Feds Raid Office of Former San Diego Pension System President

April 26, 2006 (PLANSPONSOR.com) - The former president of the San Diego pension system -- and one of the city's most well-known developers -- is now one of the targets of a two-year federal investigation into the city's under funded system.

Three-weeks ago, authorities came unannounced to former system president Frederick Pierce IV’s workplace at the San Diego State University Foundation office and seized computers and other documents, according to a report by the  San Diego Union-Tribune.

Pierce and foundation spokeswoman Theresa Nakata would not say whether the scope of the search extended beyond the pension fund and its $1.43 billion deficit, according to the newspaper.

Pierce – who has not been charged with anything – told the Union-Tribune that this instance was not the first time that prosecutors have sought documents from him related to the pension fund and added that he has cooperated when questioned about fund-related investigations.

Federal investigators have served many subpoenas at City Hall since early 2004, when they began digging into the $1.43 billion pension deficit and allegations of possible corruption and securities fraud by city officials. The deficit stems mainly from City Council decisions to underfund the system while increasing benefits in 1996 and 2002.

Pierce, a well-connected developer and development consultant, is a former president of the SDSU Alumni Association as well as an ex-trustee of the California State University System, the largest public university system in the nation, the publication reported.

Eight people already face criminal charges in pension probes. In January 2005, a federal grand jury indicted the system’s former administrator, its attorney and three former board members on conspiracy and fraud charges, contending that they illegally boosted their retirement benefits while condoning the underfunding of the system, according to the report by the Union-Tribune.

Four months later, District Attorney Bonnie Dumanis filed charges against six past and present pension board members – including three who face federal charges – alleging that each improperly benefited from votes as city employees to let San Diego pay less into the pension fund.