San Diego DA Kicks Off Pension Probe

March 24, 2005 ( - San Diego city officials got more bad news Wednesday when the local District Attorney's Office announced a new criminal probe into potential conflicts of interest with the 13-member board of trustees of the city's badly troubled pension fund as targets.

The San Diego Union Tribune reported that district attorney’s investigators gave City Hall until Wednesday to hand over records or face possible search warrants.

The newspaper said the probe appears to be focused on a California law that prohibits public employees from participating in official actions that serve to benefit their personal financial interests. The FBI, US Attorney’s Office, and the Securities and Exchange Commission are already investigating whether federal statutes have been broken in the city’s struggle to cope with its pension funding woes. Today, the $3.6 billion San Diego City Employees Retirement System has a $1.37 billion shortfall.

Among the records sought in the new local investigation:

  • audiotapes and minutes of City Council meetings, including closed sessions, involving discussions and votes on pension underfunding and special benefits for union presidents
  • e-mails, from November 1, 2001, to the present, involving current and former pension board members Cathy Lexin, Mary Vattimo, Teri Webster, Sharon Wilkinson, John Torres and Ron Saathoff.

At issue in the investigations are pension board votes in 2002 in which a majority of trustees, including several city employees, endorsed letting the city underfund the retirement system.

Public documents that have come to light since 2002, including in an internal investigation conducted for the City Council by the law firm Vinson & Elkins, show that pension board members had been led to believe that a benefits package offered to employees by the city was contingent on the board approving the underfunding. Those benefits included special enhancements for union presidents who represent thousands of city workers.

Under Proposition H, passed by San Diego voters in November, a new retirement board will take office in April. The current board held its final meeting Friday.