Tuesday, December 06, 2005 | Prosecutors and attorneys representing defendants and witnesses in the district attorney’s conflict-of-interest case against six former pension officials spent the bulk of Monday’s hearing sparring over how the criminal suit should be handled in light of the Justice Department’s coinciding investigation.

Six witnesses called to testify in the case Tuesday asserted their Fifth Amendment right, which allows an individual to avoid testifying. Witnesses may plead the Fifth Amendment to prevent information they give from being used in a criminal complaint against them.

Lawyers for the witnesses called on Monday said the federal probes left their clients vulnerable to accusations themselves if they testified.

District Attorney Bonnie Dumanis alleges that six former pension officials voted to allow the city to forgo a lump-sum payment into the pension system in exchange for enhancements to their future personal retirement accounts. The U.S. Attorney’s Office and FBI are conducting investigations into the deal as well, although no federal criminal charges have been filed.

The first four days of the preliminary hearings were filled with long-awaited testimony from three former pension officials skeptical of the pension of the deal; Monday was spent dealing the federal probes’ influence over the state court case.

Attorneys for witnesses said they worried their clients could be snared by a wide-ranging law known as “honest services fraud” that is often used in federal political corruption cases. It is a blanket law used in corruption cases. Charges can be brought against any government employee who is thought to have deprived the public of honest services.

“It’s the mechanism the federal government uses to prosecute individuals who are exercising good judgment,” said Benjamin Coleman, an attorney representing witness David Crow, a pension trustee in 2002. Crow, a retired police officer who sat on the SDCERS board from 1998 to 2005, is not being charged by the district attorney.

Former City Manager Michael Uberuaga, SDCERS attorney Lori Chapin, former city Auditor Ed Ryan, and former pension trustees John Casey and Ray Garnica also pled the Fifth on Monday.

The district attorney granted immunity to Crow, and Superior Court Judge Frederic Link assured him that a 1966 Supreme Court case prevented his testimony in the state case from being used to substantiate a federal criminal charge against him.

The Justice Department’s concurrent investigation into the city’s controversial pension dealings has required some of the witnesses called Monday to testify in front of a grand jury. The witnesses would be vulnerable to even the perception of perjury if their testimony in Superior Court did not line up with what they told a grand jury, their attorneys said.

The presence of FBI agents in court during the preliminary hearings only confirms that the Justice Department is keeping a close eye on these proceedings, Link said.

“I don’t want to put the witnesses in that type of quandary,” the judge said.

Attorneys representing the case’s defendants have argued since the preliminary hearings began last week that the District Attorney’s Office has an unfair advantage in the case because a lawyer in the office has been lent to the U.S. Attorney’s Office for the federal government’s probe.

Prosecutor Stephen Robinson assured the presiding judge that an “ethical wall” had been constructed in the District Attorney’s Office, thereby separating the lawyers working on the district attorney’s case from the deputy district attorney who is being lent out to the U.S. Attorney’s Office.

Link effectively struck down a motion filed last week on behalf of the defendants to turn over any grand jury transcripts and exhibits that the District Attorney’s Office has obtained because of the deputy’s involvement in the federal probe. Robinson said his office received no additional materials from federal investigators.

The actual testimony heard Monday proved to be the most nuanced yet. Prosecutors attempted to have Crow verify his previous statements to a grand jury testimony that the 2002 deal appeared to have been the product of “backroom deals,” and that some trustees had “voted with their wallets.”

But defense attorneys said transcripts show he told the grand jury in a later interview that assessments of that nature were inaccurate.

While backing away from claims that impropriety had occurred during the approval process of the 2002 deal, known as Manager’s Proposal 2, Crow maintained that he questioned the soundness of the proposal.

“I was concerned about the cost of it. Maybe it wasn’t the best deal for the city or the system,” Crow said. “A few people were a little bit more adamant of the proposal than I was.”

Under Manager’s Proposal 2, the SDCERS board allowed the city to bypass a requirement established in 1996 to ensure that pension plan was funded at a certain level. The district attorney is arguing that the modifications made under Manager’s Proposal 2 were detrimental to the soundness of the fund, and that trustees who were also enrolled in the pension plan approved the underfunding because it made effective a significant boost to their retirement benefits.

The ratio of the pension plan’s assets to how much it owes current and future retirees is 66 percent, and annual payments into the retirement fund have placed a considerable strain on the city’s say-to-day budget. Employees are also contributing more of their own paycheck to the fund.

The six defendants in the district attorney’s case are former Assistant Auditor Terri Webster, former Human Resources Director Cathy Lexin, former Treasurer Mary Vattimo, city management analyst Sharon Wilkinson, Municipal Employees Association Vice President John Torres and City Firefighters Local 145 President Ron Saathoff.

Please contact Evan McLaughlin directly at

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