Former union boss gets $700,000 for lost pension; Judge says the payout wasn't legally necessary

I see that attorney Ann Smith and Judie Italiano are still working closely. I'm wondering if the pension board was worried about dirty laundry being aired. Ann Smith was closely involved when the illegal pension deal was made, and she knows where all the skeletons are buried.

Former union boss gets $700,000 for lost pension
Judge says the payout wasn't legally necessary
By Craig Gustafson
December 17, 2010

The San Diego city retirement board has awarded a $700,000 settlement to former labor leader Judie Italiano despite a judge’s ruling that she isn’t owed anything beyond her $5,700-a-year pension.

The settlement was approved by Superior Court Judge Joel Pressman because he had no choice once the parties agreed. He expressed concerns, however, that it was “clearly not legally necessary” given his previous decision against Italiano. The City Attorney’s Office also argued the deal wasn’t reached in good faith.

Italiano, former president of the city’s union representing white-collar workers, had been battling with the city and its pension system to restore the annual $86,000 pension she lost in 2007 after the Internal Revenue Service deemed it invalid.

At issue is the city’s past decision to allow labor leaders to include their union service toward their pensions as city employees. In Italiano’s case, she was able to combine her 22 years as head of the Municipal Employees Association — peaking at $114,000 annually — with her nine years as a city typist making about $17,000.

The IRS said the practice, called presidential leave, violated tax law because union leaders aren’t city employees and thus can’t receive credit for union work when it comes to a city pension.

Italiano sued the city and pension system for $1.8 million — the estimated value over time of her combined union-city pension — accusing officials of negligence and making false promises about how much she would have for retirement.

Judge Pressman ruled last month that the city didn’t properly approve the presidential leave benefit so it doesn’t owe Italiano anything but the smaller pension for her nine-year stint with the city.

While the case was still going on, pension and union officials were negotiating a settlement for Italiano. The pension board unanimously approved the deal in closed session Oct. 1 — 45 days before the judge ruled against Italiano.

Pressman reluctantly approved the deal on procedural grounds Monday despite his concerns.

“This court does not see this as a good faith settlement,” he wrote in a tentative ruling. “It is a settlement crafted to give judicial cover to an agreement based on prior illegal acts. This court is not inclined to grant that cover. If the parties choose, the settlement can go forward but without this court’s good faith determination.”

Mark Sullivan, board president for the San Diego City Employees’ Retirement System, said the city and pension system were sued by Italiano on different grounds and the judge’s ruling only cleared the city from damages. He said the board needed to limit its financial exposure by settling the lawsuit.

“The cost to defend ourselves in this action would be pretty close to the amount that we were seeking to settle and there’s no way we would be able to recover that,” he said. “Our goal is to minimize the impact to the trust fund.”

City Attorney Jan Goldsmith said it didn’t make any sense to agree to a settlement given the court’s decision.

“Once again, the pension board has overstepped its bounds,” he said. “Although the judge applied procedural standards, he made it absolutely clear that he is not inclined to grant ‘cover’ for this deal. We have other avenues to challenge the pension board’s side deal and will do so.”

Goldsmith declined further comment, saying he would seek City Council input before making any decision.

Italiano’s attorney, Ann Smith, did not return a call for comment.

Italiano, 64, won’t receive the entire $700,000 settlement. She owes the pension system $250,000 for overpayments she received in the first few years after she retired, a sum that will be subtracted from the settlement.

The remaining $450,000 will be used to purchase an annuity for Italiano that is expected to pay her nearly $28,000 annually for the rest of her life. The settlement also leaves Italiano eligible to receive taxpayer-funded health care in retirement, although it’s unclear if she is actually receiving the benefit.

Before the settlement, Italiano had a $480 monthly pension although she received nothing because the system used the money to pay down her outstanding debt. If the presidential leave benefit had been upheld, she would have received nearly $7,200 per month.

The settlement could fall through if the IRS raises any objections.

Italiano resigned from the union in May 2009 amid an internal investigation into her potential misuse of a union credit card. She repaid nearly $14,000.

Judie Italiano out as manager of MEA, the largest white collar union of San Diego city employees

Judie Italiano has resigned as manager of the San Diego Metropolitan Employees Association (MEA), and her erstwhile supporters are scrambling to distance themselves from her.

Events have developed quickly since MEA members Linda French and Ed Harris sued Ms. Italiano a few weeks ago.


Italiano Resigns After Investigation Finds Card Misuse
Voice of San Diego
RANI GUPTA
May 29, 2009

Judie Italiano, the longtime general manager of the Municipal Employees' Association, has resigned after an internal investigation determined that she continued to use the union's credit cards for her personal use despite promising not to do so in 2006.

MEA board members said in a letter sent to members today that the union had referred the matter to the District Attorney's Office for "its determination as to whether any crime was committed in the course of Ms. Italiano's breach of trust."

Michael Zucchet, a former city councilman who had been working as a consultant to the group, has been acting as general manager since Italiano was put on leave May 12 as the union conducted an investigation.

Italiano's personal use of credit cards was first discovered in 2006 and was the subject of an internal investigation, a campaign to unseat her, and an investigation by then-City Attorney Mike Aguirre.

In an interview today, MEA President Tony Ruiz said the union subsequently changed its policies to prohibit the personal use of credit cards. Italiano also agreed to pay the association back for personal charges, Ruiz said.

Ruiz said Italiano stopped using the card for personal charges shortly after those charges came to light. But starting in November 2006, she resumed using the union cards for personal charges such as groceries and a casino gift shop, Ruiz said.

