Tuesday, February 06, 2007 | Bruce Is Back

Former City Councilman Bruce Henderson has been hired as a provisional employee in the criminal division of the City Attorney’s Office, a spokeswoman said Friday evening.

Because he is a city retiree, Henderson will work no more than 90 days a year. City Attorney Mike Aguirre and Henderson were allies as dissenting voices against the city’s previous contracts with the Chargers. He will earn roughly $20,000, the spokeswoman said.

Henderson will be working in the office’s criminal division on drinking-and-driving issues, the spokeswoman said.

EVAN McLAUGHLIN

Kroll Wants $9M-$11M

It looks like the city’s audit committee will be settling down for a long winter’s nap.

Because the audit committee has been unable to get a firm grasp on when it would complete its crucial and ever-expanding investigation, the City Council has not approved additional funding for the probe.

A spokesman for Mayor Jerry Sanders said this evening that Kroll Inc., the company staffing the audit committee, estimates it will need another $9 million to $11 million to complete its task.

The council will hold a special session Monday to considering hiring its first-ever independent budget analyst. If the audit committee were to restart its investigation this month, the City Council would have had to authorize new funds Monday.

The City Council will then be on holiday recess until Jan. 9. The audit committee won’t be able to ask for additional funding, and therefore resume its investigation, until then.

The audit committee’s investigation has been hamstrung by technical glitches and budget problems. It has charged the city at least $6 million since February. It originally estimated its investigation would be done in October, but it has had problems loading and searching electronic documents in its database.

The investigation is crucial to restoring the city’s fiscal credibility and concluding a nearly two-year Securities and Exchange Commission probe.

Read a more complete report in Voice’s Top Stories tomorrow.

ANDREW DONOHUE

Oh Captain, My Captain

A fellow fireman testified that he asked to the city’s Ethics Commission to investigate whether the firefighters union president had a conflict-of-interest when approving a deal that effectively boosted his future retirement pay.

Capt. Dennis Pascale told the Superior Court judge considering a conflict-of-interest case against six former pension trustees that he had concerns about a benefit granted in 2002 to Firefighters Local 145 president Ron Saathoff. The presidential leave benefit, as it is widely known, allowed Saathoff to use his union salary on top of the income he earned from the city as a fire captain on leave when calculating his future pension checks.

The Ethics Commission concluded that the complaint didn’t warrant further investigating because the deal didn’t appear to violate the city’s Ethics Ordinance.

The District Attorney’s Office argues that the presidential benefit and other increases to employees’ benefits were made effective after trustees with a criminal-level conflict of interest in the matter voted to allow the city to underfund the pension system.

Pascale said he first learned about Saathoff’s benefit while at a union meeting during labor negotiations that year. He said he remembers Saathoff saying he would get the benefit pending the pension board’s approval.

When he stood up to ask questions about it, he was drowned out by an impromptu standing ovation for Saathoff, he said. After unsuccessfully seeking an answer, he and another fire captain told the Ethics Commission that they believed the deal was corrupt.

The city, they alleged, bribed Saathoff to prevent him from taking advantage of a new labor negotiating law that was advantageous to public employee unions.

“The recent negotiations have been compromised,” the letter reads. “The buyoff of the firefighter’s [sic] lead negotiator is a clear violation of the city’s ethics ordinances. The self-approval of his special package at the Retirement Board is clearly a conflict of interest.”

The commission’s then-executive director Charles Walker wrote that “it was his understanding that all employee benefits are approved by the City Council and not by the Retirement Board.”

EVAN McLAUGHLIN

Accountant-ability

If a special session of the City Council isn’t called by this evening for next week, the vital investigatory work of the audit committee won’t restart until after the New Year.

An official with the audit committee said the firm will likely need to ask for an additional $7 million to $10 million from the City Council to finish an ever-lengthening investigation into alleged wrongdoing by city officials. Troy Dahlberg of the audit committee said the firm won’t be finished until at least April.

The committee’s deadline has steadily pushed back from October to December and now into sometime in early 2006 because of reported technical glitches in data collection. The firm has charged the city an estimated $800,000 a month during its investigation.

