Three Officials in Scandal-Plagued San Diego 'Pursue Other Interests'

May 17, 2005 ( - Three veteran San Diego officials involved in that city's ongoing pension scandal stepped down from their positions this week.

City Manager Lamont Ewell announced the resignations in a memo that said the trio “have each chosen to resign from their positions and pursue other professional interests,” according to a San Diego Union Tribune report. Leaving their posts were former Deputy City Manager Patricia Frazier, former Treasurer Mary Vattimo and Human Resources Director Cathy Lexin.

Frazier oversaw the city’s financial management for many years, and Vattimo and Lexin – a key player in the city’s labor negotiations – served on the board of trustees for the $3.6-billion San Diego City Employees Retirement System (SDCERS). Frazier and Vattimo had already been moved out of positions of influence, the media report indicated.

Additionally, today, San Diego’s District Attorney Bonnie Dumanis filed charges of felony conflict of interest for benefiting from lavish and controversial increases in the city pension plan, while also voting to under-fund the system, against six former and current members of the city’s pension board, according to a story in the Los Angeles Times. These are the first criminal charges, for which each could face three years in prison, filed amid the ongoing problems at the pension system.

The latest developments in a continuing uproar over the city’s pension woes follows the placing of former acting Auditor Terri Webster on administrative leave for her alleged failure to hand over evidence sought by a federal grand jury, the Union Tribune said. Webster also is a former pension board trustee.

Federal and state investigators are looking into whether city officials violated securities laws by failing to disclose to bond investors the deteriorating condition of the pension system, which today has a deficit of at least $1.4 billion. Officials also failed to disclose unfunded retiree health-care costs of more than $500 million, according to charges. The FBI and US Attorney’s Office are investigating whether federal fraud and public-corruption laws were violated.

The trio resigning Monday joined a growing list of top City Hall figures whose careers, either directly or indirectly, have foundered in the turbulence created by the pension crisis, which threatens to overwhelm city finances, according to the media report.

The first to go was City Auditor Ed Ryan, who announced his unexpected departure in January 2004. Two weeks later, city officials disclosed to Wall Street that San Diego’s financial statements contained errors and omissions.

By March, City Manager Michael Uberuaga, on duty announced his resignation. Last month, Murphy announced he will resign effective July 15, less than eight months into his second term (See  San Diego’s Murphy: ‘The city needs a fresh start’ ).