District Attorney Bonnie Dumanis, second from left, announces the filing of charges against six former and current members of the San Diego City Employee Retirement System Board of Trustees at a news conference held in San Diego on Tuesday.
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<small><B>Dennis Poroy /</b> Associated Press</small>
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SAN DIEGO — Six current and former trustees of the board that oversees the city's battered pension fund were charged Tuesday with felony conflict-of-interest violations for votes from which they personally profited, the district attorney's office said.
The case against Ron Saathoff, John Torres, Sharon Wilkinson, Mary Vattimo, Terri Webster and Cathy Lexin contained the first criminal charges in the pension-fund scandal that prompted the resignation of Mayor Dick Murphy. Only Torres remains on the board.
"We believe this is the first step in restoring public trust in our government institutions," San Diego County District Attorney Bonnie Dumanis said. "This prosecution will send a message that the district attorney's office is watching and no one — let me repeat, no one — is above the law."
The charges were another blow to the city, where two council members are on trial in a separate case on charges of accepting illegal campaign contributions from a strip-club owner.
The San Diego City Employees Retirement System deficit has swelled to $1.37 billion, largely a result of decisions in 1996 and 2002 that allowed San Diego to escape payments to the retirement fund and — at the same time — enhance pension benefits.
Dumanis said additional charges may be filed as the investigation continues.
Attorneys for Wilkinson and Lexin said their clients had done nothing wrong and were both swept up in a politically-motivated prosecution.
"There were lawyers literally all over this matter and nobody raised it as a conflict issue," said Lexin's attorney, Nick Hanna. "For the district attorney to come along and say that our clients, who are not lawyers, should have recognized these votes as a (conflict-of-interest) violation … is unfair."
Messages left with attorneys for Torres, Saathoff, Webster and the City Employees Retirement System were not immediately returned. A woman who answered the phone at the offices of Vattimo's attorney declined comment.
According to court documents, a pension board vote on July 11, 2002 was allegedly linked to a deal to boost pension benefits that benefited the six defendants.
The vote boosted Webster's pension nearly 11 percent, making her eligible for benefits of more than $130,000 a year; Saathoff's annual pension rose 36 percent with the 2002 vote and he is collecting more than $116,000 annually.
The six defendants were each charged violating a state law that prohibited them as trustees from having a financial interest in matters up for consideration by the pension fund board, according to a criminal complaint. They each face a maximum of three years in state prison and fines.
The announcement of the charges came a day after the resignations of three city officials, including Vattimo and Lexin, linked to the scandal. Vattimo, 44, was the city's treasurer; Lexin, 54, the San Diego human resources director.
Last week, Webster, 43, the assistant auditor and controller, was placed on administrative leave for allegedly failing to cooperate with federal investigators.
Court documents identified Saathoff, 57, as president of the firefighters union; Torres, 56, a police fingerprint examiner and vice president of the Municipal Employees Association or MEA; Wilkinson, 55, a city management analyst and member of Torres' union.
The U.S. Justice Department and U.S. Securities and Exchange Commission is investigating the city's financial practices amid questions about whether city officials hid bad news about its pension obligations from investors and taxpayers.
Wilkinson was not a target of the U.S. Attorney's investigation, according to her attorney, Lisa Damiani. Lexin's attorney declined to discuss the federal probe.
All six defendants are expected to appear Wednesday in San Diego Superior Court. City Attorney Mike Aguirre said the pension board was paying for most, if not all the defense attorneys for the six defendants.
Members of the 13-member board have rejected requests for documents sought by federal investigators by refusing to vote to waive attorney-client privilege. That has led the city attorney and other officials hired to clean up San Diego's finances to suspect that the pension board may be hiding evidence of wrongdoing.
"We today don't know if we have a $1.7 billion problem, a $2 billion problem, a $2.5 billion problem because we don't have anyone inside the pension system that we can trust," Aguirre said.
Posted in Sdcounty on Wednesday, May 18, 2005 12:00 am
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