Tuesday, February 06, 2007 | And They’re Off

County Supervisor Ron Roberts has his first official challenger to his re-election campaign as the representative of the county’s District 4.

Richard Barrera, the public policy director for the Service Employees International Union Local 434B, formally declared his candidacy today for Roberts’ seat and will have a news conference Saturday to promote it. The primary election is in June.

District 4 encompasses much of the urban core of the city of San Diego.

Roberts, an architect by trade, was elected to the Board of Supervisors in 1994 after first serving as a member of the San Diego City Council.

— SCOTT LEWIS

Ladies and Gents, Your New Mayor

Jerry Sanders will be sworn in as San Diego’s 34th mayor Monday at 2 p.m.

When next week’s council hearing begins, the Nov. 8 election results will be certified and the former police chief will officially assume office. A brief inaugural address will follow in council chambers, an aide said.

A more substantive speech will follow in January with Sanders gives the annual State of the City address.

He will oversee council meetings until the switch to a strong-mayor form of government is official on Jan. 3. At that point, the mayor will be removed as a voting member of the legislative body and essentially become the leader of the city’s executive branch.

Council meetings are scheduled for Monday and Tuesday next week and then the council is slated to take a nice long holiday break until the New Year. However, there is talk of a special hearing on Dec. 12 to straighten out budget and deadline issues with Kroll, Inc.

The company serves as the city’s audit committee and is investigating allegations of wrongdoing at City Hall.

Council meetings are held downtown on the 12th floor of the City Administration Building at 202 C. St.

— ANDREW DONOHUE

Pension Benefit Suit Reinstated

A judge said Friday that he has changed his mind about dismissing a case aimed at eight former and current employees of the city and its retirement system after City Attorney Mike Aguirre promised to prove that the defendants received new benefits above and beyond what was given to all city workers.

The complaint, which alleges the eight individuals charged in the case unlawfully benefited from deals struck in 1996 and 2002 to underfund the retirement system, was thrown out in September by Superior Court Judge Charles Wickersham. The judge initially ruled that the Political Reform Act, the state law governing the case, does not make it illegal for officials to set their own salaries or pensions.

In an amended form of the civil complaint, Aguirre said that firefighters union President Ron Saathoff and former Assistant Auditor Terri Webster won benefits exclusive to them in the underfunding deals they allegedly helped enact. Saathoff improperly profited from a benefit exclusive to union presidents that allowed him to use his city and union wages toward his pension, and Webster was exempted from a provision that capped the total an employ can receive annually, the complaint alleges.

The defense attorneys in attendance argued that the city attorney did not identify exclusive benefits for the other defendants in the amended complaint. Aguirre pledged Friday that he would quickly identify extra benefits given to the remaining six defendants.

The other defendants in the case are former Human Resources Manager Cathy Lexin, white-collar union vice president John Torres, former Deputy City Manager Bruce Herring, retirement system administrator Larry Grissom, retirement system attorney Lori Chapin, and city management analyst Sharon Wilkinson.

Aguirre is using the suit to prove that benefit enhancements granted in 1996 and 2002 are illegal and void. The benefits are the most high profile of the city’s financial burdens.

— EVAN McLAUGHLIN

Tidbits From the Pension Hearings

Former pension trustee Dick Vortmann said Thursday that he never received any pressure from pension officials to vote in favor of the deal at the heart of the district attorney’s case against six former trustees. However, he said he did get pressure from one place: the Mayor’s Office.

Vortmann said Dennis Gibson, then a policy advisor to former Mayor Dick Murphy, contacted him while the pension board was considering the controversial pension pact and sought his support.

Murphy eventually bowed out, stepping down from office earlier this year under the weight of the city’s many problems.

Former City Manager Michael Uberuaga bowed out about a year before Murphy over concerns surrounding the veracity of the city’s public financial disclosures and the pension furor.

Prosecutors in the pension case said Thursday that Uberuaga has been brought back from his current home in Idaho to testify Tuesday.

However, it is expected he, like other upcoming witnesses, will invoke his constitutional right not to testify because of the ongoing, wider probe being conducted by the U.S. Attorney’s Office.

