CA: (San Diego) 5 current and former pension figures indicted

I'm out of the loop. Can you fill me in on this story?

The SD U-T has a link with a lot of background leading up to this announcement.

http://www.signonsandiego.com/news/metro/pension/index.html

FR has a lot of info as well, which can be accessed thru keywords like san diego.

To sum it up, bad things happened that will show some of the leadersip of san diego government culpable for mismanagement for whatever reasons.

The SEC has been investigating this for well over a year.

Oh Oh Oh Yeah! I think it's been almost 3 years they've been working on this case. I'm anxiously awaiting this. Ok... nervously, but still.

Ever notice they always wait until late on Friday afternoon to do this stuff! :P

the wheels of justice grind exceedingly slow, especially if the feds are involved. ;-)

San Diego's Pension Crisis
Pension troubles: A timeline

http://www.signonsandiego.com/news/metro/pension/pensiontimeline.html

A pension crisis marked by a growing deficit in the retirement fund has staggered San Diego city government for months. Now, six current and former members of the retirement board face felony conflict-of-interest charges brought by the district attorney. Decisions leading to the pension crisis began in the 1990s.

1993
City health-care plan posts $200 million deficit.

1994
Mayor Susan Golding inquires about one-year holiday on the city's contribution to its pension system.

1995
City Auditor Ed Ryan secures $9.3 million reduction in city pension payment, later nullified on legal grounds.

1996
City Council approves City Manager Jack McGrory's plan to increase benefits and underfund the pension system, with gradually increased payments and a safety net to guarantee financial integrity of the system.

City shifts retiree health-care costs to pension system.

2000
Financial markets tumble; pension system assets drop. Dick Murphy elected mayor.

2001-02
Pension fund plunges below the ratio of assets to liabilities set as safety net in 1996 deal. City faces massive balloon payment.

2002
Blue Ribbon Committee on City Finances warns pension system at risk.

Pension trustee Diann Shipione contends deficit will grow and warns mayor and council against continued underfunding and benefit increases.

November: Murphy and council majority approve benefit increase and new underfunding plan but do away with safety net.

2003
Retirees sue city and retirement board on underfunding. (The city has since settled.)

2004
Jan. 15: Auditor Ryan announces resignation.

Jan. 27: Two weeks later, city officials disclose reporting errors and omissions about the pension system in past bond documents. Huge bond issues for sewer upgrades and Petco Park refinancing are tabled.

Feb.: City's credit ratings fall.

Feb.: City is unable to sell bonds to borrow money for capital projects.

Feb.: The FBI in February confirms joint investigation of city finances with Securities and Exchange Commission and U.S. Attorney's Office.

March: Murphy announces tentative settlement of retiree lawsuit.

April: City Manager Michael Uberuaga resigns; his assistant, Lamont Ewell, replaces him.

June: Pension reform committee calls for new pension board and closing deficit -- now $1.15 billion – with bonds and other debt.

Sept.: Vinson & Elkins, the Washington, D.C., law firm hired to represent city in talks with the SEC, finds widespread accounting irregularities (details) but no wrongdoing.

Sept.: Standard & Poor's suspends San Diego credit rating.

Sept. 7: The New York Times refers to San Diego as "Enron by the Sea," a term consistently repeated in national news media.

Oct.: The auditing firm KPMG expresses doubts over Vinson & Elkins' report and warns city officials it cannot complete long-overdue audits until the city investigates whether illegal acts have been committed.

Oct.: San Diego city voters approve ballot propositions in November to restructure pension board and close pension deficit within 15 years.

Dec.: Murphy takes the oath of office for a second term in December. Following the disputed election, courts rule thousands of write-in ballots cast for Councilwoman Donna Frye are invalid.

Dec.: City Manager Ewell says financial concerns will force an indefinite delay in capital projects, including water and sewer improvements.

2005
Jan.: New City Attorney Michael Aguirre, conducting his own investigation into city finances, issues reports suggesting Murphy and other city officials covered up the city's problems and might have committed civil violations of securities laws.

Feb.: Murphy and the City Council make contract offers to the city's four unions that call for two-year pay and benefit freezes and reduced pension benefits for new hires. Murphy says the proposal would cut the pension deficit by $600 million in two years.

March: District Attorney Bonnie Dumanis' office launches a criminal investigation into the city's pension system and its 13-member board of trustees.

April: City pension system deficit grows to at least $1.4 billion, although Aguirre says it could be $1.7 billion.

April 17: Time magazine declares Murphy one of the three worst big-city mayors in the United States. (Time article – scroll down or do a CTRL-F text search for "Murphy")

April: Long-festering speculation about a recall effort against Murphy or his possible resignation picks up momentum.

April 25: Murphy announces that he will resign July 15, seven months into his second term as mayor.

