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.
Showing posts with label San Diego pension deal. Show all posts
Showing posts with label San Diego pension deal. Show all posts
Monday, December 20, 2010
Monday, August 10, 2009
The scapegoats for the San Diego pension fraud are still being prosecuted
UPDATE: All defendants except Ron Saathoff dismissed in January 2010 by California Supreme Court.
ORIGINAL POST:
These people are not angels, but they most certainly did not act alone in the billion dollar San Diego pension scheme.
So why are they alone in being prosecuted?
Because Bonnie Dumanis, our District Attorney, doesn't like to pick on the truly powerful.
Defendants:
Cathy Lexin, Ronald Lee Saathoff, John Anthony Torres, Mary Elizabeth Vattimo, Teresa Aja Webster, Sharon Kay Wilkinson
Charge: Conflict Of Interest - Specified Officials
Court No.: CD190930
Prosecutor: Stephen Robinson
Synopsis: Six former and current members of the San Diego City Employee Retirement System Board of Trustees are charged with felony conflict of interst following an 11-month investigation. The defendants are Ronald L. Saathoff, John A. Torres, Sharon K. Wilkinson, Cathy Lexin, Mary Vattimo and Terri A. Webster. Each has been charged with felony counts of Government Code 1090. On July 11, 2002 The SDCERS Board of Trustees voted to approve and accept an amended version of a City of San Diego proposal which deferred a percentage of City of San Diego employer contributions and avoided the City's obligation to make a balloon payment to SDCERS as negotiated under the terms of a prior City agreement. The amended proposal included a negotiated enhanced retirement benefits agreement between the City of San Diego and three of the City of San Diego Employee bargaining unions. These unions included the San Diego Fire Fighter's Local 145; Municipal Employees Association; and American Federation of State, County and Municipal Employees Local 127. Each of the trustees named in this criminal action voted in favor of this proposal and personally benefited as a result of their involvement with the amended proposal.
Custody Status: Warrant issued
Next Court Date: Further Proceedings, Oct 23 2009 9:00AM, Department 26, San Diego Superior Court, Central Division, County Courthouse
ORIGINAL POST:
These people are not angels, but they most certainly did not act alone in the billion dollar San Diego pension scheme.
So why are they alone in being prosecuted?
Because Bonnie Dumanis, our District Attorney, doesn't like to pick on the truly powerful.
Defendants:
Cathy Lexin, Ronald Lee Saathoff, John Anthony Torres, Mary Elizabeth Vattimo, Teresa Aja Webster, Sharon Kay Wilkinson
Charge: Conflict Of Interest - Specified Officials
Court No.: CD190930
Prosecutor: Stephen Robinson
Synopsis: Six former and current members of the San Diego City Employee Retirement System Board of Trustees are charged with felony conflict of interst following an 11-month investigation. The defendants are Ronald L. Saathoff, John A. Torres, Sharon K. Wilkinson, Cathy Lexin, Mary Vattimo and Terri A. Webster. Each has been charged with felony counts of Government Code 1090. On July 11, 2002 The SDCERS Board of Trustees voted to approve and accept an amended version of a City of San Diego proposal which deferred a percentage of City of San Diego employer contributions and avoided the City's obligation to make a balloon payment to SDCERS as negotiated under the terms of a prior City agreement. The amended proposal included a negotiated enhanced retirement benefits agreement between the City of San Diego and three of the City of San Diego Employee bargaining unions. These unions included the San Diego Fire Fighter's Local 145; Municipal Employees Association; and American Federation of State, County and Municipal Employees Local 127. Each of the trustees named in this criminal action voted in favor of this proposal and personally benefited as a result of their involvement with the amended proposal.
Custody Status: Warrant issued
Next Court Date: Further Proceedings, Oct 23 2009 9:00AM, Department 26, San Diego Superior Court, Central Division, County Courthouse
Friday, September 05, 2008
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.
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.
Friday, July 11, 2008
San Diego demonstrates how to win an award for excellence in accounting
David Washburn of Voice of San Diego find that Enron by the Sea made the New York Times again, in an article about "skim funds."