— ANDREW DONOHUE

Judge Tentatively Reinstates Aguirre’s Dismissed Pension Suit

City Attorney Mike Aguirre said his office will argue to uphold a tentative ruling by a Superior Court judge Thursday to reinstate a case thrown out a few months ago.

Aguirre filed a civil lawsuit in July against eight former and current employees of the city and its retirement system who benefited from pension underfunding arrangements they helped engineer in 1996 and 2002. The benefit increases, Aguirre argues, were contingent upon the unlawful underfunding of the retirement system.

Judge Charles Wickersham originally threw out the case in September, but the case may be heard after all if the judge maintains his preliminary ruling after both sides argue the case’s merits Friday.

“We have a tentative decision, we’re not taking anything for granted,” Aguirre said.

The civil suit, titled People v. Grissom, aims to void about $700 million in pension benefit increases that were granted in the two deals Aguirre claims are illegal. Wickersham ruled earlier that the Political Reform Act of 1974, the state law at the center of the case, exempts a pension benefit increase from being an illegal conflict of interest.

Aguirre said in September that the case was a backup to the city’s cross-complaint against the San Diego City Employees’ Retirement System, which was filed in regards to a different conflict-of-interest law.

— EVAN McLAUGHLIN

Pension Case: Dissenting Rep Concludes Testimony

The police union representative who voted against the pension agreement at issue in the conflict-of-interest case against six former city of San Diego pension trustees wrapped up his testimony this morning. Before a Superior Court judge, defense attorneys attacked speculations he made yesterday regarding the trustees’ motivations for approving the deal now at the heart of the city’s political and fiscal woes.

Tom Rhodes, a San Diego police officer who represented the Police Officers Association on the pension board when the deal was struck in 2002, said he never directly heard the six officials on trial discuss why they voted for Manager’s Proposal 2.

The deal allowed the city to continue its practice of underfunding the pension fund. Prosecutors say that the fact that the city tied pension benefit enhancements makes the pension officials’ votes in favor of the deal corrupt.

Under questioning from prosecutors yesterday, Rhodes speculated that the six trustees voted on the pension funding arrangement because they knew doing so would lead to an increase in their personal pension accounts.

Rhodes, during cross examination, also said that pension attorneys never warned trustees that voting on the proposal could be illegal or run counter to state Government Code 1090 — the conflict-of-interest statute that trustees are accused of breaking.

The pre-trial hearing continues this afternoon with more testimony from witnesses. The hearing is expected to last between three and eight weeks. At the end, the judge will decide if the charges brought by the District Attorney’s Office merit a jury trial. Read Voice‘s Friday edition for complete coverage.

When a defense attorney was describing information that had been aired in the press, Judge Frederic Link replied, “The only think I believe that I read in the newspaper is Pooch Café.”

Pooch Café is a comic.

“We do have people here who are grandstanding this case,” Link said. “But that’s not important to me.”

— ANDREW DONOHUE

County to Face Pension Numbers

The trustees overseeing the county of San Diego’s pension fund will publicly discuss for the first time Thursday a new report that the trust is now facing a $1.37 billion shortfall — more than $175 million larger than last year’s deficit.

The trustees will also hear a report on how much paying for retirees health care will cost the pension fund in the future.

All retired employees of the county receive a maximum of $400 a month in addition to their pensions to cover the cost of medical insurance. The cost is rising and with the county’s pension system health worsening, some officials have floated the idea of cutting off the benefit indefinitely.

Interested groups like the employee unions and retiree association will most likely attend the public session Thursday — members of both groups packed an auditorium in September that had been reserved to handle the large crowd expected to show their opposition to any elimination of the health-care benefit.

Read a four-part series about the deteriorating health of the county’s pension fund here.

—SCOTT LEWIS

Professionals to Blame for City Disclosure Mess, New Suit Says

A malpractice lawsuit filed this afternoon by the city of San Diego claims that hired auditors and attorneys failed to catch inaccuracies in financial statements the city used to sell more than $1 billion in bonds to investors.

The suit seeks up to $100 million that attorneys say the city lost as a result of financial statements that inaccurately portrayed the funding methods and fiscal health of the city’s now-troubled pension system.