In total, two different firms have been hired to complete investigations into the city’s financial disclosure practices and its pension system. The first investigation began in February 2004.

Kroll Inc., the company that staffs the audit committee, was hired in February 2005 to pick up for law firm Vinson & Elkins, whose two investigatory reports were deemed to lack the independence to satisfy both the investigating Securities and Exchange Commission and the city’s outside auditor, KPMG.

Until the city completes a satisfactory investigation, KPMG refuses to bless its 2003 financial statements. Without that certified audit, the city remains stuck with a suspended credit rating.

The audit committee’s work essentially ground to a halt in early November. The audit committee had run through its allotted money and the City Council hasn’t approved additional funds absent a new budget and deadline estimate.

The council’s last regularly scheduled hearing before the New Year was Tuesday.

— ANDREW DONOHUE 

Aw, Zucch-et

Local media is reporting that the U.S. Attorney’s Office has chosen to appeal a judge’s decision to overturn former City Councilman Michael Zucchet’s convictions on corruption charges.

A spokeswoman for the U.S. Attorney’s Office, however, says that the office merely filed papers to meet a deadline to keep that option alive. The actual decision whether or not to appeal will be made by the U.S. Solicitor General’s Office, she said.

— ANDREW DONOHUE

Maienschein Speaks

Not one prone to hold a press conference or send out too many statements, San Diego City Councilman Brian Maienschein expressed some of his lingering skepticism of city staff Thursday when he wondered aloud how the city could claim that it has saved $170 million through efficiency efforts recently.

According to a press release, Maienschein said he didn’t know where the city got that number from or how those supposed savings were spent.

“We can do better,” Maienschein said. “We can improve essential services and we can cut costs. We can and we must.”

SCOTT LEWIS

School Trustee Ready to Move on?

Shelia Jackson, who was only recently elected to the board of trustees of the San Diego Unified School District, confirmed this week that she was considering a challenge to County Supervisor Ron Roberts.

Jackson has spent barely a year on the school board but said she is ready to answer a need in the district.

“The people want leadership that will support everyone not just an interest group,” Jackson said in an interview.

But longtime Republican consultant Herman Collins told a reporter that the county’s districts are carved out to ensure that the five county supervisors are Republican “for at least our lifetimes.”

Collins said that Roberts’ district — District 4 — does include several neighborhoods in the city of San Diego that traditionally vote heavily for Democratic candidates but that they are outweighed by the more Republican-leaning northern areas.

“It’s extremely difficult for a person of color to believe that they could win a supervisor’s district the way it’s drawn,” Colins said. “The districts were carved to protect the supervisors’ own stakes and to disenfranchise minority groups.”

Richard Barerra, a local labor union leader, was the first to formally declare his intention to challenge Roberts. And San Diego City Councilwoman Toni Atkins has been rumored to be mulling a race against Roberts as well.

Roberts was elected in 1994.

SCOTT LEWIS

Pension E-mail: ‘Greed happened’

In 2003, the pension system was being sued by retirees over the way the city had handled its pension finances. An attorney defending the system in the case asked retirement administrator Larry Grissom to justify the controversial pension dealings.

Grissom, who publicly defended the dealings, responded in an e-mail that the city’s underfunding of the pension system was “illegal, immoral, fattening, and otherwise bad.”

His Sept. 12, 2003 e-mail then explained the process of what’s known as Manager’s Proposal 2 in startling honesty:

“For you and you only, I could write a treatise, but will attempt to exercise some degree of parsimony. In the perfect world, you have an annual actuarial valuation which recommends employer and employee contribution rates. The Board duly considers said valuation, passes it and refers it to the plan sponsor who pays those contribution rates. Benefits are enhanced, the actuary prices them, recommends contribution rates. The plan sponsor and employees pay those rates. And guys like me administer all of those benefits and all that money.

