Wednesday, November 30, 2005 | The Pension Trial
Defense lawyers took aim Tuesday at the whistleblower who first accused six former city of San Diego pension officials now facing criminal charges of entering into a possibly corrupt agreement in 2002.
Whereas prosecutors gave pension whistleblower Diann Shipione the opportunity on Monday to present herself as the independent and responsible trustee, attorneys for the accused pension board members worked diligently, sometimes to the presiding judge’s objections, to portray her as incredulous and out of her league.
Shipione is best known for speaking out against Manager’s Proposal 2, a 2002 pension pact that freed the city from a large pension payment and concurrently gave city employees richer pension benefits. Its passage by the pension board and the City Council has led to myriad legal and financial problems for the city and the pension plan, including the district attorney’s conflict-of-interest case that completed its second day on Tuesday.
Six former city of San Diego pension officials are charged with felony violations of the state’s conflict-of-interest law for votes they took to approve the deal. Prosecutors say that when the pension board members voted to alleviate the city of a balloon payment to the pension system, they in essence voted to give their personal pensions a substantial boost because the two deals were conspicuously tied.
Although she is lauded by candidates for public office and has been nominated repeatedly to rejoin the board overseeing the embattled San Diego City Employees’ Retirement System, Shipione’s relationship with her pension board colleagues – many of whom were rolling their eyes to her wavering answers in court Tuesday – was contentious and often hostile.
In the years after voicing her suspicions, Shipione was internally criticized, publicly mocked and almost placed under citizen’s arrest by her pension colleagues while she openly accused board members of being corrupt.
Six former pension officials stand accused of voting on contracts that benefited them financially. They are: John Torres, vice president of the Municipal Employees Association; Ron Saathoff, president of City Firefighters Local 145; Sharon Wilkinson, a management analyst for the city; former Treasurer Mary Vattimo; former Assistant Auditor Terri Webster; and former Human Resources Director Cathy Lexin.
Defense attorneys sharpened their sticks against Shipione on Tuesday, poking at the credibility of a witness prosecutor Stephen Robinson bills as someone who asked the right questions about Manager’s Proposal 2 and then making the appropriate choice to vote against it.
The six defense lawyers homed in on whether Shipione had the credentials to challenge fiduciary law experts who advised trustees the agreement was sound, attacked her attendance record at SDCERS board meetings as “poor,” and declared frustration with Shipione’s nuanced and sometimes non-responsive answers several times throughout their cross-examination.
They also didn’t mind striking low, such as when a question from defense attorney Bob Rose led to Shipione admitting while on the witness stand that she had been previously convicted of theft. Shipione, vice president of investments at a financial house, declined an interview request after Superior Court Judge Frederic Link’s court adjourned for the day.
Several attorneys also asked Shipione, who stated Tuesday that she attended the University of Arizona but never graduated, why she was knowledgeable enough about fiduciary law to contest the legal advice of an expert in the field.
Shipione said a trustee’s fiduciary duty was to look after the fiscal soundness of a trust fund and that she had questions about Bob Blum, the fiduciary counsel hired by SDCERS, well before the board’s final vote. She even asked him how much malpractice insurance he carried.
Defense attorneys on Tuesday said Blum helped shape the final version of Manager’s Proposal 2. Pension actuary Rick Roeder, who is expected to testify this week, said in an interview last month that Blum also authored the letter signed by Roeder approving the soundness of the deal.
Shipione also fielded questions about husband, attorney Pat Shea, and Mike Aguirre, a one-time litigious citizen who threatened to sue SDCERS over the 2002 deal. The defense attorneys implied that both played roles in her actions as a trustee. Shipione and Shea are now informal advisors for Aguirre, San Diego’s current city attorney.
When responding to questions about the outside influence, Shipione told the court that she understood her role as a trustee and that she authored all of the letters sent in her name.
Attorneys asked her about her knowledge of the linked labor deals or whether she knew that the former trustees being charged worked for the city. They hinted, sometimes at Link’s objections, that Shipione was inattentive to her board colleagues and the advice she was receiving from board colleagues, staff and outside advisers.
She acknowledged that she had been asked in her first couple of years by some trustees to attend more SDCERS board meetings, but that she had attended “many meetings” already. Her concerns were with the soundness of the retirement fund, not about her colleagues’ jobs, she said.
“It’s always been about funding, or underfunding as the case may be,” she said. “That in itself is a full-time job.”
Robinson, the prosecutor, will call another witness Wednesday when the preliminary hearings for the case resume.
The proceedings are expected to last three to eight weeks. At that point, the judge will decide if the charges brought by District Attorney Bonnie Dumanis warrant a full jury trail.
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