Federal San Diego Pension Trial on Hold

March 5, 2007 (PLANSPONSOR.com) - The federal trial of five former San Diego pension officials came to a screeching halt last week.

U.S. District Judge Roger T. Benitez scrapped the May trial date in the federal pension fraud case last Thursday, saying he would wait at least a few months to see what happens in a separate state pension-related prosecution, according to the Union Tribune.

Benitez, who did not set a new trial date, agreed with the defense’s contention that if the state court finds the defendants did not violate conflict-of-interest laws in voting on their own benefits, it could have repercussions for the federal conspiracy fraud case (see  Five Indicted in San Diego City Pension Case ).

Federal, State Actions

The five charged are Ronald Saathoff, former president of the local firefighters union; Cathy Lexin, former human resources director in the city manager’s office; Teresa Webster, the city’s former acting auditor and comptroller; Lawrence Grissom, former SDCERS administrator; and Loraine Chapin, the plan’s general counsel, who voluntarily went on administrative leave more than a year ago.  

The charges were a result of a two-year federal investigation into San Diego’s underfunded pension system.   The federal indictment claims that citizens and pensioners were deprived of their right to honest services by conspiring to illegally obtain enhanced retirement benefits for themselves in exchange for allowing the financially strapped city of San Diego to underfund the pension system.

According to the Union Tribune, if the federal case is stalled until the state case is resolved, it could be a long wait.   The state trial, which had been scheduled for February 26, was delayed indefinitely after the California Supreme Court ordered a hearing on why the case should not be thrown out.    In the state case, prosecutors contend the vote was linked to a package of enhanced retirement benefits given to all city workers, including the board members, who then illegally benefited from their votes (see  San Diego DA Kicks Off Pension Probe).