The real world is different, dramatically so in the last 10 to 15 years. Governmental budgeting processes dislike spending any money for anything not visibly for the “public good”. I think, for instance, that a City Council would rather add police officers than increase the salary of the existing force. Since the pie is just so large, and there is never enough money to cover everything, there is always stress on how to divide (illegible)…”

He then details a 1996 pension deal, known as Manager’s Proposal 1, which is the older brother to the 2002 deal that is the focus of so many investigations.

“The then City Manager, Jack McGrory, was very smooth and did a very good to excellent (job) of presenting and selling the concept. He did his homework well.

In my personal opinion, MP I was not a bad deal. City got a predictable contribution cost. Employees got a nice package of benefits. System got a steadily increasing stream of contribution dollars and downside protection. There’s a lot of stuff here that was of concern to me at the time about being 100% funded, which is better saved for another term paper. Subsequently, bad things began to happen. Both labor and management adopted an attitude of not caring about the costs of benefits, because the liability “can just be rolled into the Manager’s Proposal”. Greed happened. Long discussion about too many labor and management reps on retirement Boards generally – that would be term paper #3.

Manager’s Proposal II was not handled nearly as well as the first one. The City’s position was to say, new benefits, which we will pay for, but we see the train coming down the track and we need to shore up our downside protection (reduce floor). Their approach was if I give you this, you gotta give me that – carried out in a pretty roughshod matter. See term paper #3.

I’ll stop the archaeology at this point. It is simply to bolster my perspective that there was very little justification to MP II even though we went through the same process as the first time. I don’t blame the City for being scared about what might happen when we fell thru the floor. Had there been no MP II, we would probably be in litigation with the City over interpretation of MP I, and Gleason would likely be out there, albeit with perhaps less publicity. It still galls me that the beneficiaries whom we have all taken the holy oath to protect didn’t give a damn about anything but their benefit enhancements.”

ANDREW DONOHUE

Still Trevor Time

Famed closer Trevor Hoffman decided to stay with the Padres today after flirting with the idea of playing next season for the Cleveland Indians.

Hoffman, a fan favorite, signed a two-year, $13.5 million contract. The team holds an option for the 2008 season. He ranks second all-time in saves with 436. He has notched all but two of those saves as a Padre.

ANDREW DONOHUE

Rather Work for Trash than Mayor

Johnnie Perkins, the governmental affairs director of the city’s firefighters union, has announced that he will leave the labor group to become a vice president of marketing for EDCO Disposal Corporation.

Perkins had been offered a job by new San Diego Mayor Jerry Sanders to become the head labor negotiator.

He said that job would have been too time-intensive.

“When someone gets elected for the first time, working for them is a 24-7 deal,” Perkins said. “Three years ago I might have taken it but I have a son now and I like hanging out with him.”

Perkins has previously worked for former City Councilman Byron Wear and former Attorney General Daniel Lundgren. 

SCOTT LEWIS

County’s Pot Shot

The county of San Diego is suing the state of California over the legality a 1996 initiative that gave growers and users of medicinal marijuana new exemptions from criminal penalties.

County supervisors had already decided in November to file legal action against the state over legislation that would require them to implement an ID card system for medical marijuana patients.

This latest decision broadens the scope of the county’s offensive against the state-mandated medical marijuana rules. The supervisors, who are all Republican, have vowed to carry on that offensive for as long as it takes to outlaw medical marijuana completely.

— WILL CARLESS

Second Thoughts: MP2 Not as Bad

A former retirement trustee testified Wednesday in Superior Court that he saw nothing improper with the 2002 pension deal central to the district attorney’s criminal charges against six former pension officials.

John Casey, who sat on the pension boards that approved controversial pension deals in 1996 and 2002, told the court that he had deep reservations against the 1996 arrangement because it was clear that a pact allowing the city to skimp on its annual pension payments went hand-in-hand with an increase to workers’ benefits.

“It was not our job as trustees to be involved in negotiating labor benefits,” said Casey, who represented the city’s white-collar union on the San Diego City Employees’ Retirement System’s board from 1998 to 2005. “I even wrote a memo to the fiduciary counsel complaining about it, but it went completely ignored.”