"New Jersey and San Diego had versions of skim funds, and won "excellence in accounting" awards from the Government Finance Officers Association for many years while operating them. Each ended up with far less money in its pension fund than its books showed. The Securities and Exchange Commission found that San Diego had committed securities fraud by overstating the soundness of its pension fund; it is still investigating New Jersey."
"New Jersey and San Diego had versions of skim funds, and won "excellence in accounting" awards from the Government Finance Officers Association for many years while operating them. Each ended up with far less money in its pension fund than its books showed. The Securities and Exchange Commission found that San Diego had committed securities fraud by overstating the soundness of its pension fund; it is still investigating New Jersey."
Tuesday, June 24, 2008
Public Entities fleecing taxpayers to avoid responsibility for wrongdoing
From Voice of San Diego
Letters
All Those Legal Bills
By Tom Adler, San Diego
Tuesday, June 24, 2008
I was delighted to read that the city council has finally come to their senses and has begun to balk about paying for outside consultants.
It does seem a bit ironic however.
During their pension dustup the council members couldn't get enough of them. Council member Jim Madaffer, for instance, had no trouble at all in March 2006 requesting that the taxpayers of this city pay his personal attorney a sum of $327,231. These attorney fees were supposedly incurred to enable Mr. Madaffer to get advice from an attorney as to whether he had violated any laws in regard to the pension debacle. In more than 30 years as a lawyer, I never knew anyone who paid this amount to get advice from an attorney as to whether they had broken the law. He wasn't the only city councilperson to request these outrageous fees. Councilman Brian Maienschein requested $345,000. Councilwoman Toni Atkins requested $365,696.
The other councilpersons were close behind with their requests with the exception of Councilwoman Donna Frye, who not only refused to take taxpayer money but also paid her own attorney fees which amounted to $5,000.
I wonder if a private citizen could have paid these fees, which to this date have been unaccounted for due to the refusal of the city council and mayor to release the records necessary for a full accounting. In any event, the council approved these fees and also fees for the representation of any other city employee who was to be interviewed or deposed. It didn't matter whether or not any of them had been sued or even suspected of wrongdoing. They all received counsel from private attorneys at the taxpayers' expense. At last count, the fees paid for these counseling attorneys was in excess of $3 million.
Maybe if the city had competent council members and skilled employees there would be less need for this continual army of experts who troop through City Hall with their main strength being how to bill.
Letters
All Those Legal Bills
By Tom Adler, San Diego
Tuesday, June 24, 2008
I was delighted to read that the city council has finally come to their senses and has begun to balk about paying for outside consultants.
It does seem a bit ironic however.
During their pension dustup the council members couldn't get enough of them. Council member Jim Madaffer, for instance, had no trouble at all in March 2006 requesting that the taxpayers of this city pay his personal attorney a sum of $327,231. These attorney fees were supposedly incurred to enable Mr. Madaffer to get advice from an attorney as to whether he had violated any laws in regard to the pension debacle. In more than 30 years as a lawyer, I never knew anyone who paid this amount to get advice from an attorney as to whether they had broken the law. He wasn't the only city councilperson to request these outrageous fees. Councilman Brian Maienschein requested $345,000. Councilwoman Toni Atkins requested $365,696.
The other councilpersons were close behind with their requests with the exception of Councilwoman Donna Frye, who not only refused to take taxpayer money but also paid her own attorney fees which amounted to $5,000.
I wonder if a private citizen could have paid these fees, which to this date have been unaccounted for due to the refusal of the city council and mayor to release the records necessary for a full accounting. In any event, the council approved these fees and also fees for the representation of any other city employee who was to be interviewed or deposed. It didn't matter whether or not any of them had been sued or even suspected of wrongdoing. They all received counsel from private attorneys at the taxpayers' expense. At last count, the fees paid for these counseling attorneys was in excess of $3 million.
Maybe if the city had competent council members and skilled employees there would be less need for this continual army of experts who troop through City Hall with their main strength being how to bill.
Saturday, June 14, 2008
Aguirre has recovered $10 million, more than he's spent in pension lawsuits
Mike Aguirre's campaign for reelection just got a big shot in the arm. His accusers must now admit that his aggressive pursuit of those who defrauded San Diego in the pension scam and related investigations has paid off for the city.
