Tuesday, February 06, 2007 | By ANDREW DONOHUE

It was nearly a normal day in San Diego politics Friday. A businessman running for mayor released a detailed financial plan. An environmentalist running for mayor touted an idea to make the town the leader in solar energy.

Sure, wealthy businessman Steve Francis delivered his financial recovery plan to the backdrop of a massive crater that in better days was a functioning city street, and the ubiquitous San Diego sun didn’t pop out for Councilwoman Donna Frye’s plan to attract the budding solar industry. But Friday had the feel of a rare tranquil day in the city’s political realm.

Then federal investigators dropped a friendly reminder of the civic chaos that engulfs the nation’s seventh largest city: subpoenas arrived at City Hall seeking payroll and pension benefit data for seven current and former city officials and their spouses.

As part of an ongoing investigation into possible political corruption, the U.S. Attorney’s Office and FBI requested Friday documents and communications concerning salaries and benefits for the following officials and their spouses: Bruce Herring, deputy city manager; Ed Ryan, the former auditor who retired abruptly last year; Ron Saathoff, president of the Local 145 firefighters’ union; Terri Webster, former assistant auditor; and Cathy Lexin, former director of human resources.

Saathoff, Webster and Lexin were charged last month by the District Attorney’s Office on allegations they personally benefited from votes made as board members of the city’s troubled pension system.

Webster was placed on administrative leave from the city last month on allegations she failed to comply with subpoenas, while Lexin resigned a day before charges were filed.

Saathoff has been on leave as a fire captain to serve as union president for two decades. Ryan retired suddenly in early 2004 after it was determined that the city had understated the size of its pension deficit in financial disclosures to potential investors. 

Also named specifically in the subpoena are city employees Russell Webster, husband of Terri Webster, and Madison Wiggins, Lexin’s husband. Russell Webster works in the city’s development services department, while Wiggins works in real estate assets.

The subpoena was served upon retirement administrator Larry Grissom, assistant retirement administrator Paul Barnett, and attorneys Roxanne Parks and Lori Chapin.

The U.S. Attorney’s probe is in its 16th month now, as is a parallel investigation into errors and omissions in the city’s financial disclosures to investors by the Securities and Exchange Commission. The city attorney and district attorney each have ongoing investigations.

A good deal of the subpoenas seek information surrounding pension deals made between the city, pension boards and labor unions in 1996 and 2002, as well as the city’s financial condition and bond disclosures.

“Now [investigators] are digging in deep to the very precise detail of who got what,” said City Attorney Mike Aguirre. “Every week they ask for documents, they receive documents, and they reflect greatly on them and ask for more documents.”

Specifically, the subpoena received Friday asks for documents and communications pertaining to each individual’s wages and benefits, including W-2 forms, payroll data, direct deposit documents, pay stubs, and data relating to the Deferred Retirement Option Program, or DROP. The last is a retirement benefit that allows employees to accrue their retirement pay for five years in an interest-earning account while still working.

Before news of the new subpoena broke, Francis — founder of AMN Healthcare Inc. — proposed a plan for “restoring trust in San Diego.”

The plan focused on five key topics: challenging the legality of city employee pension benefits granted in 1996 and 2002, trimming City Council budgets by 20 percent, performance audits of every department, no new taxes and no bankruptcy.

He called bankruptcy a failure and repeatedly stressed that he would bring a businessman’s approach to the mayor’s office.

For her part, Frye assembled with a group of solar energy folks at a local condominium development on Mission Gorge Road. The condos, by KD Development, are powered almost entirely by solar energy panels on site.

She proposed attracting the burgeoning solar energy industry — which is growing at a pace of about 30 percent a year according to one industry official at the press conference — to San Diego as an economic engine.

Such a move would not only ensure clean electricity and a cleaner environment, Frye said, but would also attract jobs and corporate headquarters.

Please contact Andrew Donohue directly at

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