Casey said the 2002 deal known as Manager’s Proposal 2, which effectively increased the future retirement checks of the six defendants who voted to approve the underfunding plan, was not the same. Under Manager’s Proposal 2, the board was only asked to approve “the funding mechanism” and not labor benefits, he said.

Additionally, trustees understood that the board could unilaterally withdraw from the deal, Casey said.

“It was a different kind of animal,” said Casey, who voted in favor of the deal. “I did not think it was improper.”

Casey’s testimony concluded Wednesday morning, and the pension system’s hired actuary Rick Roeder is expected to testify this afternoon.

— EVAN McLAUGHLIN

Immune to Selectivity, or Selective of Immunity?

Defense lawyers in the district attorney’s pension case are disputing the prosecution’s selection of which witnesses are granted immunity, alleging that protection is not being requested for individuals with information helpful to the defense’s case.

Three of the seven witnesses who pleaded the Fifth Amendment this week have returned to the stand after the presiding judge has compelled them to testify after granting them immunity. The remaining four are witnesses whose testimony may benefit the defendants, but will not testify without immunity, defense attorneys said.

Attorney Nick Hanna, who represents defendant Cathy Lexin, accused prosecutor Stephen Robinson of withholding immunity for the benefit of his own case.

“The selective use of immunity is skewing the playing field,” Hanna said.

Pension administrator Larry Grissom, former City Manager Michael Uberuaga, former City Auditor Ed Ryan and retirement system attorney Lori Chapin should all be protected by the court because they hold information that could be helpful for their clients’ defense, defense lawyers said.

Robinson rebuffed the accusations, saying that the statute of limitations has not expired on any conspiracy charges that could possibly levied on former city and pension system staffers. The prosecutor said he did not want to shut that door.

Superior Court Judge Frederic Link, who is presiding over the conflict-of-interest case, said he would consider the defense’s assertion.

— EVAN McLAUGHLIN

Aguirre’s Back

City Attorney Mike Aguirre returned to his pre-election self Tuesday, releasing the latest installment in his series of reports on the city’s troubled pension system and sternly criticizing a number of City Council members for failing to support the rollback of employee pension benefits.

Aguirre praised the work of new Mayor Jerry Sanders, but said that a number of council members — specifically Jim Madaffer, Scott Peters and Toni Atkins by name — continued to obstruct the city’s financial recovery. He said they should be actively advocating his legal challenges to essentially all pension improvements granted to employees in the last decade.

The council members have chosen a less aggressive route in the city’s fiscal crisis, adopting the city manager’s recommendation of land sales, loans and bonds to begin paying off what is estimated to be at least a $1.37 billion deficit. Aguirre says that approach will do little and wants to void the pension benefit enhancements at the heart of the deficit. It is a move the council members contend is risky and uncertain.

The city attorney’s new report essentially summarizes the 60,000 pages of documents that were released by the pension system under a federal court order. Many of the e-mails and legal opinions found in the report had already gradually made their way to the public through the press.

Read a full version of this story in Voice‘s Wednesday edition.

— ANDREW DONOHUE

Shoot the Messenger

A trustee of the city of San Diego’s beleaguered pension system — speaking on behalf of the system — raged about the media Monday at a forum in San Francisco.

Steve Meyer, who represents city employees on the board of trustees of the pension system, told a large gathering of people from across the country that the reporting about the city’s pension crisis was “very inflammatory,” full of “disinformation” and the product of “political agendas.”

“Very little is based on fact,” Meyer said, according to a copy of the PowerPoint presentation he distributed.

Meyer was speaking at “Public Fund Board’s Forum” at a hotel in San Francisco. It’s a gathering of trustees like Meyer from similar public pension systems in the United States. His talk was titled “Last Trustee Standing: Lessons Learned from San Diego City Employees Retirement System.” Meyer distributed a copy of many of the resignation letters of former members of the board of trustees of San Diego’s pension system.

SCOTT LEWIS

Mayor Sanders, Officially

Jerry Sanders officially became San Diego’s 34th mayor this afternoon with a promise to restore candor and financial stability to a City Hall ruffled by two years of political mayhem.

