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The pension cases have been a mixed bag. The Police Officers Association and SDCERS pension cases to force taxpayers to pay hundreds of millions into the pension failed. Some of the cases to set aside illegal benefits have been successful. The California Supreme Court did hold the prosecution of Ron Saathoff in the state criminal case.
However, Andy is right to say no knock out has been scored in court by those of us alleging massive illegal conduct occurred in connection with the pension case.
Those are the facts. The question now is how should they be interpreted. To say there was no illegal conduct flies in the face of the SEC findings, Kroll Report, City Attorney Reports, and the Pension Board’s own report. There was illegal conduct. The illegal conduct caused real damage. The idea that hundreds of millions of dollars of pension benefits were created with no funding is a reality.
The idea that those behind the pension fraud were only helping the system does not square with the facts. For many years, these pension players were involved in rigging the system to payout benefits to themselves and other high wage city managers. Those benefits were so high they were disallowed under IRS rules. The pension players responded to the IRS limit by creating another pension in their favor. They had the standard pension, the excess benefit pension, 401-K, and the SPSP benefit plan.
Private pension plan criminal laws put into place by the Kennedy brothers prohibit the conduct we saw with the city pension. Moreover, the collective bargaing process and pension administration for private pensions are strictly regulated under federal civil and criminal laws. Municipal pensions and unions are exempt from these laws.
We need to amend federal law to make municipal unioins subject to the federal criminal and civil laws that prohibit the conduct engaged in by those who created the pension mess. Strict federal regulation under laws designed specficially to cover pension administration and collective bargaining is a possible answer.