$4.35 million settlement in pension lawsuit
Law firm represented city before the SEC
By Craig Gustafson
San Diego Union Tribune
June 14, 2008
Vinson & Elkins, the Houston-based law firm whose two-year investigation into San Diego's finances was criticized as a whitewash, has agreed to settle with the city for $4.35 million.
The firm would be the fourth to settle lawsuits related to financial and legal troubles from the city practice of increasing employee pension benefits while cutting funding for them.
Settlements
Pension-related settlements:
July 2006: Two auditing firms, Caporicci & Larson and Calderon, Jaham & Osborn, paid $1.65 million total to the city. Calderon conducted the city's annual financial audits, which were later found to contain million of dollars in errors. Caporicci, of Costa Mesa, later bought the firm and denied any wrongdoing by itself or Calderon.
November 2006: San Francisco-based Callan Associates, a pension consultant that advised San Diego's retirement system, agreed to pay $4.5 million to the city. City Attorney Michael Aguirre accused them of faulty investment advice. The firm admitted to no wrongdoing.
City Attorney Michael Aguirre classified the settlement as a victory for his pension-related lawsuits, even though he had sought $10 million.
Vinson & Elkins, which also represented Enron, admitted no wrongdoing but agreed to pay back $3.25 million to the city and forgive $1.1 million in outstanding bills, Aguirre said. The City Council will vote Tuesday on the settlement...
$4.35 million settlement in pension lawsuit
Law firm represented city before the SEC
By Craig Gustafson
San Diego Union Tribune
June 14, 2008
Vinson & Elkins, the Houston-based law firm whose two-year investigation into San Diego's finances was criticized as a whitewash, has agreed to settle with the city for $4.35 million.
The firm would be the fourth to settle lawsuits related to financial and legal troubles from the city practice of increasing employee pension benefits while cutting funding for them.
Settlements
Pension-related settlements:
July 2006: Two auditing firms, Caporicci & Larson and Calderon, Jaham & Osborn, paid $1.65 million total to the city. Calderon conducted the city's annual financial audits, which were later found to contain million of dollars in errors. Caporicci, of Costa Mesa, later bought the firm and denied any wrongdoing by itself or Calderon.
November 2006: San Francisco-based Callan Associates, a pension consultant that advised San Diego's retirement system, agreed to pay $4.5 million to the city. City Attorney Michael Aguirre accused them of faulty investment advice. The firm admitted to no wrongdoing.
City Attorney Michael Aguirre classified the settlement as a victory for his pension-related lawsuits, even though he had sought $10 million.
Vinson & Elkins, which also represented Enron, admitted no wrongdoing but agreed to pay back $3.25 million to the city and forgive $1.1 million in outstanding bills, Aguirre said. The City Council will vote Tuesday on the settlement...
Tuesday, April 08, 2008
Note to Bonnie Dumanis: This is how you conduct an investigation
Today in Finance for April 8, 2008
SEC Charges Five Ex-Officials in San Diego Muni Fraud
Commission Chairman Christopher Cox has cited the city government's scandal as a reason to expand the SEC's regulatory powers over municipal bonds.
http://www.cfo.com/article.cfm/11002450/c_10999584?f=home_todayinfinance&x=1
Stephen Taub
CFO.com | US
April 8, 2008
The Securities and Exchange Commission has filed civil fraud charges against five former San Diego city officials—mostly finance professionals—for their roles in the city’s financial crisis in 2002 and 2003.
The SEC charged the individuals for failing to disclose to investors buying the city’s municipal bonds that there were funding problems with San Diego's pension and retiree health care obligations and those liabilities had put the city in financial peril.
advertisement The five named were former city manager Michael Uberuaga, former city treasurer Mary Vattimo, former auditor an comptroller Edward Ryan, former deputy city manager of finance Patricia Frazier, and former assistant auditor & comptroller Teresa Webster.
"The facts will clearly demonstrate that all city officials and staff members acted with good faith and honest intention with regard to the bond offerings by the city of San Diego," stated Webster's attorney, Frank Vecchione. "At no time did Terri Webster act inappropriately or with intent to deceive any potential investor. The time has come to put the misperceptions and misrepresentations regarding Ms. Webster and these bonds to rest. We intend to do so."
