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Friday, May 29, 2009 | Three years ago, the head of City Hall’s largest union became embroiled in a controversy over charging thousands of dollars at casinos, department stores, and other shops on her official credit cards.

Judie Italiano and her supporters fended off a challenge to her leadership and pooh-poohed an investigation by then-City Attorney Mike Aguirre, saying she had nothing to hide.

On Friday the Municipal Employees Association board announced that Italiano had resigned after the organization started an investigation into her personal use of the union’s credit cards, which she stopped only briefly after the charges came to light in 2006, according to union President Tony Ruiz.

Union officials also have referred the matter to the District Attorney’s Office to see if criminal charges are warranted, Ruiz said.

The resignation marks a dramatic end for the career of a long-time City Hall fixture who defiantly defended both her union and her own actions as the city’s financial problems and pension scandal unfolded this decade.

Ruiz said Italiano was put on leave May 12 when the new charges were discovered and resigned in the midst of the investigation. She cut the union a check for $13,903, covering credit card charges, interest and vacation time that Italiano had taken but not yet accrued, he said.

Michael Zucchet, a former city councilman who has been consulting for MEA, is acting as general manager while the organization seeks a permanent replacement.

Ruiz said Italiano received no severance pay as part of her departure and was not fired because she resigned before the investigation was finished. Italiano will also keep a car the union bought for her, which Zucchet said was not a company car and was given to Italiano previously as part of her compensation.

The union also has no plans to drop a lawsuit against the pension system alleging Italiano has a right to a pension despite a determination that the act giving her a city pension violated federal tax regulations.

After Italiano’s credit card charges came to light in 2006, the union changed its policies to prohibit personal use of the union credit cards and Italiano agreed to pay back the money she had charged, Ruiz said. Previously, he said, there was an informal arrangement allowing use of the cards as long as personal charges were paid back.

Ruiz said Italiano stopped charging personal expenses on her card for a while but resumed making personal charges starting in November 2006 and continuing through February 2009. Ruiz said he discovered the charges while preparing his first budget as board president.

“We were all taken in by Judie,” Ruiz said. “She [said] she would not be doing this type of behavior anymore. We put these policies in place and she agreed to these policies, and she breached our trust.”

He added, “We’re closing this chapter and moving forward and the business of MEA will continue.”

Linda French, who brought many of the allegations to light when she campaigned for MEA president in 2006, believes board members are also culpable for wasting hard-earned member dues.

“I look at them as an accessory after the fact, and that’s what we’ve been talking about all along,” she said.

This month, French filed a lawsuit seeking to remove Italiano as MEA’s general manager. The other plaintiff was Ed Harris, who is leading a push to remove the lifeguards from MEA and join the Teamsters. Harris said he felt MEA’s announcement vindicated his concerns and hoped that prosecutors who have previously been referred evidence of Italiano’s deeds would now file charges against her.

In September 2006, a confidential investigation by Aguirre, recently obtained by voiceofsandiego.org, detailed allegations against Italiano, in which former employees said Italiano had used MEA funds for personal loans to her relatives and staff, used union money to buy property and funded trips to Las Vegas and the races.

Bud Simpson, a former MEA employee who now lives in Idaho, was among those questioned for Aguirre’s report, which was reportedly sent to the District Attorney’s Office and the state attorney general but never resulted in charges.

In an interview earlier this month, Simpson told voiceofsandiego.org that the MEA office staff went to Las Vegas for his birthday and frequently made trips for others’ birthdays. He said Italiano’s power within the organization allowed her to misuse cards with impunity.

“Judie pretty much had the board of directors eating out of her hand,” Simpson said. “She’s done a pretty good job for them and, as a result, she makes sure she has the executive committee handpicked.”

Simpson added that the general membership didn’t appear to care. “Just as long as you take care of us, we’ll forgive minor indiscretions,” he said.

Simpson was fired in 2003, a move he said made way for Italiano to hire her husband, Jeff Carr. Ruiz said there’s no cause to terminate Carr because he’s not accused of wrongdoing but said the organization is “coming to an agreement” on terms of his separation from MEA.

Likewise, Ruiz said there’s no cause to end the union’s relationship with Italiano’s son, who will continue to provide health benefits to members.

Ruiz said the internal inquiry has turned up no proof of the other allegations detailed in Aguirre’s investigation. He said Italiano’s departure was a chance for MEA to move forward and “provide services to the members even better than we had before.”

Italiano could not be reached for comment.

Please contact Rani Gupta directly at rani.gupta@voiceofsandiego.org with your thoughts, ideas, personal stories or tips. Or set the tone of the debate with a letter to the editor.

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