CHARLESTON — A lawsuit claims teachers and other state employees covered by West Virginia’s only state-run 401(k)-style retirement plan are victims of fraud.

Seeking class-action status, the lawsuit contends enrollees were steered toward an investment that performed only slightly better than some savings accounts, and that some of them had wrongly been lured away from a traditional pension.

The lawsuit targets an investment option known as a VALIC annuity that was offered to enrollees in the Teachers’ Defined Contribution plan. The plan allows members to manage investments to generate future retirement benefits. Enrollees claim they were duped into selecting the VALIC annuity.

“VALIC engaged in a systematic scheme of hiring agents, with whom the teachers, school service personnel and professional staff were familiar,” the lawyers filing the suit said in a news release. “We believe many of the representations made by these VALIC agents were not factually based and were clearly fraudulent in character.”

The annuity also is blamed for the poor returns suffered by many TDC investment accounts. Thousands of plan enrollees are trying to join another state-run pension program as a result.

That program, the Teachers’ Retirement System, offers a guaranteed benefit based on years of service and final salaries. The statement from the Bell & Bands and Webb law firms cites members of that plan who were lured into leaving for TDC.

“Those employees who transferred their funds into the VALIC annuities have had far less returns on their investment than they would have had realized in the ‘old’ TRS,” the lawyers’ release said.

VALIC is now part of insurance giant AIG.

“VALIC offered a fixed annuity product to the plan and we are confident that we met the obligations we were contracted to provide,” AIG Retirement Services spokesman John E. Pluhowski said Thursday night in a statement. “We are proud to be of service to West Virginia educators.”

He declined further comment on the lawsuit.

The lawsuit filed Monday in Marshall County Circuit Court names as defendants AIG Retirement, its VALIC subsidiary and a half-dozen VALIC sales agents. The defendants also include as-yet-unidentified individuals who also allegedly sold TDC enrollees on the annuities.

After meeting with AIG officials last month, Gov. Joe Manchin suggested the company pay some of the potential costs of moving TDC members into the pension plan. AIG balked at accepting such responsibility and defended its track record with TDC.

The state’s Consolidated Public Retirement Board, which oversees TDC, is not named in the lawsuit but was criticized in Thursday’s release. Board Executive Director Anne Lambright said the lawyers behind the suit informed her Wednesday that they plan to sue the board as well.

The lawsuit names a single plaintiff, and the lawyers said they continue to sign up possible class members.

Under a process that ended Monday, TDC members could elect to join the Teachers’ Retirement System. But the voluntary transfers hinge on at least 12,343 enrollees, or 65 percent of eligible members, making that choice. The retirement board expects certified results from the transfer election by the end of the month.

The Associated Press recently analyzed TDC’s performance since it opened in 1991, and found that enrollees have invested more of their funds into VALIC annuities than any other option — as much as three-fourths of all its funds. The AP review also suggests that the annuities’ returns lagged behind other investment options, particularly since 2000.

For the last three years, the annuity has delivered only its 4.5 percent guaranteed return. Complaints about poor returns and spotty help from the program’s managers prompted the Legislature to close TDC to new enrollees in 2005.