Frazier's attorney could not be reached at presstime. Lawyers for the remaining three former officials did not return phone calls from CFO.com.
In the fraud complaint filed by the SEC on Monday, the commission charges that the five former San Diego officials knew that the city had been intentionally underfunding its pension obligations so that it could increase pension benefits while deferring the costs. The officials were allegedly aware that the city would face severe difficulty funding its future pension and retiree health care obligations unless it raised new revenues or pension and health care benefits or city services were cut.
The SEC alleges the ex-officials knew that the city’s unfunded pension liability was projected to grow dramatically from $284 million at the beginning of fiscal year 2002 to an estimated $2 billion by 2009 and that the city’s liability for retiree health care was another estimated $1.1 billion. But the officials failed to disclose those and other material facts in bond-offering documents and continuing disclosures, it added.
In a speech, SEC Chairman Christopher Cox has cited securities fraud within San Diego's city government in those years as a rationale for extending the commission's regulatory powers over municipal bonds. "While the SEC has anti-fraud authority -- allowing us to come in and clean up messes like [San Diego] after the fact," he said in a July 2007 speech, neither the SEC nor any other federal regulator can compel the municipal bond market to make the same sorts of disclosures that the SEC requires in the corporate securities market. "It's a basic common-sense consumer protection that is way overdue," Cox said at the time, calling for legislation giving the SEC "limited powers" to assure transparency in muni offering.
In its current complaint, the SEC alleges that Uberuaga signed the closing letter for one of the bond offerings, falsely certifying that it was accurate and did not contain any misleading statements. Ryan signed letters falsely representing that the city’s audited financials included in the securities offerings were accurate, the regulator alleged.
The commission also charged that Frazier regularly reviewed and revised the false and misleading disclosure documents and signed the closing letter for two out of a total five bond offerings relevant to the case. She falsely certified the disclosures as accurate and did not contain any misleading statements reviewed and made presentations to the rating agencies, the SEC alleged.
Webster reviewed city financials that contained some of the false and misleading disclosures, the commission charged, alleging that Vattimo took part in drafting the city’s false and misleading disclosures. Vattimo and Webster both allegedly knew that in 2003, the rating agencies had concerns about the city’s growing pension burdens and that those obligations could hurt the city’s credit rating. "Nevertheless, they withheld material facts from the rating agencies," the SEC added.
The SEC previously issued a sanction against San Diego for committing securities fraud by failing to disclose to investors important information about its pension and retiree health care obligations in the sale of its municipal bonds in 2002 and 2003. To settle the action, the city agreed to cease and desist from future securities fraud and to retain an independent consultant for three years to foster compliance with its disclosure obligations under the federal securities laws.
In December 2007, the SEC and the outside auditors for the city and its pension system, Thomas J. Saiz and Calderon, Jaham & Osborn, settled charges against the firm. Without admitting or denying the allegations in the complaint, the audit firm consented to the entry of a final judgment permanently enjoining them from violating the antifraud provisions of federal securities laws. The firm, which acted as the auditor of the city and the benefits plan, also paid a civil penalty of $15,000.
SEC Charges Five Ex-Officials in San Diego Muni Fraud
Commission Chairman Christopher Cox has cited the city government's scandal as a reason to expand the SEC's regulatory powers over municipal bonds.
http://www.cfo.com/article.cfm/11002450/c_10999584?f=home_todayinfinance&x=1
Stephen Taub
CFO.com | US
April 8, 2008
The Securities and Exchange Commission has filed civil fraud charges against five former San Diego city officials—mostly finance professionals—for their roles in the city’s financial crisis in 2002 and 2003.
The SEC charged the individuals for failing to disclose to investors buying the city’s municipal bonds that there were funding problems with San Diego's pension and retiree health care obligations and those liabilities had put the city in financial peril.
advertisement The five named were former city manager Michael Uberuaga, former city treasurer Mary Vattimo, former auditor an comptroller Edward Ryan, former deputy city manager of finance Patricia Frazier, and former assistant auditor & comptroller Teresa Webster.