Ruiz said he discovered Italiano's personal credit charges when he was preparing his first budget as association president and examined the books kept by office staff. The letter sent to members says Italiano wrote the organization a check totaling $13,903 covering the full amount, including interest, of $6,916 owed in credit card charges, along with $6,987 in annual leave. Those cover charges made through February 2009, Ruiz said.

"We were all taken in by Judie," Ruiz said. "She [said] she would not be doing this type of behavior anymore. We put these policies in place and she agreed to these policies, and she breached our trust."



[Maura Larkins' note: I'm not sure I believe Mr.Ruiz. I think Bud Simpson might be describing the situation more accurately:

"Judie pretty much had the board of directors eating
out of her hand," Simpson said. "She's done a pretty
good job for them and, as a result, she makes sure she
has the executive committee handpicked."

Simpson added that the general membership didn't
appear to care. "Just as long as you take care of us,
we'll forgive minor indiscretions," he said.]

Lifeguard files suit against Judie Italiano of MEA

UPDATE: May 31, 2009
The lawsuit detailed below seems to have triggered some defensive maneuvers within the MEA (San Diego Metropolitan Employees Association). All of a sudden the union became interested in allegations that were brought up in 2006 and all but ignored by the board of directors. The union started an investigation, and Italiano resigned.

My question: where is Judie Italiano's faithful friend and attorney, the ubiquitous Ann M. Smith? She seems to be taking a back seat to Michael Zucchet. I guess the directors realize that the Judie and Ann show is over.



ORIGINAL POST:

Suit Filed Against Italiano
Voice of San Diego
RANI GUPTA
May 6, 2009

Two members of the city's white-collar employee union filed suit today against its general manager, Judie Italiano, claiming she misused union funds by charging thousands in personal expenses to union credit cards and made loans to herself, her family and her allies in the union.

The suit was filed by Ed Harris, a lifeguard who is leading a push for the lifeguards to separate from MEA, and by Linda French, who sought to unseat Italiano in 2007. The lawsuit says Italiano breached her fiduciary duties and seeks to have her suspended or removed as general manager.

Among the charges: that Italiano used MEA's line of credit to secure her son's business lease and make a business loan to him. The suit says Italiano made more than $130,000 in personal purchases on the MEA credit card -- including to casinos -- and used $10,000 in union money to buy property "believed to be a timeshare in Hawaii." The lawsuit alleges that Italiano has stopped making payments on a promissory note drafted after the charges were first discovered.

MEA consultant Michael Zucchet said the allegations were already reported in 2006 when former City Attorney Mike Aguirre investigated Italiano.

Zucchet said MEA started an internal investigation into the allegations, hired auditors "and deemed it to be without merit, and took care of what needed to be taken care of."

[Maura Larkins' note: Would this be an investigation by Ann Smith, Judie's inextricably close associate?]

Harris said...the problems cited in the complaint are part of the reason he's seeking to leave MEA.

Mike Aguirre wins regarding police retirement payments

A court has dismissed a lawsuit by police against San Diego City Attorney Mike Aguirre. Aguirre has been trying to reduce pension benefits given away in 2002 by Mayor Dick Murphy, with support from Ann Smith of the MEA. The purpose of the giveaway was to keep unions quiet about a billion-dollar underfunding of the city pension system.Voice of San Diego
by WILL CARLESS
September 4, 2008
Court Loss for City Cops

In another legal loss for city cops, a federal court judge has dismissed a lawsuit brought by more than 1,500 city police officers against City Attorney Mike Aguirre and the city's retirement system.

The police officers had argued that their federal constitutional rights were violated when, in 2005, the city reduced or eliminated their employment benefits by mandating that police officers pay higher payments into their retirement plans, thus reducing the take-home pay of many officers.

In her decision yesterday, Judge Marilyn Huff dismissed the case, referring in her decision to an earlier decision she made in a related case brought by the Police Officers Association, the union that represents city police officers.

Huff ruled in that case that there was insufficient proof that the employment benefits that were reduced in 2005 were vested constitutional rights, and that the under-funding of the pension system doesn't implicate federal constitutional rights.

This was the second court loss for city police officers in two weeks. On Aug. 21, another federal court judge dismissed a lawsuit brought against the city by more than 700 officers for breach of contract and unpaid overtime.

"So much for Aguirre never winning a lawsuit," said Executive Assistant City Attorney Don McGrath, who represented Aguirre in the lawsuit. McGrath said that, by his count, the POA has lost six of the seven lawsuits it brought against the city and Aguirre.

Judie Italiano announces that she's MEA's executive-for-life

The San Diego Union Tribune quotes Metropolitan Employees Association general manager Judie Italiano as saying:

"MEA is never, ever, as long as I can draw a breath, endorsing Mike Aguirre."

Well, that's pretty clear. But MEA's lawyer Ann Smith has made it clear that she and former president Judie Italiano are a package deal. Ann Smith "threatened" to resign if Judie were not named general manager.

Judie and Ann are perfect duplicates of California Teachers Association's controlling couple, Carolyn Doggett and Beverly Tucker, the CTA executive director and her lawyer, who also seem to be a package deal.

Well, San Diego, it seems we're in for a long ride with JudieAnn Italismith. We'll have their billion-dollar budget-busting noses in faces, making demands for some time.

Ann Smith said San Diego had to pay when it was a billion in debt, now she says city has to pay even more

After Metropolitan Employees Association (MEA) lawyer Ann Smith helped finagle a deal (that the SEC says was illegal) with the City of San Diego, she insisted that San Diego had to stick with the deal even though it put the city a billion dollars into the red and was illegal.

Now she says that the city's health care payments have gone down, so the city should pass on the savings.

Pass on the savings, but not the losses, eh, Ann?

Ann Smith clearly doesn't care if her union bankrupts the city.