May 13: Terri Webster, the city's former acting auditor, is placed on administrative leave for failing to turn over documents subpoenaed by federal investigators.

May 16: Former Deputy City Manager Patricia Frazier, former Treasurer Mary Vattimo and Human Resources Director Cathy Lexin resign. All were involved with the pension system and city finances.

May 17: Bonnie Dumanis announces that felony conflict-of-interest charges (2, 3) have been filed against Webster; Vattimo; Lexin; Ron Saathoff, a fire captain and president of the firefighters union; John Torres, vice president of a city employees union; and Sharon Wilkinson, a city management analyst. Torres is a retirement board trustee. The others are past trustees.

May 25: The law firm Luce, Forward, Hamilton & Scripps makes public a report concluding that San Diego's pension board probably violated California's conflict of interest law in 1996 and 2002 by green lighting the pension underfunding plan in exchange for employee benefit increases.

May 27: Fitch Ratings downgrades San Diego's credit rating – the third such downgrade in 15 months.

June 9: Councilman Scott Peters warns the pension board that if members continue to refuse to hand over documents demanded by investigators, the board may be taken over. The pension board refused to turn over documents since a May 20 meeting when Mayor Dick Murphy and other officials urged them to waive attorney-client privelege. An additional deadline was given, and by July 5 the pension board still had not complied.

June 10: A federal grand jury subpoenas documents pertaining to the payment histories of five workers who played varying roles in pension-fund decisions that have contributed to a liability of at least $1.4 billion and prompted probes into possible corruption, securities violations and conflicts of interest.

June 20: Not-guilty pleas are entered by the six current and former pension board members who were indicted on criminal conflict-of-interest charges.

July 7: City Attorney Michael Aguirre files suit against eight officials he alleges had economic conflicts in developing pension system plans in 1996 and 2002. Aguirre's suit also seeks a rollback in pension benefits, and asks that Aguirre be named legal trustee of the pension system.

July 11: The pension system's assistant administrator, Paul Barnett, 52, dies of heart failure at his San Diego home. Pension consultant Rick Roeder says he believes the stress of dealing with multiple pension problems, along with the intense media coverage, was a contributing factor. "I have very little doubt," Roeder said. "He took this stuff very hard."

July 12: Pension board member Thomas E. King resigns, stating that the board has been "fatally compromised" by the "highly charged conditions" of the pension fallout.

July 14: Pension board members Susan Snow and Robert Wallace resign, citing the threat of lawsuits.

July 20: Pension board member Thomas Page, former chairman of Enova and San Diego Gas & Electric, resigns, citing both personal reasons and "the unsupportive political/legal environment that surrounds this activity."

July 25: Aguirre starts investigation into whether Mayor Dick Murphy had "an unlawful quid pro quo relationship" with the S.D. firefighters' union in which he agreed to torpedo recommendations by the city's pension reform committee in return for political backing from the union.

July 30: San Diego's pension system sues the city in hopes a judge will decide once and for all whether disputed employee benefits are legal.

Aug. 2: The law firm Vinson & Elkins releases a report concluding there is insufficient evidence of intentional wrongdoing on the part of city employees. The report is quickly disputed by City Attorney Michael Aguirre, leading to conflict between Aguirre and City Manager Lamont Ewell.

Aug. 8: Deputy Mayor Toni Atkins announces four appointments to the 13-member board that governs the San Diego City Employees' Retirement System: taxpayer advocate Richard Rider, former trustee and pension whistleblower Diann Shipione, private practice attorney Ezekiel Cortez and corporate accountant Thomas Hebrank.

Aug. 9: Lawyers for six past and present members of the San Diego pension board charged with violating conflict-of-interest laws counterattack, arguing in court papers that the charges were legally insufficient and should be dismissed.

Aug. 10: Concerned over the loss of pension benefits, the police union files a federal lawsuit demanding millions of dollars from the city in damages and the removal from office of City Attorney Michael Aguirre.

Aug. 16/17: Aguirre releases his plan for a settlement with the Securities and Exchange Commission, which he says will lead to the city's financial recovery.

Aug. 29: A San Diego judge denies a request to dismiss conflict-of-interest charges against the six current and former pension board members.

Sept. 7: A motion to remove pension president Peter Preovolos stalls on a 3-3 City Council vote.

Sept. 8: City Manager Lamont Ewell withholds $1 million from a Houston-based law firm hired to investigate the pension board's securities violations because it failed to review 57,000 potentially relevant documents.

Sept. 10: The city releases a report listing possible pension solutions including bonds and the sale of city-owned land. The report is subsequently approved by the City Council.

Sept. 13: Attorney James T. Waring appointed to the city's pension board.

Sept. 17: Private audits find that San Diego overstated its assets by over $640 million in fiscal 2002.

Sept. 18: A Union-Tribune report uncovers serious flaws in San Diego's inventory of real-estate assets, the sale of which is being considered as a remedy to pension underfunding.