"The facts will clearly demonstrate that all city officials and staff members acted with good faith and honest intention with regard to the bond offerings by the city of San Diego," stated Webster's attorney, Frank Vecchione. "At no time did Terri Webster act inappropriately or with intent to deceive any potential investor. The time has come to put the misperceptions and misrepresentations regarding Ms. Webster and these bonds to rest. We intend to do so."
Frazier's attorney could not be reached at presstime. Lawyers for the remaining three former officials did not return phone calls from CFO.com.
In the fraud complaint filed by the SEC on Monday, the commission charges that the five former San Diego officials knew that the city had been intentionally underfunding its pension obligations so that it could increase pension benefits while deferring the costs. The officials were allegedly aware that the city would face severe difficulty funding its future pension and retiree health care obligations unless it raised new revenues or pension and health care benefits or city services were cut.
The SEC alleges the ex-officials knew that the city’s unfunded pension liability was projected to grow dramatically from $284 million at the beginning of fiscal year 2002 to an estimated $2 billion by 2009 and that the city’s liability for retiree health care was another estimated $1.1 billion. But the officials failed to disclose those and other material facts in bond-offering documents and continuing disclosures, it added.
In a speech, SEC Chairman Christopher Cox has cited securities fraud within San Diego's city government in those years as a rationale for extending the commission's regulatory powers over municipal bonds. "While the SEC has anti-fraud authority -- allowing us to come in and clean up messes like [San Diego] after the fact," he said in a July 2007 speech, neither the SEC nor any other federal regulator can compel the municipal bond market to make the same sorts of disclosures that the SEC requires in the corporate securities market. "It's a basic common-sense consumer protection that is way overdue," Cox said at the time, calling for legislation giving the SEC "limited powers" to assure transparency in muni offering.
In its current complaint, the SEC alleges that Uberuaga signed the closing letter for one of the bond offerings, falsely certifying that it was accurate and did not contain any misleading statements. Ryan signed letters falsely representing that the city’s audited financials included in the securities offerings were accurate, the regulator alleged.
The commission also charged that Frazier regularly reviewed and revised the false and misleading disclosure documents and signed the closing letter for two out of a total five bond offerings relevant to the case. She falsely certified the disclosures as accurate and did not contain any misleading statements reviewed and made presentations to the rating agencies, the SEC alleged.
Webster reviewed city financials that contained some of the false and misleading disclosures, the commission charged, alleging that Vattimo took part in drafting the city’s false and misleading disclosures. Vattimo and Webster both allegedly knew that in 2003, the rating agencies had concerns about the city’s growing pension burdens and that those obligations could hurt the city’s credit rating. "Nevertheless, they withheld material facts from the rating agencies," the SEC added.
The SEC previously issued a sanction against San Diego for committing securities fraud by failing to disclose to investors important information about its pension and retiree health care obligations in the sale of its municipal bonds in 2002 and 2003. To settle the action, the city agreed to cease and desist from future securities fraud and to retain an independent consultant for three years to foster compliance with its disclosure obligations under the federal securities laws.
In December 2007, the SEC and the outside auditors for the city and its pension system, Thomas J. Saiz and Calderon, Jaham & Osborn, settled charges against the firm. Without admitting or denying the allegations in the complaint, the audit firm consented to the entry of a final judgment permanently enjoining them from violating the antifraud provisions of federal securities laws. The firm, which acted as the auditor of the city and the benefits plan, also paid a civil penalty of $15,000.
Wednesday, February 20, 2008
Scott Lewis explains the Mike Aguirre-City Council-pension lawsuit connection
From Voice of San Diego
by Scott Lewis
Having It Both Ways
http://voiceofsandiego.org/opinion/slop/
A reader, who is an attorney, wrote me an e-mail about the revived ambiguity surrounding the 2005 vote (or non-vote) the City Council supposedly took to authorize City Attorney Mike Aguirre's legacy lawsuit to roll back city employee pension benefits.
Remember yesterday's reminder of what Council President Scott Peters argues: that Aguirre only received authorization to sue in his own name.
