Risk Scenario

A Friend’s Betrayal

An expensed dinner and drinks with an old and trusted friend winds up being more than Jimmy Davis ever bargained for.
By: | August 13, 2013
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

Part One

When Jimmy Davis sat down to dinner with his old buddy Sal Blair that night, he could never have guessed how much damage a simple conversation could do to him.


One of the things that Jimmy liked about Sal was that Sal liked to eat as much as he did.

So it was with a wink and a nod, and safely out of view of their wives, that Jimmy and Sal both ordered the special at the River Run Inn that night. Three cod filets, a dozen shrimp, calamari and a mess of smelts, all of it deep fried to a golden brown. Tartar sauce and steak fries on the side, thank you very much.

“And a side of penne with marinara,” Sal said to the waitress.

“Same for me,” Jimmy added.

The two old friends and former football teammates clinked wine glasses and chuckled. The laughs came easy with Sal. That was the way it was with a guy you had known since grade school.

“Hell of a meeting tonight,” Jimmy said.

“Yeah, some negotiations are tougher than others I guess,” Sal said.

Jimmy, a retired Monroe County fire captain, and Sal, a retired Monroe County police detective, both served as trustees on the county’s police and fire pension fund.

They’d been to the fund’s quarterly meeting that night in Sharpsburg where the topic had been reduced fund returns due to bond investments that just weren’t what they used to be.

“I think the members get it, not much we can do,” Jimmy said, about the current financial climate.


When the bill came, Sal got to it first.


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“Hey, let me get that,” said Jimmy. “You paid for the Mellencamp concert after last quarter’s meeting!”

“Nah, I got it,” Sal said. “Besides, I expensed the mileage for the concert to the fund.”

“Really?” said Jimmy, somewhat taken aback.

“Yeah, I don’t do it all the time,” Sal said as he used his index finger to pick up the crumbs of graham cracker crust that had served as the underpinning to his departed slice of Mayer lemon cheesecake.

“But ever since gas walked over the $3.00 per gallon mark, I’ve been doing it a couple times a year. I think it’s fine if we’re coming from a fund meeting.”

“It’s not a lot mind you,” Sal said as Jimmy gave him a challenging look.

“Alright,” Jimmy said softly as Sal bent his head to sign the credit card receipt.

As Sal folded his copy of the receipt and put it in his wallet, Jimmy noticed, as he always did, how Sal’s right pinkie finger splayed away from the rest of his fingers, bent at the second knuckle.

In the AAA championship game against Montclair back in 1974, Sal had jammed that hand into the face mask of a Montclair lineman, trying to open up a hole for Jimmy, who was playing fullback that night.

Sal had always played on the edge of dirty. That night back in 1974 it had cost him a broken finger.

But Jimmy had picked up 22 yards on that play. He would never forget that.

He and Sal had been buddies for a long time. But as they left the restaurant that night, Jimmy walked behind Sal, pondering his friend’s pension fund expense account habits.

Part Two

Three weeks later, Jimmy got a manila envelope in the mail, the contents of which turned his stomach to ice.


It was a report from the auditing firm Gamble, Gamble, Rutter and Beam. The annual audit detailed numerous expense infractions on the part of Monroe County Police and Firemen’s Pension Fund trustees.

Four trustees and the fund’s executive director were mentioned by name in the report. Sal was one of them.


At dinner with his family that night, Jimmy’s mind was elsewhere.

“Jimmy! Jimmy! Did you hear one blessed word that I just said?” his wife Marla asked him.

“Um, you were talking about who was going to drive Jenny back from soccer practice tomorrow,” Jimmy said, nodding hopefully at his 13-year-old daughter.

“No dad! That wasn’t it at all!” Jenny and her brother Andy broke out in laughter. But Marla didn’t.

Things went from bad to worse very quickly. Sal, three other trustees and the executive director all resigned their positions at the request of a majority of the pension fund board.

Then Jimmy got another manila envelope in the mail. It didn’t take him long to figure out what it was. This time he went numb all over. Jimmy had been named as a defendant in a lawsuit brought against the pension fund trustees by the pension fund members.

Sal had violated the “exclusive purpose rule” that fund monies must be used exclusively for the purpose of representing fund participants and beneficiaries. The suit alleged that Jimmy knew about the misuse of funds and did nothing about it.

That night at the River View Inn, the conversation between the two former teammates isn’t so lighthearted.

Sal had his face in his hands, that always broken pinkie prominent.

“I … I screwed up, Jimmy. I got nervous, I didn’t know what I was saying,” said Sal.

“You didn’t know what you were saying? What do you mean? You didn’t know you were giving them my name? You had to say ‘Jimmy Davis’?” Jimmy almost hissed the words.