The erroneous financial statements, and the subsequent revocation of San Diego’s credit rating by one of the three major credit rating firms, are key elements in the fiscal crisis that grips city government. Because of the disclosure problems, the city has been exiled from Wall Street for more than a year and spent more than $18 million on consultants to untangle the resulting mess.

The city’s long-delayed 2003, 2004 and 2005 financial audits remain on hold pending the completion of an internal investigation into alleged misdeeds.

“With the filing of this lawsuit the people of the city of San Diego are going to begin to fight back and hold the professionals responsible for their roles in creating and covering up the financial irregularities,” said Dan Stanford, a private attorney representing the city.

The legal maneuver is one in many the city has or likely will execute as it reaches for compensation from the professionals involved at all levels of its fiscal collapse.

The suit focuses on two firms, Orrick, Herrington & Sutcliffe LLP, the city’s San Francisco-based bond counsel, and Calderon, Jaham & Osborn, the auditing firm that examined the city’s books for a decade leading up to the 2003 discovery of disclosure errors.

The suit also names accounting firm Caporicci & Larson, which assumed Calderon’s San Diego practice in 2003.

“This lawsuit is entirely baseless as well as factually wrong,” said Tim Larimer, Orrick’s director of communications. “The extensive public record including the City Council’s own independent investigation demonstrates that it was Orrick who ensured the city’s pension problems were disclosed. It is unfortunate that the city needs funds, but this is no way to go about it.”

The Securities and Exchange Commission and the Justice Department are investigating possible civil and criminal securities fraud violations by city officials in connection with the financial statements.

(A complete version of this story will be found in tomorrow’s Voice edition.)

ANDREW DONOHUE

Up Next: University of California, Tijuana?

UCSD Chancellor Marye Anne Fox, speaking at the Tijuana Cultural Center today, announced an ambitious and wide-ranging agenda for partnership between the university and Mexico.

Fox unveiled four initiatives that she said are aimed at improving the quality of life of citizens of Mexico and the United States:

The first initiative is aimed at tackling the problem of air pollution in both Mexico and the United States. A Nobel-prize winning scientist from the University of California, San Diego will spearhead efforts to clean up the air of the two nations, focusing on Baja California.

With the second initiative she hopes to build a “technology corridor” from Mexico to the United States. A $20 million grant will be sought by UCSD to establish the border region as a magnet for high-tech businesses.

Third, an economic strategies project will bring together economists from both countries to identify barriers to growth and to try and find unique solutions to economic problems on each side of the border.

And finally, UCSD is planning on placing a full-time representative of its university in Mexico City. The representative will work with Mexican think-tanks, the Mexican government, academics and non-profits with the goal of deepening the university’s understanding of Mexican culture and ideology.

(Note: Voice reporter Will Carless is traveling with Marye Anne Fox in Tijuana, look out for his full report later this evening.)

— WILL CARLESS

Calling All Affected By Condo Conversion

Testimony will be taken from people affected by condo conversions Thursday night in City Council chambers in a hearing called by City Attorney Mike Aguirre.

Aguirre has expressed concern that renters have endured hardships from being displaced by the conversion of apartment units into for-sale condominiums. He has also stated worries that buyers have purchased converted condos that aren’t up to building codes.

The city attorney says that the city of San Diego has allowed nearly 12,000 condo conversions without the proper environmental review and issued a legal opinion earlier this month stating that the city has wrongfully allowed the conversions to be exempted from environmental impact studies. Read Voice’s story on his Nov. 10 release of the opinion.

The Thursday meeting will begin at 6 p.m. and council chambers are located on the 12th floor of City Hall at 202 C St. in downtown.

— ANDREW DONOHUE

With Friends Like These …

Mayor-elect Jerry Sanders is the headliner for the San Diego Lincoln Club’s annual dinner scheduled for Dec. 15. The black-tie-optional event will honor recently deceased developer Corky McMillin.

The first name on the Honorary Host Committee for the event: Randy “Duke” Cunningham, who was a congressman until stepping down yesterday and pleading guilty to taking $2.4 million in bribes tied to defense contracts.

Other sponsors include Kourosh Hangafarin, the Republican donor whose brief stay on the Port Commission earlier this year ended in controversy over unauthorized business done in Cuba, and Manchester Financial Group.

