Posted on 01/22/2005 11:20:52 AM PST by John Jorsett
Employees in the city of San Diego's treasurer's office – ground zero in federal investigations of city finances – destroyed numerous records last month, prompting a warning from City Manager Lamont Ewell yesterday.
The destruction of records was revealed yesterday by City Attorney Michael Aguirre, who said he learned from an unnamed city employee Thursday night that about 20 people in the treasurer's Financing Services division dumped whole files into recycle bins and erased e-mails.
The news spurred a terse e-mail from Ewell to "all city employees," warning against the destruction of documents that might be sought by federal investigators looking into city finances and its pension system.
Deputy City Manager Lisa Irvine said it is not unusual for files to be periodically purged. She said some of the records – exactly how many and what information they contained, she could not say – are backed up by computer files. She said she did not think the destroyed records had been sought by federal investigators.
Ewell's office said he was out of town and unavailable for comment. He did not return a message left on his cell phone.
The Securities and Exchange Commission is investigating possible securities fraud related to the city's bond disclosures. The treasurer's Financing Services division oversees the issuance of city bonds and is responsible for ensuring the city's compliance with federal securities laws.
The FBI and U.S. Attorney's Office are also probing the city's financial practices, and the FBI is conducting a separate investigation of possible public corruption at City Hall.
Aguirre's disclosure of file destruction came on a day of major developments elsewhere in San Diego's fiscal saga:
The board of the San Diego City Employees Retirement System excluded fellow trustee Diann Shipione from a closed-session meeting, in open defiance of Aguirre's opinion last month that such an action would be illegal.
Late last year, retirement officials devised a scheme, which was never carried out, to place Shipione under citizen's arrest and call police if she refused to leave a closed session.
Shipione has drawn the ire of city officials by exposing irregularities in the pension system and city finances, triggering federal probes and drawing national attention to the city's fiscal crisis.
pension benefits granted by the city in 2002. The suit alleges that the action was illegal because at least five members of the retirement board had conflicts of interest.
The pension system deficit deepened to $1.37 billion from $1.16 billion in the 12 months ended June 30, 2004, according to a report released yesterday.
That drove the system's funded level, a measure of assets versus liabilities, down to 65.8 percent. The system was funded at 67 percent the year before and 97 percent in 2000. Pension officials put out a news release under the headline: "City of San Diego's Pension Fund Stabilizes."
Aguirre criticized the timing of Ewell's memo yesterday.
"This is like the fire engine showing up to the scene of a fire after the building's burned down. It's a little late in the game to be sending that out," said Aguirre, who added that he is investigating the destruction of the documents.
Ewell's e-mail, titled "Important Reminder," read:
"As you have been advised earlier, because of pending federal investigations, you are not to destroy, discard, alter, or delete any record or document, whether electronic, hard copy, or otherwise covered or potentially covered under any category of the subpoenas received from the SEC or U.S. Attorney's Office. Should any one have any concerns regarding what is contained within these categories, you are directed to consult with your Director. All Directors are to immediately confirm receipt of this message."
At retirement system headquarters downtown, the board ended its regular session in mid-afternoon and convened to closed session, with the press and public asked to leave the chambers.
In closed session, Shipione said, board President Frederick W. Pierce IV told her to leave. When she refused, she said Pierce told the rest of the board to reconvene in a back room, without her. She left.
The board voted last year to bar Shipione from closed session, saying she had disclosed confidential information about legal fees. Shipione said the information she gave to a retiree was general in nature and that she had done nothing wrong.
She said the board wants her out so it can pursue illegal transactions.
"This board does not care what the law is and they're going to do what they want," said Shipione, who was visibly upset upon leaving headquarters yesterday. "There's nothing I can do to prevent them from taking their illegal meetings to other venues and breaking the law."
Pierce did not return a call to discuss Shipione's exclusion.
Yesterday's lawsuit filed by the taxpayers association claims benefits granted by the city retroactively in 2002 were tied to retirement board approval of continued city underfunding of the pension system.
The suit said the arrangement violated California's conflict-of-interest laws because five pension board members, who are city employees, saw their benefits soar.
"This is a very unusual step for our organization and one we don't take lightly," Lisa Briggs, executive director of the taxpayer association, told a news conference.
Michael Conger, the lawyer who filed the lawsuit, said the 2002 arrangement was a "quid pro quo."
At the time, the retirement system's assets were falling to the point that the city would have been required to make a massive balloon payment to boost system assets. The payment was required under a 1996 agreement to underfund the system.
The balloon payment has since been estimated at $500 million – easily enough to swamp city finances.
Conger said the 2002 deal called for the 13-member retirement board to allow the city to continue underfunding the system – but in a way that wiped out the balloon payment requirement – in exchange for benefit increases.
"At least five of those pension board members had a substantial interest in those new benefits," said Conger, who called the arrangement "absolutely outrageous."
