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California Supreme Court throws out pension charges against 5 ex-retirement board members in San Diego

January 25, 2010 |  1:46 pm

The California Supreme Court today threw out criminal charges filed by the San Diego County district attorney against five former members of the city retirement board stemming from the city's pension controversy.

The court, however, allowed conflict-of-interest charges to remain against the firefighters union president because of his alleged role in tailoring a pension boost for himself in 2002.

But the other five, all of whom were city employees, had no such conflict-of-interest because the pension boosts were also enjoyed by other employees, the court ruled.

The decision is the latest sign that the court cases stemming from the city's pension woes are being quietly resolved.

The Securities and Exchange Commission is moving to settle civil charges against former city officials, according to court documents. Those charges began with the fact that the city failed to tell Wall Street of the growing pension shortfall in its prospective bond offerings. A judge in the SEC case has already ruled that there was no fraud, undercutting the SEC complaint.

Criminal charges filed by the U.S. attorney's office in San Diego against some of the same officials are in abeyance while the U.S. Supreme Court, in an unrelated case, rules on whether prosecutors nationwide have been overly zealous in using the so-called "honest services" statute in filing charges against public officials.

Dist. Atty. Bonnie Dumanis filed three felony charges against the six in May 2005 amid a civic drumbeat -- led by the editorial page of the San Diego Union-Tribune and City Atty. Michael Aguirre -- that the city's pension deficit was the result of possible criminality by city officials and labor union leaders. Aguirre, a political rival of Dumanis, has since been voted out of office.

No trial date has been set for firefighters union President Ron Saathoff on the state charge.

Like many public agencies, the San Diego government increased pensions at a time of a rising stock market and growing political power by labor unions. When the market plummeted, the pension fund was depleted and the city now faces a growing budget gap, requiring cutbacks in city services and hard-bargaining with the unions.

Orange County lawyer Nick Hanna, who represented Cathy Lexin, the city's former human resources director, called the 65-page decision by the California Supreme Court "a total vindication." Lexin had been ordered to sit on the retirement board by the city manager, Hanna said.

The court decision, Hanna noted, holds that no laws were broken.

"This isn't a technicality," Hanna said. "Cathy is happy this case has come to an end. She lost her job, her career, her reputation was dragged through the mud. Where do you go to get your reputation back?"

The pension controversy has dominated local politics for several years. Major reforms have been instituted in the pension system; Mayor Dick Murphy resigned in July 2005 amid accusations that he was he slow to respond to the deficit.

“We respect today’s decision by the California Supreme Court,” Dumanis said in a statement.  “We will continue to aggressively pursue conflict-of-interest matters within our community, as honest and open government are essential qualities which must be vigilantly maintained.”

-- Tony Perry in San Diego

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