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Loophole allows officials convicted of public corruption to keep hefty pensions

May 31, 2011 |  8:24 am


When former Vernon city administrator Bruce Malkenhorst was convicted of misappropriating public funds last week, the gap between two sets of numbers immediately jumped out.

The $100,000 in fines and restitution that Malkenhorst was ordered to pay for his crime. And the $500,000 a year state pension that he got after retiring five years ago from the industrial city.

The 76-year-old former public official had one thing going for him: He wasn’t elected to his position. Had Malkenhorst been, it’s very likely that his state pension would have disappeared.

“The law states that pensions are revoked if an elected official is convicted of a felony, but not in the case of an employee,” said Brad Pacheco, a spokesman for CalPERS. Malkenhorst “would continue to receive his pension according to the law.”

The issue of the public pensions of those convicted or charged of felonies came to the head after a massive salary scandal broke out last summer in the city of Bell, one of Vernon’s neighbors in Southeast Los Angeles County. The Times revealed that city administrator Robert Rizzo made about $800,000 a year, and that his total compensation swelled to about $1.5 million with other benefits.

As a result, state Sen. Tony Strickland (R-Moorpark) proposed a bill that would strip the pension benefits of a public official if they are convicted of misusing public funds. The bill, SB115, died in a state Senate committee this month, with two Republicans voting for it and three Democrats against.

The bill drew the opposition of various employee groups, including the AFL-CIO, the California Professional Firefighters and the California State Employees Assn. They and the lawmakers who voted against the bill argued that it discriminated against public employees relative to private employees and said such a law would really harm “innocent spouse and family of the convicted officer who will lose their financial security.”

Strickland said he was “shocked” that the bill was killed.

“State law affects judges and elected officials, but not people like Rizzo,” he said. “The argument about the family is a weak argument that can apply to any person convicted of a crime. Families are always affected when you talk about criminals.”

When Malkenhorst stepped down in 2005 amid a criminal investigation by county prosecutors, Malkenhorst was making about $912,000. Now he collects the highest public pension in California: $509,664.

Rizzo was on schedule to collect $600,000 through CalPERS, though a “supplemental pension” he designed for himself and other Bell officials could have pushed his pension to $1 million.

Rizzo’s potential pension in particular fed into the heated issue of public employee questions, and concerns that the rising costs of them as well as retiree healthcare could overwhelm the ability of taxpayers to fund many basic health, welfare and public safety services.

But unlike Malkenhorst, Rizzo's pension is threatened by allegations that he got his high salary fraudulently.


Indicted Vernon official collecting $500,000 annual pension

California public records: A guide to your rights as a citizen

State attorney general probes more high salaries across California

-- Hector Becerra

Photo: Robert Rizzo in court. Credit: Irfan Khan / Los Angeles Times