April Boling, a member of the taxpayer association board and one of the individual plaintiffs in the suit, valued the benefits at about $42 million. In addition, if a judge voided the 2002 benefits, the city would save about $2 million a year in the future, she said.
Ann Smith, lawyer for the Municipal Employees Association, said the 2002 actions were not illegal because the city's funding arrangement with the pension system was separate from the benefits agreement.
"I absolutely deny" that benefits were tied to underfunding, Pierce, the pension board president, said earlier in the day after the suit was filed.
A September report by Vinson & Elkins, a law firm representing the city in talks with the SEC, said the 2002 benefits were contingent upon the retirement board's willingness to give the city a break on pension funding. Or, as Conger put it, no break for the city, no new benefits.
The president of the Municipal Employees Association, Judie Italiano, said workers are "quite concerned" with the threatened loss of benefits. She said the 2002 benefits came out of good-faith bargaining, and that employees have adjusted their lives accordingly. "People have made plans, some people have even retired," she said.
By the time all the questionable goings-on have been investigated, half the city government is going to prison. If there's justice in the world,that is.
Wonder what a similar investigation in San Joser City Hall would turn up.
Well, that ought to do it!
The email also urged employees to "close that damned barn door".
They shoulda just called Sandy Berger...
I agree. And Murphy's back with 34% of the vote. What a city. Nothing but bad things in the future. I'm outta here.
I'd love to see it, that's for sure.
It's a target rich environment wherever libs and public funds glom together.
All municipalities but the smallest, I always thought, of necessity have backup records at remote locations for the official city records, including email.
When he's been in office for 6 months (the minimum under city law), expect a recall election. Especially if he's indicted, as I fully expect(I'm not sure whether that'll happen in the next 6 months, but we can hope).
That drove the system's funded level, a measure of assets versus liabilities, down to 65.8 percent. The system was funded at 67 percent the year before and 97 percent in 2000. Pension officials put out a news release under the headline: "City of San Diego's Pension Fund Stabilizes."
It's like saying the Titanic isn't sinking as fast as we thought.
. . . Diann Shipione . . . has some cojones based on how she's "trying" to stand up to the thiefs.Or . . . paint me cynical . . . is this article giving us the straight scoop? I'd like to hear about this mess from some San Diego FReepers before I color the lady a heroine.
I'm praying. They are all corrupt. Every last one of them. I don't know much about Aguirre...is he a good guy?
I'm not sure. I used to think he was just some litigious nutlog, and maybe he still is, but perhaps that can be harnessed for the forces of good in this case. So far he's the only one making the right kinds of noises about getting to the bottom of the rot that's seized city government. Everyone else is either under indictment, being questioned by the feds, shredding documents, hiding in the kneeholes of their desks, or saying, "what problems?". I include the news media in the last category, although there are signs that Aguirre's starting to wake them up. It's astounding how little investigative reporting has gone on in this case. It's like the media outlets in this town are nothing but transcription services who just repeat the latest pack of lies the city puts out.
(Of course, ol' Jack later landed on his sizeable feet by securing a plush job with the legalistic agents of the bond issue that the city had to float in order to build Petco Park, but that's another story.)
*IF* yes. I think the dead guy will get a pass. Everyone else shouldn't be looking toward higher office just yet.
Smells like the good old boy network of corruption and a Democrat plot to steal the city--for good, they hope. All the while they'll be pretending to save San Diego from "special interests" and inept, corrupt leadership. Nevermind they'll have lead ex-Dem & RINO Murphy right down this garden path and into the briar patch.
What we know thus far, yes. The scandal continues to grow and look even worse for the city and even more likely for (additional) indictments. Shipione seems to be getting the usual *good* whistleblower treatment meaning she'll be driven to near ruin for daring to speak up about this fiscal disaster.
It's hard to know if Aguirre is a "good guy" because he's very much a Democrat but he also seems to be a bit of a crusader and is a former federal prosecutor as well. He's not well liked by the "city leaders" who happen to be, or appear to be, neck deep in this mess. I'm not sure if Ms. Devaney had won whether there would've been additional coverups or not since she would've been coming from the City Attorney's office already.
I'm suspicious and fear some kind of triangulation which will lead to a virtual "permanent" Democrat majority and leadership in the city just like they took over other major cities in past decades, centuries. We must be very watchful, however it may be too late. I always saw Mayor Murphy as a weakling, a pawn of the Democrats.
There's definitely much, much more to come.
What exactly is the charge? Every retirement fund has lost money in investments in the last few years.
LOL. I have to preface these requests like that because I once asked a FReeper pretty much the same question and somehow he discovered all the target's PERSONAL telephone numbers, including the gal's CELLPHONE number, her personal email address, and even her physical home address . . . which, thank God, he didn't publish ANY of it on FR -- he gave them to me in a FReepmail. So, I learned then that you'd best not ask an "open-ended" question of any FReeper because we've got some of the most talented folks on the planet here . . . and they can find out most anything.
I'd just like to drop Ms. Shipione a note of thanks for fighting the good fight . . . that's all.
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