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Thursday, May 19, 2005 | The most interesting thing San Diego District Attorney Bonnie Dumanis told the press Tuesday – aside from the announcement that six more city officials are facing criminal charges – was that she began her investigation into the pension fund in June 2004.
That seemed to take everyone by surprise.
After all, the public didn’t know she was even formally paying attention to the city’s pension problems until just a couple of months ago. And investigators from the FBI and Securities and Exchange Commission had been looking into the pension system since at least February 2004. What was it that piqued Dumanis’ interest several months later in June?
Maybe it was a special meeting the retirement board held early in that month. For anyone in attendance at the public session, it may very well rank as one of the most bizarre meetings that very bizarre agency has held.
Of course, as with most issues regarding the city these days, the most notable part of the meeting was not what was said, but what was not said.
It all happened on June 7, 2004, when the board of administration of the San Diego Employees’ Retirement System was set to give final approval to a settlement with the dissident retirees who had sued it, and their lawyer Michael Conger.
As part of his argument, Conger had alleged that the board members had violated the state’s conflict-of-interest laws by approving a deal in 2002 that boosted many of their own pensions and at the same time allowed the city to continue paying less into the retirement system than it owed.
Once it appeared that all the specifics of the settlement were in order, the board called a special meeting June 7 to approve it in closed session. Before they went into closed session, however, they brought up another topic.
Reporters covering that meeting had no idea what that meant.
They weren’t the only ones in the dark, though.
The board’s own attorney, Lori Chapin said she didn’t know what it was. She said she would like a chance to review it before she recommended action on it.
Trustees Diann Shipione, Ray Garnica and Dick Vortmann – all independent members not part of the majority of city employees and dependents on the board – asked for an explanation of the measure.
All were met with a very awkward silence.
Shipione asked the other attorneys in the room – and by this time in its history, the board’s meetings attracted a cadre of dark-suited legal advocates to each meeting -whether they recommended the resolution and, if so, to explain it. They said they didn’t and couldn’t.
So all eyes went back to board president Frederick W. Pierce, IV, who, of course, remained silent except for the following statement.
“As you know, Government Code Section 1090 issues have been raised in the litigation against the system and out of an abundance of caution, I believe that the resolution in front of you is appropriate for the board,” Pierce said.
Government Code Section 1090 is what Dumanis is using to prosecute six of Pierce’s former colleagues on the board. She alleges that they illegally benefited from decisions they made while sitting with Pierce as pension trustees.
Pierce had one other thing to say to his colleagues.
“We should all keep strictly confidential any and all advice and communications we have had with lawyers in order to protect the attorney-client privilege today,” Pierce said, implying that such a breach of confidentiality would invite some kind of legal punishment.
It was a threat he, several months later, backed up with action against Shipione.
Meanwhile, despite continued queries by some members of the retirement board, the majority of its members – many of whom now await trial – sat stone faced.
In an editorial published in The San Diego Union-Tribune more than a month later, Pierce denied that the board had “abrogated” the state’s conflict of interest laws. Abrogate, for the more jargon-challenged, means to annul, repeal or disregard a law.
The resolution, Pierce wrote, “was adopted to comply with state law, not abrogate it.”
Again, confusion.
Pierce recommended “a more careful reading” of the resolution.
Turns out, a more careful reading of the resolution, in fact, does show that it was meant as a sort of report, rather than an arrogant declaration. It’s not the retirement board “abrogating” state law, it’s the City Charter, the retirement board said.
Ahhh, the City Charter, that venerable document that has served San Diegans so well over the recent past.
By forcing its employees to serve on the pension board, the argument goes, the framers of the City Charter accepted the potential that those employees may indirectly tinker with their own pensions in the process of overseeing the system.
And it didn’t matter, Pierce maintained, the board had not toyed with its members own benefits.
“The board has never once cast a vote to establish, set or expand retirement benefits … by law the board has no authority to do so.”
So, what, exactly, does the board of administration do?
“The board’s sole responsibility is to administer retirement benefits once they have been established.”
Again, that’s the board’s responsibility. Did it, by chance, do anything else?
Even the city’s own attorneys say yes.
At the very least, the board had the opportunity to veto the package of spruced up benefits that came its way in 2002. In fact, because the city needed so desperately to avoid paying off the huge debt in the retirement system at least a little longer, trustees of the retirement board had the power to demand a lot in exchange for giving the city a little breathing room.
Dumanis says they took advantage of that power and demanded something more – something from which they personally benefited. Apparently, she also disagrees with the board that the City Charter abrogated state law.
In fact, it may have been the retirement board’s bold declaration that it did that finally got Dumanis’ attention. It may be several more months or years before we know the precise motivation behind that abrogation declaration because since then, board members – even the ones not in any danger of going to jail – have strictly adhered to the laws protecting attorney client privilege.
And we wouldn’t want to break the law, now would we?
Scott Lewis, a former reporter at The San Diego Daily Transcript, is spending a short time in South Carolina. You can e-mail him at smikelewis@comcast.net with your thoughts, ideas, tips or personal stories.