The SEC says the pension deal included fraud

City's Former Auditor Charged With Fraud
December 11, 2007


SAN DIEGO -- The Securities and Exchange Commission has charged San Diego's former auditor with fraud for making false and misleading statements on city bond offerings.

The agency said Thomas Saiz and his former firm -- Calderon, James & Osborn -- signed off on incorrect statements about the health of the city's pension fund. The statements came in five city bond offerings in 2002 and 2003. Those bond sales raised $260 million.

Saiz agreed to pay a $15,000 fine as part of a settlement in the case filed Monday. Neither he nor the firm admitted wrongdoing.

The city's failure to disclose its pension woes became known in 2004, leading to the mayor's resignation and severely hampering San Diego's ability to borrow money.

Last year, the SEC charged the city of San Diego with securities fraud in connection with the bond sales in 2002 and 2003. It ordered the city to hire an independent financial consultant for three years but stopped short of levying fines for failing to disclose bad news about the pension fund.

The city employee's pension put San Diego $1.4 billion in debt, according to officials.

The Commission's investigation is ongoing, according to its Web site, "as to other individuals and entities that may have violated federal securities laws."


NBCSandiego.com. The Associated Press contributed to this report.