That was the end of the conversation. Jimmy strode out to the parking lot and called Steve Mars, the Monroe County solicitor.

“Steve, it’s Jimmy Davis.”

“Hey Jimmy, sorry about Sal,” Steve said.

“Sorry about me!” Jimmy said. “Did you see I got named in a lawsuit by the union members?”

“I … no … I hadn’t seen that,” Steve said. “I’d heard rumors about it, but that’s all.”

“I’m a retired county firefighter, I’m a volunteer on that board. The county defends me in court, right?”

There is a brutally long pause on the other end.

“No, Jimmy, no, the county doesn’t defend you.”

Steve sighed. Everybody knew and loved Jimmy Davis. This wasn’t easy.

“Some counties indemnify their volunteer board members but unfortunately Monroe County does not.”

“Indemnify, what does that mean?” Jimmy asked.

“Insurance, Jimmy. You’re not covered by a county insurance policy that could pay for your defense.”

“I run into burning buildings for 27 years and the county doesn’t cover me?” Jimmy said.

“Not for something like this, Jimmy. I’m sorry.”

Part Three

Lawsuits and audits concerning public funds and trustees are open records. With copies of the lawsuit and the audit in hand, the newspaper editors in Monroe County tee off on Jimmy and the rest of the pension board members.


Protesting their innocence, Jimmy and another pension board member who was named in the lawsuit were forced to resign from the board.

It got worse. The Monroe County District Attorney’s office filed felony charges against Sal, three other ex-board members and the former executive director of the fund. The value of what they were alleged to have taken from the fund exceeded $300 each, which qualified as a felony by state law.

“Are you considering any more charges in this case?” a reporter asked the D.A. at a press conference.

“We are,” said the D.A.

“The possibility remains that additional members of the trustee board could be named accessories to felony, based on their possible knowledge of these criminal acts.”

The D.A. drew himself up to his full height, as he always did when the television camera lights were on.

“Let me be perfectly clear. My office considers the breach of public trust in this case to be substantial and we intend to prosecute this case to the fullest extent of the law.”

The D.A. knew which side of his political bread was buttered and by whom. There were plenty of fire and police union members within earshot.

“We view our police and firefighters as heroes, everyday heroes to the people of this county. We will not rest until this violation of their trust has been met with justice,” the D.A. said, to thunderous applause from those police and firefighters attending the conference.


Dinners in the Jimmy Davis household had become very somber affairs indeed.

“Children, your father has something he needs to tell you,” Marla said as Jimmy poked at a slice of meatloaf he had no desire or energy to consume.

There was a long pause.

“What is it Dad?” Jenny said in that open, curious way of hers, the sight of which brought Jimmy to the verge of tears.

“Kids,” Jimmy said. “Andy … Jenny.” His voice almost cracked.

“We can’t go to Fair Harbor this year. Mom and I had to cancel our rental cottage.”

“Why??!!” Jenny and Andy cry in unison.

Jimmy couldn’t tell them it was because the preliminary estimates for his legal defense ran into the tens of thousands of dollars.

With a possible felony conviction and an adverse decision in the pension members’ lawsuit in the offing, Jimmy’s own pension could be at risk.

Jimmy was a brave man on the football field and in firefighter’s gear. But what he was facing now had him afraid like never before.


Jimmy Davis, a retired firefighter, becomes privy to the seemingly trivial ethical shortcomings of Sal Blair, an old friend and a fellow trustee on the county’s fire and police pension fund board. Little does Jimmy know how much legal trouble his knowledge of Sal’s shortcomings will create for him. After Sal’s theft of pension board funds becomes public, Jimmy is sucked into the dilemma due to his prior knowledge of his friend’s theft. Jimmy is forced to step down from the pension board and faces possible criminal prosecution and staggering legal bills.

1. Know when to say when: Friendships are important, but protection of yourself and your family is more important should you become knowledgeable that someone you know with fiduciary responsibilities is breaking the law.

2. Know your exposures: If you assume a position of fiduciary responsibility, even as a volunteer, you should educate yourself on your exposures as an elected officer and what measures you should take to mitigate them.

3. Coverage is out there: There are insurance products to protect board members in the public and private sector from stakeholder lawsuits and it is worth your while to familiarize yourself with them.

4. Lawyers cost money: Lawyers’ fees and the issue of duty to defend are often major sticking points in whether a board member has adequate coverage or not. If you are in a position where you could be sued by stakeholders or shareholders, adequate coverage for your legal defense should be a key concern.

5. Know the law: You can’t know if you or an associate are breaking the law unless you know the law. If you gain knowledge of questionable behavior, consult an attorney in that field of practice as the first step in analyzing your exposure.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected].

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