Here's the attorney:
I too have always been confused on how that went down. I'm not sure what it means to authorize Aguirre to sue in his own name? He's the City Attorney for crying out loud! Did they mean he could sue as an individual? In that case, he really didn't need their permission.
What also always irritated was that if the Council felt like their position on this was misunderstood and they really did not want him to file the suit, why did they not revote and clarify their position at the next Council meeting or anytime thereafter??? Don't get me wrong I absolutely believe the City Attorney can not file this type of lawsuit without Council approval. I just thought they left him an out with their ambiguity and never clarified as they most certainly could have.
This is a vitally important point. If the City Council never authorized Aguirre to sue to roll back what he claimed were illegal pension benefits, why in the world did they never do a single thing about it?
This may be why the issue is coming up now. One of the big arguments Peters and the gang looking to throw Aguirre out of office will undoubtedly use is the meme that Aguirre has been a reckless litigator.
If he has been a reckless litigator, his most reckless litigation is the pension lawsuit. But how can Peters (and his colleague Brian Maienschein) possibly argue that this was as reckless as they say if they authorized him to file the lawsuit?
The State Bar, by investigating this, is enabling Peters and Maienschein to float the idea that they never did authorize the litigation.
It should be remembered, of course, that they never did anything to stop it either.
But regardless, this can all be cleared up if the City Council would release the transcript of what really happened at that meeting. But they decided only to give the transcript to the State Bar.
How convenient.
-- SCOTT LEWIS
Wednesday, February 20 -- 3:02 pm
Click here to post comments (3 posted so far)
The Meeting in Question
E-MAIL POST
In light of today's U-T report on the State Bar investigation into City Attorney Mike Aguirre, I'm having flashbacks of a series of columns I did in 2005 about the meeting that is apparently at the center of the Bar's probe.
Flashback with me: Watching a City Council meeting in August of that year, I was shocked to see then Assistant City Attorney Les Girard quietly announce that the City Council had authorized City Attorney Mike Aguirre to sue to get rid of pension benefits he thought city employees had illegally secured.
It was a stunner. I rewound the tape a couple of times to make sure I understood him because the City Council had, until that point, never been too enthusiastic about Aguirre's expressed desire to completely roll back benefit enhancements city employees had secured in the 90s and in 2002.
So I called Aguirre to confirm and wrote up what I thought was big news.
Don "The Rat" McGrath today tries to explain the city attorney's side.
It suddenly got the attention of both union leaders and a blogger named Pat Flannery neither of whom completely believed me until they too saw the tapes. When Ann Smith, the lawyer for the city's Municipal Employee Association heard about it, she wanted to know what was going on as well and sent a letter to the City Council asking.
I wrote up a followup after asking a couple of City Council members.
On Aug. 9 just before the City Council broke its meeting to go to lunch (at 1 hour, 43 minutes into the archived video on the city's Web site -- for the really interested), Assistant City Attorney Les Girard made this announcement:
"Last week in closed session, by a unanimous vote, the City Council authorized the city attorney to pursue a modified cross complaint in the action of SDCERS v. the city of San Diego and City Attorney Michael Aguirre."
Heck, it's my blog, I'm just going to reprint the best part of the column here:
In an interview Aug. 12, Aguirre said that the council had "joined the city attorney" in his legal pursuits against the pension board on the condition that he drop his contention that individuals named in the suit be held personally liable for their actions. That was how the complaint was "modified," Aguirre said.
"This is an area where the City Council has chosen to support the city attorney," he said.
He reaffirmed his statements last week.
But relations among the city leaders have apparently deteriorated so badly that they can't even agree on what official actions they have taken.
Deputy Mayor Toni Atkins released a one-line reaction.
"The Council took no action nor a position on benefits being legal or illegal nor allowing the City Attorney to be counsel for the [San Diego City Employees' Retirement System] board," Atkins said.
Since it's the only statement we have from her on this, we have to take each word for what its worth.
Let's see that again: "The Council took no action nor a position on benefits being legal or illegal."
So what did they do? Why did Les Girard announce in an open council session that "the City Council authorized the city attorney to pursue a modified cross complaint ..."
Is that not an "action"?
Atkins' colleague, Councilman Scott Peters, acknowledges that the council took an action, just not an action with the impact Aguirre describes.