District Attorney Bonnie Dumanis is also listed as an honorary host.

— ANDREW DONOHUE

There She Grows

Monday, Nov. 28, 2005 — 9:58 p.m.

The shortfall in the county of San Diego’s pension system grew to more than $1.38 billion over the last year as investment gains were not adequate to stymie the lingering effects of a 2002 increase to county employee retirement benefits.

Last year the county’s pension deficit was $1.2 billion.

In their annual report of the county’s pension — known as a valuation — advisors from the firm The Segal Co. announced that pension obligations to county employees had grown faster than the assets in the trust fund. The fund now has 80.3 percent of the assets it needs to meet the commitments the county has made to former and current county employees.

Last year the county’s retirement system had an 81.1 percent funded ratio. Actuaries working for the system have warned that funds that dip below 80 percent funded are considered to be in a “red zone.”

The county’s pension system rode a surplus of funds for many years. The employee pension fund was so flush, in fact, that the County chose not to contribute to it at all.

But in 2002 the county Board of Supervisors approved an enhancement to the pensions of county employees that immediately converted the surplus to a deficit of more than $1.2 billion.

Since then, the county has secured nearly $1.2 billion in loans from Wall Street to invest in its pension system. Yet even with that infusion of assets, the pension shortfall remains.

— SCOTT LEWIS

Read the Duke Court Docs

Read the U.S. Attorney’s allegations against U.S. Rep. Randy “Duke” Cunningham and the plea agreement in which he admitted to bribery and tax evasion charges. A Voice hint: in both documents there is a substantial list of everything the congressman received for his role in the scheme. And, toward the end of the plea agreement another list details what Cunningham will turn over to the government (including enough furniture to fill, say, a Rancho Santa Fe mansion).

— ANDREW DONOHUE

Duke Admits to Conspiracy, Tax Evasion

U.S. Rep. Randy “Duke” Cunningham, a decorated war veteran who became a staunch conservative in Congress admitted Monday to having conspired to commit “crimes against the United States of America” and evading taxes.

The actual crimes Cunningham pled guilty to conspiring to commit include bribery of a public official, tax evasion, mail fraud and wire fraud. The conspiracy charges can lead to prison sentences of up to five years with fines up to $250,000, the tax evasion charges carry potential prison terms up to five years and fines totaling the net of what was owed.

“This was a crime of unprecedented magnitude and extraordinary audacity,” U.S. Attorney Carol C. Lam said.

“Mr. Cunningham used his public office to pressure and influence Department of Defense personnel to award and execute government contracts in a manner that would benefit [the] defense contractors,” Lam said, referring to unnamed co-conspirators.

Cunningham will be sentenced Feb. 27.

During a federal court hearing early Monday, Cunningham replied with a “yes, your honor” to a series of questions about whether he had set out to influence the awarding of defense contracts in exchange for money from businessmen hoping to secure those deals.

Cunningham admitted he received $2.4 million in bribes paid through a “variey of methods” including more than $1 million in checks, cash, rugs, antiques, yacht-club fees, furniture, boat repairs, moving costs and vacation expenses

He waived his rights to any trial on the charges.

He also admitted to having only reported $121,000 in taxable income when he actually collected $1.2 million.

Cunningham has been under investigation for several months after a local newspaper revealed that he had sold his former Del Mar home for what appeared to be a wildly inflated price. The buyer of the property was a defense contractor whose business with the military was overseen by a congressional committee on which Cunningham was a member.

— VOICE STAFF

U.S. Attorney Plans Cunningham Announcement

Aides to U.S. Attorney Carol C. Lam directed reporters to a federal court hearing at 9 a.m. Monday. The hearing is expected to be a new development in the investigation into U.S. Rep. Randy “Duke” Cunningham (R-Escondido).

Lam is holding a press conference after the hearing at 10 a.m.

Cunningham has been under investigation for several months after a local newspaper revealed that he had sold his former Del Mar home for what appeared to be a wildly inflated price. The buyer of the property was a defense contractor whose business with the military was overseen by a congressional committee on which Cunningham was a senior member.

Lam is the federal prosecutor for the Southern District of California.

VOICE STAFF

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