Sept. 20: Aguirre releases a proposed consent decree urging the City Council to approve to settle the Securities and Exchange Commission's investigation into city finances.

Sept. 22: Independent auditors uncover 29 specific accounting problems with the San Diego pension system.

Sept. 23: Aguirre files a lawsuit to partially revoke pension benefits for former mayor Dick Murphy and two convicted ex-councilmen.

Oct. 1: San Diego judge S. Charles Wickersham dismisses Aguirre's lawsuit contending that pension board members' conflicts of interest should invalidate their votes for pension benefit increases in 1996 and 2002.

Oct. 4: Among thousands of documents released in response to Public Records Act requests is a March 5, 2003 letter from private attorneys concluding the pension board "breached their fiduciary duty." Another document – a 2003 email from pension administrator Lawrence Grissom – sums up the situation with "greed happened." Deputy Mayor Toni Atkins calls on three pension officials to resign, while City Attorney Michael Aguirre announces his intention to file new lawsuits against the leaders of the city's employment unions, retirement board members and other city officials.

Oct. 10: The state legislature passes a law allowing the San Diego Unified Port District to separate its pension plan from the city of San Diego.

Oct. 14: Governor Arnold Schwarzenegger suggests that if San Diego declares municipal bankruptcy, it would force his ill-fated move to overhaul public pension systems back on the public agenda.

Oct. 18: The City Council rejects a settlement proposal that would have transfered an estimated $150 million worth of land holdings to the pension fund.

Oct. 18: City fingerprint examiner John A. Torres, a member of the pension board since 1995, resigns citing "crushing personal and financial burdens." Torres is one of six former board members facing conflict-of-interest charges.

Oct. 25: Consultants hired to analyze San Diego's finances tell city officials their work will take until at least mid-March to complete, three months later than estimated.

Oct. 31: The City Council names Jim Hearty, a Del Mar resident who served 12 years on a state employee pension board in Massachusetts, to the pension board.

Nov. 3: U.S. District Court Judge Marilyn Huff dismisses several claims in a lawsuit filed by the San Diego Police Officers' Association alleging city officials failed to properly fund the retirement fund.

Nov. 11: Federal investigators subpoena the payment records of James Chapin, a former deputy city attorney.

Nov. 23: The U.S. Attorney's Office subpoenas documents, including drafts and the final version, of a presidential benefit for fire Capt. Ron Saathoff, president of San Diego Firefighters Local 145 and a former pension board member.

Nov. 28-30: Prosecutors with the District Attorney's Office begin to publicly lay out their case against six former board members of the San Diego City Employees' Retirement System. The preliminary hearing includes grueling, often tedious cross-examination of whistle-blower Diann Shipione. Also questioned is San Diego police Officer Thomas Rhodes, who joined Shipione in voting against the 2002 agreement that led to the pension crisis.

Dec. 1: The city of San Diego files a $100 million lawsuit against four firms that were hired to provide advice and work on bond offerings now under federal investigation.

San Diego's Pension Crisis: Archive

http://www.signonsandiego.com/news/metro/pension/archive.html

Thanks.

Next time could you please be more thorough?

I wish I could take ya thru it, hopefully the indictments to be handed out will allow ya to get up to speed real quick.

I and a few others spent quite a bit of time posting threads on it for awhile, but won't even pretend to be expert on it for that reason alone. :)

Conflict of interest charges agianst pension board member will likely be the main thrust of the indictments. whether conspiracy charges also come into play will be divulged shortly.

Hey, it's FRiday and there's a FReepathon going on, don;tcha know, so cut me some slack. lol ;-)

btw, thanks for bumping , it reminds me I have a case of SamAdams 2005 assortment brew pack that I should toss in the FRidge for the playoffs. :)

an update on the teaser article.. 20 indictments

still waiting for list..

SAN DIEGO – A federal grand jury returns 20 indictments in the pension fund case Friday afternoon. Its details are being announced at 2 p.m.

San Diego's pension crisis: Key players
http://www.signonsandiego.com/news/metro/pension/pensionplayers.html

From http://www.nbcsandiego.com/news/5892373/detail.html

We have a WEINER! Well, 5 of them so far....

Feds Indict Pension Officials For Fraud, Conspiracy

POSTED: 1:55 pm PST January 6, 2006
UPDATED: 2:12 pm PST January 6, 2006

SAN DIEGO -- Federal prosecutors announced Friday that a grand jury has indicted one current and four former San Diego city pension officials for fraud and conspiracy.

The indictments named several officials who were already charged with felony violations in May by San Diego County District Attorney Bonnie Dumanis .

The former officials named in the indictment include:

Cathy Lexin
Ronald Saathoff
and Terri Webster
Lawrence Grissom
Loraine Chapin

Refresh this story for more information on this developing story.