Here's Peters' take.
"...the City Council has authorized the city attorney to allege illegality in his name only," Peters wrote (emphasis added) in a memorandum to Aguirre disputing language Aguirre uses in court documents.
Peters made his case to Voice of San Diego Thursday.
"No one has signed on to his view that the benefits are illegal. He has been authorized to make that argument in his own name but not on behalf of the City Council or the City of San Diego," Peters said. "I would never have voted to authorize him to litigate this illegality issue if the retirement board hadn't brought it up."
Peters said the authorization the council granted Aguirre "in no way" signifies official City Council support for Aguirre's legal maneuver.
Isn't it, however, a bit more supportive than, say, not authorizing him?
Peters explained that, in this instance, it's the retirement board's fault. The pension system, in July, filed a complaint asking a judge to determine if -- in light of Aguirre's blistering investigative reports -- benefits it was paying out were illegal or not.
The pension board had also filed a lawsuit against Aguirre after he tried to take over the attorney chair at the agency.
Now, fast forward two-and-a-half years and the state bar apparently is suspicious of whether the City Council actually did give Aguirre authorization to do the lawsuit or not. And that, we're all assuming, must be something the Bar has a serious problem with. The Bar, according to the U-T's Alex Roth, has asked for a transcript of the secret meeting Girard had referred.
Let's just say that if the City Council does waive the right to keep that transcript private, I will be the first in line to get a copy. It never was entirely clear what the City Council authorized and didn’t.
But I'll repeat this one point I've been making for a couple of years now: Aguirre always argued that he didn't need the City Council to approve his litigious actions yet in times like this, he sought and trumpeted their approval. If he didn't need their approval and really believed that, he probably would never have sought it.
-- SCOTT LEWIS
Tuesday, February 19 -- 1:07 pm
by Scott Lewis
Having It Both Ways
http://voiceofsandiego.org/opinion/slop/
A reader, who is an attorney, wrote me an e-mail about the revived ambiguity surrounding the 2005 vote (or non-vote) the City Council supposedly took to authorize City Attorney Mike Aguirre's legacy lawsuit to roll back city employee pension benefits.
Remember yesterday's reminder of what Council President Scott Peters argues: that Aguirre only received authorization to sue in his own name.
Here's the attorney:
I too have always been confused on how that went down. I'm not sure what it means to authorize Aguirre to sue in his own name? He's the City Attorney for crying out loud! Did they mean he could sue as an individual? In that case, he really didn't need their permission.
What also always irritated was that if the Council felt like their position on this was misunderstood and they really did not want him to file the suit, why did they not revote and clarify their position at the next Council meeting or anytime thereafter??? Don't get me wrong I absolutely believe the City Attorney can not file this type of lawsuit without Council approval. I just thought they left him an out with their ambiguity and never clarified as they most certainly could have.
This is a vitally important point. If the City Council never authorized Aguirre to sue to roll back what he claimed were illegal pension benefits, why in the world did they never do a single thing about it?
This may be why the issue is coming up now. One of the big arguments Peters and the gang looking to throw Aguirre out of office will undoubtedly use is the meme that Aguirre has been a reckless litigator.
If he has been a reckless litigator, his most reckless litigation is the pension lawsuit. But how can Peters (and his colleague Brian Maienschein) possibly argue that this was as reckless as they say if they authorized him to file the lawsuit?
The State Bar, by investigating this, is enabling Peters and Maienschein to float the idea that they never did authorize the litigation.
It should be remembered, of course, that they never did anything to stop it either.
But regardless, this can all be cleared up if the City Council would release the transcript of what really happened at that meeting. But they decided only to give the transcript to the State Bar.
How convenient.
-- SCOTT LEWIS
Wednesday, February 20 -- 3:02 pm
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The Meeting in Question
E-MAIL POST
In light of today's U-T report on the State Bar investigation into City Attorney Mike Aguirre, I'm having flashbacks of a series of columns I did in 2005 about the meeting that is apparently at the center of the Bar's probe.
Flashback with me: Watching a City Council meeting in August of that year, I was shocked to see then Assistant City Attorney Les Girard quietly announce that the City Council had authorized City Attorney Mike Aguirre to sue to get rid of pension benefits he thought city employees had illegally secured.
