SD Pension Lawyer Saw Board Conflict in 2004

October 11, 2005 (PLANSPONSOR.com) - A San Diego lawyer representing the city's now much-troubled pension system asserted in a recently revealed memo that pension board members had most likely run afoul of the state's conflict-of-interest law.

The May 2004 memo by attorney Michael Leone asserted that it was “probable” that a court would find the law was broken when the trustees voted to adopt a city proposal to continue underfunding the pension system while simultaneously enhancing future benefits for city workers, the San Diego Union Tribune reported. The conflict-of-interest law prohibits public officials from making a contract in which they have a financial interest.

The Leone memo also came a year before local prosecutors charged six current and former board members with such a conflict of interest violation (See  Three Officials in Scandal-Plagued San Diego ‘Pursue Other Interests’  ). District Attorney Bonnie Dumanis filed charges against Torres, vice president of the San Diego Municipal Employees Association, the city’s largest labor union; Ron Saathoff, president of the firefighters union; Mary Vattimo, former city treasurer; Terri Webster, former acting auditor for the city; Cathy Lexin, former human resources director for the city; and Sharon Wilkinson, a city management analyst.

The failure to fully fund the retirement system has contributed to a growing pension deficit that is at least $1.4 billion and has led to a sweeping investigation by federal authorities that began 18 months ago.

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