I wonder where the rest are.....

BTTT

Thanks!

probably multiple charges involved

May 17, 2005

May 17: Bonnie Dumanis announces that felony conflict-of-interest charges (2, 3) have been filed against Webster; Vattimo; Lexin; Ron Saathoff, a fire captain and president of the firefighters union; John Torres, vice president of a city employees union; and Sharon Wilkinson, a city management analyst. Torres is a retirement board trustee. The others are past trustees.

Looks like Grissom and Chapin are the new add-ons to ones already charged last year.

FRom SD U-T

Five indicted: Ron Saathoff, Cathy Lexin, Terri Webster, Larry Grissom, Loraine Chapin

Updating thread with article with specifics

SAN DIEGO – Four former top officials in San Diego's city pension system and the system's lawyer were charged with wire fraud, mail fraud and conspiracy to commit wire and mail fraud in a 20-count indictment issued by a federal grand jury Friday afternoon.

U.S. Attorney Carol Lam announced the charges against former San Diego City Employees' Retirement System Trustees Ronald Saathoff, Cathy Lexin and Teresa Webster; and the system's former Administrator Lawrence Grissom and its current General Counsel Loraine Chapin.

"The defendants had a duty to act in the best interest of the city retirement system," Lam said. "They breached that duty by engaging in self-dealing, ignoring conflicts of interest, and exploiting their positions to the detriment of the retirement system."

Federal prosecutors contend that fellow trustees were deceived by the defendants, who concealed material information about the pension plan, including the fact that Saathoff would receive an increase in his yearly retirement of more than $25,000 if the SDCERS board enacted a controversial measure known as Manager's Proposal 2.

The criminal charges are at least the initial results of the U.S. Attorney's Office yearlong investigation into San Diego's underfunded pension system, a scandal that has shaken city government and left its finances a shamble.

The federal investigation focused on Manager's Proposal 2, the 2002 deal in which pension board members allowed the city to continue underfunding SDCERS – something the city had been doing since 1996 – in exchange for granting increased benefits to employees.

The pension board approved the plan in November 2002 and the City Council approved it three days later.

The agreement enabled the city to avoid making a balloon payment of as much as $100 million – an amount that would have been a huge chunk of the city's annual general fund.

Federal prosecutors said that to encourage board members to support the proposal, Lexin, Webster, Grissom and Chapin helped design and implement the "presidential leave retirement benefit," a clause that would increase Saathoff's benefit by more than $25,000 per year. He would get the increase only if the pension board voted to adopt the proposal.

Saathoff made the motion that ultimately put the proposal into effect.

The retirement system's deficit is estimated to be at least $1.4 billion, largely because of the underfunding, benefit increases and stock-market losses from 2000 to 2002.

Lexin, Saathoff and Webster and three other pension figures already are being prosecuted on state conflict-of-interest charges by the county District Attorney's Office.

The city's finances also are the subject of continuing investigations by the Securities and Exchange Commission and the FBI.

Grissom and Chapin were identified as targets of the federal investigation last month, when the pension board approved a plan to indemnify, or compensate, the two for any legal expenses they may incur as a result of their jobs.

Grissom retired at the end of December, but still consults for the pension system until it hires a permanent replacement.

Failure to disclose
Federal investigations into city finances, allegations of securities fraud and possible public corruption began in 2004 in the wake of the city auditor's sudden resignation. The pension fund's deficit was not disclosed in documents related to bond issues until 2004.

In the county criminal case, six current and former members of the pension board are accused of violating state conflict-of-interest laws in 2002. Defense lawyers are scheduled to begin presenting their evidence in the lengthy preliminary hearing in the case when it resumes Monday.

County prosecutors contend the six defendants benefited because they received heftier retirement packages after they approved the underfunding. The deal also carved out special benefits tailored for two pension board members.

A key element of that case is whether there was a link between the underfunding and the benefit enhancements, a quid pro quo arrangement.

Defense attorneys have argued the two actions were not connected and that their clients had no financial interests at stake.

Scandal's impact
The pension crisis has been disastrous for the city's already shaky budget, accounting for millions of dollars in bills for outside legal services, internal inquiries and audits.

The accounting firm KPMG has yet to sign off on the city's 2003 financial statements, the city's credit ratings have been in a dive for almost two year and its ability to borrow money has been severely curtailed.

The pension scandal also has changed the political landscape of the city.

Just days after being branded one of the nation's worst big-city mayors in April 2005 by Time magazine, Mayor Dick Murphy announced he would resign from office, saying San Diego needed a fresh start. He resigned in July and has been replaced by Jerry Sanders, the former police chief who took office last month.

City Attorney Michael Aguirre has made investigating the fiscal scandal a central theme of his first year in office, and has released seven interim reports on the city's pension problems.