It was a stunner. I rewound the tape a couple of times to make sure I understood him because the City Council had, until that point, never been too enthusiastic about Aguirre's expressed desire to completely roll back benefit enhancements city employees had secured in the 90s and in 2002.
So I called Aguirre to confirm and wrote up what I thought was big news.
Don "The Rat" McGrath today tries to explain the city attorney's side.
It suddenly got the attention of both union leaders and a blogger named Pat Flannery neither of whom completely believed me until they too saw the tapes. When Ann Smith, the lawyer for the city's Municipal Employee Association heard about it, she wanted to know what was going on as well and sent a letter to the City Council asking.
I wrote up a followup after asking a couple of City Council members.
On Aug. 9 just before the City Council broke its meeting to go to lunch (at 1 hour, 43 minutes into the archived video on the city's Web site -- for the really interested), Assistant City Attorney Les Girard made this announcement:
"Last week in closed session, by a unanimous vote, the City Council authorized the city attorney to pursue a modified cross complaint in the action of SDCERS v. the city of San Diego and City Attorney Michael Aguirre."
Heck, it's my blog, I'm just going to reprint the best part of the column here:
In an interview Aug. 12, Aguirre said that the council had "joined the city attorney" in his legal pursuits against the pension board on the condition that he drop his contention that individuals named in the suit be held personally liable for their actions. That was how the complaint was "modified," Aguirre said.
"This is an area where the City Council has chosen to support the city attorney," he said.
He reaffirmed his statements last week.
But relations among the city leaders have apparently deteriorated so badly that they can't even agree on what official actions they have taken.
Deputy Mayor Toni Atkins released a one-line reaction.
"The Council took no action nor a position on benefits being legal or illegal nor allowing the City Attorney to be counsel for the [San Diego City Employees' Retirement System] board," Atkins said.
Since it's the only statement we have from her on this, we have to take each word for what its worth.
Let's see that again: "The Council took no action nor a position on benefits being legal or illegal."
So what did they do? Why did Les Girard announce in an open council session that "the City Council authorized the city attorney to pursue a modified cross complaint ..."
Is that not an "action"?
Atkins' colleague, Councilman Scott Peters, acknowledges that the council took an action, just not an action with the impact Aguirre describes.
Here's Peters' take.
"...the City Council has authorized the city attorney to allege illegality in his name only," Peters wrote (emphasis added) in a memorandum to Aguirre disputing language Aguirre uses in court documents.
Peters made his case to Voice of San Diego Thursday.
"No one has signed on to his view that the benefits are illegal. He has been authorized to make that argument in his own name but not on behalf of the City Council or the City of San Diego," Peters said. "I would never have voted to authorize him to litigate this illegality issue if the retirement board hadn't brought it up."
Peters said the authorization the council granted Aguirre "in no way" signifies official City Council support for Aguirre's legal maneuver.
Isn't it, however, a bit more supportive than, say, not authorizing him?
Peters explained that, in this instance, it's the retirement board's fault. The pension system, in July, filed a complaint asking a judge to determine if -- in light of Aguirre's blistering investigative reports -- benefits it was paying out were illegal or not.
The pension board had also filed a lawsuit against Aguirre after he tried to take over the attorney chair at the agency.
Now, fast forward two-and-a-half years and the state bar apparently is suspicious of whether the City Council actually did give Aguirre authorization to do the lawsuit or not. And that, we're all assuming, must be something the Bar has a serious problem with. The Bar, according to the U-T's Alex Roth, has asked for a transcript of the secret meeting Girard had referred.
Let's just say that if the City Council does waive the right to keep that transcript private, I will be the first in line to get a copy. It never was entirely clear what the City Council authorized and didn’t.
But I'll repeat this one point I've been making for a couple of years now: Aguirre always argued that he didn't need the City Council to approve his litigious actions yet in times like this, he sought and trumpeted their approval. If he didn't need their approval and really believed that, he probably would never have sought it.
-- SCOTT LEWIS
Tuesday, February 19 -- 1:07 pm
Tuesday, December 11, 2007
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.
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.
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