if the takeover plans had been known.

The allegations were contained in a document filed Friday in U.S. District Court in Richmond. The document is not an indictment, but it lists alleged criminal violations by the three officials. Prosecutors said earlier they expect to file criminal charges in the case; they did not say who would be charged.

The court papers named Jacqueline G. Epps, former chairwoman of the VRS Board of Trustees; Mark T. Finn, former chairman of its investment committee; and Glen D. Pond, the system's former chief administrator. All three ``sought to enrich themselves financially, reputationally, politically and obtain business benefits for their careers,'' the document said.

All three have left the $16.1 billion pension fund, and neither they nor their attorneys returned telephone calls seeking comment.

The takeover bid started shortly after Wilder took office in 1990 and blocked the planned merger of CSX Corp. and RF&P. Not long afterward, Wilder replaced Republican retirement chairman Charles B. Walker with Epps, a longtime supporter. She and Finn then decided to take over RF&P by buying stock on the open market, but kept it secret to avoid triggering a bidding war, according to the document.

In doing so, prosecutors said, Epps, Finn and Pond violated federal securities, mail and wire-fraud statutes as well as state laws prohibiting secret meetings, perjury, misuse of public funds, falsification of official records, conflict of interest and making false representations.

Prosecutors also said Epps ``used her positions ... to generate cash donations'' to her unsuccessful 1992 congressional campaign from lawyers and companies that did business with the pension fund.

According to documents, Finn hoped that engineering the RF&P takeover would enhance his reputation at a time when his own investment firm was suffering.

As chief staff member, Pond broke the law when he followed orders from Epps and Finn to cover up the purchase, prosecutors said. Among other things, he allegedly set up illegal secret meetings, omitted relevant information from the minutes of pension fund board meetings and had documents removed from the pension fund offices to frustrate possible subpoenas, according to court papers.

The purchase of the first RF&P stock came when $35 million of pension fund money was transferred in May 1990 into a secret account. The account's name later was changed to hide the actual buyer when reporters began asking questions.