Before a City Council chambers packed with a who’s who of the local political community, the City Council certified the results of the Nov. 8 special election to replace resigned Mayor Dick Murphy. Sanders, who spent 26 years rising through the ranks of the San Diego Police Department and eventually became chief, then offered the ritual pledge and a brief speech.

“I’m very proud to have been a city employee for 26 years and I’m proud to be one again,” Sanders said after receiving a standing ovation.

Following the ceremony, he took over as chairman of Monday’s City Council meeting, a position he will hold only briefly before the city switches to a strong-mayor form of government on Jan. 3.

The new mayor pledged to usher in a new era of candor at City Hall and immediately ordered the phrase “America’s Finest City” to be returned to the top of the city’s Web site. The City Manager’s Office had chosen to remove the slogan in August, presumably because of the city’s financial and political crisis.

City employees today received an e-mail stating that jobs may need to be cut in order to deal with the city’s fiscal crisis, which is highlighted by a pension deficit estimated to be at least $1.37 billion.

During the campaign, Sanders promised to close the city’s budget gap by downsizing city government. He promised to privatize some city services, cut 100 of the 300 management positions, and slash non-public safety jobs by 10 percent if labor unions didn’t cede to his wage and salary demands.

— ANDREW DONOHUE

Charter Course

Ron Nehring, one of five trustees for the Grossmont Union High School District, proposed today to convert the district’s 10 high schools to charter status and transform the entire Grossmont district to a charter district under California law.

— MARSHA SUTTON

Circle of Fifths

A slew of witnesses called by prosecutors Monday in the conflict-of-interest case against six former pension trustees have exercised their Fifth Amendment right to abstain from testifying.

Former members of the board overseeing the San Diego City Employees’ Retirement System and some past city administrators will take the Fifth even after it was implied that the District Attorney’s Office would seek to grant the witnesses immunity.

The district attorney is alleging that the six charged trustees received new pension benefits by approving in 2002 an arrangement that relieved the city of an obligated contribution to the pension system.

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.

“I’m not going to put the witness in the type of quandary,” presiding Judge Frederic Link 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.

The witnesses who were called Monday morning but asserted their Fifth Amendment right were former board trustees David Crow, Ray Garnica and John Casey; former city auditor Ed Ryan; and Lori Chapin, the pension system’s head attorney.

Former City Manager Michael Uberuaga may take the stand this afternoon, although he is expected to also plead his Fifth Amendment rights.

The judge also denied a motion by the defense that attempted to open up defense attorney’s access to evidence presented to the grand jury.

— EVAN McLAUGHLIN

Fed Probe Influencing DA Pension Case

The overarching federal corruption probe of City Hall could impact the district attorney’s conflict-of-interest case against six former pension board members today.

This morning Judge Frederic Link will hear a motion from defense attorneys to widen the defense’s access to evidence that was brought before a grand jury in non-public proceedings.

Prosecutors have entered as evidence the transcripts of seven witnesses’ testimony from federal grand jury interviews. The grand jury proceedings are done in secret and the defense says it doesn’t have access to information that could potentially prove their clients’ innocence.

Link, who enjoys toying with attorneys and cracking the occasional joke in the courtroom, told prosecutors last week that he had sat next to District Attorney Bonnie Dumanis at lunch and had threatened last to throw out the case based on the evidence issue.

Prosecutors say the seven transcripts were given to them by the U.S. Attorney’s Office after it obtained a court order releasing the information. Prosecutors say they have no further access to evidence.

Also this week, attorneys are anticipating that the first of what could be many witnesses who invoke their rights to stay silent on the stand because of the federal investigation. Former City Manager Michael Uberuaga is slated to testify Tuesday, however there is a possibility he will exercise his right not to give potentially self-incriminating testimony.

Defense attorneys also claim that the invocation of these rights could prevent the airing of information favorable to their clients.

The pre-trial hearing began last week and is expected to last between three and eight weeks. Six former pension officials are charged with approving a contract that in effect boosted their personal retirement pay.

ANDREW DONOHUE

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