The City Manager Shoe Drops

Wednesday, April 9, 2008 | Of the people charged yesterday by the Securities and Exchange Commission, I wanted to highlight two. First, Terri Webster. She’s the only one of all the city officials so far ensnared in the legal fallout from the city’s pension crisis to face charges from all three agencies with cases going forward: the District Attorney’s Office, the U.S. Attorney’s Office and now the SEC with its civil complaint.

Ouch. The way these cases have all rolled out, the former assistant auditor and comptroller somehow has become the chief villain. Is it fair?

Webster was the author of the notorious “EEK” and “Sleepless in San Diego” memos. The “Sleepless” e-mail was the subject of the very first news story in voiceofsandiego.org.

Here was the intro to the story, including a cameo from April Boling the accountant now running for City Council:

In December 2001, the free-falling earnings of the City of San Diego’s pension plan so concerned then-Assistant Auditor Terri Webster that she simply signed an e-mail detailing a startling earnings decrease to the pension administrator, “Sincerely, Sleepless in San Diego.”

But that same month, despite her insomnia-inducing worries, Webster worked to convince Blue Ribbon Committee members to paint a rosier picture of city finances and excise the “doom and gloom” of the panel’s highly-touted 2002 report that was supposed to candidly assess the city’s financial state, according to internal e-mails.

At the time, committee member April Boling was frustrated by changes Webster and her boss, former-Auditor Ed Ryan, who abruptly retired a year ago shortly before it was revealed city financial disclosures contained errors and omissions, made to her drafts of the panel’s final report. In a January 2002 e-mail, Boling dismissed the edits as “well-meaning.”

Now, she views Webster’s efforts differently. “I thought she was just overstepping her bounds as staff and not fully understanding that she was changing meaning. Now I believe she totally understood she was changing meaning and doing it intentionally.”

The DA has since charged Webster with illegally maneuvering with colleagues on the city’s pension board to vote on their own benefits. The U.S. attorney has accused her and others of illegally boosting the pension of firefighters’ union president Ron Saathoff. And now the SEC says she and four others committed securities fraud by knowingly withholding those worries about the city’s pension obligations from disclosures made to investors in the city’s bonds.

At least this time, it appears the SEC has indicated Webster couldn’t have been solely responsible for all this supposed malfeasance and has charged her bosses, who, aside from former Treasurer Mary Vattimo, avoided charges from the criminal prosecutors. I’m sure the City Council and mayor never told these people to avoid budget cuts at all costs. They just went wild on their own count.

One of the bosses finally going down this road of charges with Webster is former City Manager Michael Uberuaga, who shares the stage as a defendant with her in the securities fraud case just announced. Uberuaga is the second person I wanted to talk about for a minute here.

There are few people in this city who can tell you very coherent reasons why Uberuaga lasted as long as he did at the city’s helm. The former city manager of Huntington Beach and Steamboat Springs, Colo., Uberuaga started his service with San Diego as the manager in the late 1990s and lasted until 2004. It was spring 2004 when then Mayor Dick Murphy, under the cloud of investigations and prodded by rival Ron Roberts, “mutually agreed” with Uberuaga that the manager needed to go.

What’s interesting is that Uberuaga lasted as long as he did. The consulting firm Kroll Inc, which was investigating the city two years ago on the city’s dime (for what, by the way?), interviewed the City Council members about their recollections about the city’s pension crisis. Summaries of those interviews are public records.

The investigators asked about Uberuaga. It bears remembering what at least two of them — Scott Peters and Brian Maienschein — had to say about the former city manager now accused of securities fraud. Peters and Maienschein, after all, are hoping to get a new job as the city’s top lawyer.

The disdain they had for Uberuaga is intense.

Let’s start with Maienschein:

[Maienschein] also said that while he initially thought that City Manager Michael Uberuaga’s projections were accurate and reasonable, as he learned more about the budget and the City, he subsequently stopped believing a lot of Mr. Uberuaga’s budget projections. Nevertheless, Councilmember Maienschein felt that he could not tell Mr. Uberuaga what he thought the budget should be.

There’s more from Maienschein:

Councilmember Maienschein stated that he thought that the Manager frequently “hid the ball” with regard to the budget.

And more (emphasis added):

Councilmember Maienschein said he told Mayor Murphy during their first meeting together that he thought that Mr. Uberuaga should be fired. Councilmember Maienschein said he initially thought that Mr. Uberuaga was a leader he would vote for, but later he thought that Mr. Uberuaga was misleading him, either intentionally or because Mr. Uberuaga was so out of touch with his staff who were misleading him.

And how about Peters?

Councilmember Peters believed that Uberuaga was overmatched in the position, as he had come to San Diego after serving as City Manager of Huntington Beach, California, a much smaller city.

And more:

Councilmember Peters responded that he did not think that Uberuaga was at all competent and mostly delegated matters out to other City departments and offices.

So let’s get this straight. Both city councilmen say they didn’t trust Uberuaga, thought he was incompetent and wanted to get rid of him right away. Maienschein even says the guy was misleading City Council.

And what do they do? They don’t say a thing to the public and live with him as city manager for four years.

Now that’s courage, San Diego style.

Please contact Scott Lewis (scott.lewis@voiceofsandiego.org) directly with your thoughts, ideas, personal stories or tips. Or send a letter to the editor.