SwiftVets.com

[SBD]

In case you haven't heard, San Diego is on the verge of Bankruptcy due to a flawed pension system and a cover up that is being investigated by the SEC, FBI and the Attorney Generals Office. In 1996, the City stopped contributing their usual payments to the Pension System since the Pension System was completely funded and so they could waste the money on other things. The stock market was growing daily and the funds investments were bringing in the money to cover all of it. The only stipulation in this scheme was that if the pension fund went down to a 82% level, the City would be required to make a balloon payment to make up for the shortfall.

Fast forward to October 2001 when the stock market hit new lows after the tech boom and 911. The fund was steadily dropping to levels that could trigger the balloon payment but no one at City Hall was made aware of the impending crisis. Instead, they used clever accounting practices to hide the unfunded portion of the Pension System. When the City Council was made aware of the problem, they did not try to fix it. They instead, began working on the Union Members and the Pension Board to recind the balloon payment requirement. They gave the Union more benefits in a "You scratch my back and I'll scratch yours" fashion. The plan gave the three top Union Bosses in San Diego employee status and added their Employee/Union Boss salaries together to come up with the figure to use as their retirement salary. In exchange, the Pension Board, which 2 of the 3 Union Bosses are members released the City from paying the baloon payment and lowered percentage allowed to be underfunded.

This is just the tip of the iceburg. There is still one piece of this puzzle I can't figure out and thought maybe someone on this forum could help shed some light. The part I have not figured out yet is what the Union was trying to gain by putting Donna Frye in the Mayor's seat. She was the only one to vote no the Union Boss benefit vote and yet, the Unions came out in full support for her writein campaign. They even assembled at the polling places and intimidated voters into writing in Donna Frye for Mayor in violation of Election Law. I am not suprised they broke election laws, but why this big push for the writein Mayor if she has publically voted against them?? Any ideas?

Below you will find the San Diego City Attorney's Second Interim Report. I have included the final conclusion below and the link to the entire 172 page report if anyone is interested.

Thanks,

SBD


http://genesis.sannet.gov/infospc/templates/attorney/pdf/secondinterimreport.pdf

IV.
CONCLUSION

Based upon these premises, the San Diego City Attorney concludes that there is substantial evidence consistent with a finding that the Mayor and Council authorized the issuance of City bond offering and related disclosure documents, identified above, that the Mayor and City Council Members knew to be false, as set forth above. Moreover, the San Diego City Attorney concludes that there is substantial evidence consistent with a finding that the Mayor and Council authorized bond offering documents and related disclosure offering documents, for the bond offerings identified above, while they recklessly disregarded facts indicating a risk that the disclosures might be misleading, as set forth above.

The San Diego City Attorney further concludes that there is substantial evidence consistent with a finding that the Mayor and Council had knowledge of facts set forth herein that brought into question the City's ability to repay the bonds sold by the City of San Diego, identified above. The City Attorney of San Diego finds that under these circumstances there is substantial evidence supporting a finding that it was reckless for the Mayor and City Council, with regard to the bond offerings identified
above, to approve the related disclosures to investors without taking steps to prevent the dissemination of materially false or misleading information regarding those bonds. In this matter, such steps should have included becoming familiar with the disclosure documents and questioning the City's officials, employees, or other agents about the
disclosure of the material facts.

Upon these premises the San Diego City Attorney concludes that there is substantial evidence consistent with a finding that the Mayor and City Council engaged in civil violations of federal securities laws. There is no finding of any wrongdoing by Council Member Tony Young. He was not elected to represent the Fourth Council District until 4 January 2005 and therefore there is no evidence of his involvement in any of the alleged securities law violations.

There is no finding of any wrongdoing by Council Member Michael Zucchet. He did not take office until 2 December 2002. He was not a Council Member during the period of time in which the information about the trigger and balloon payment was provided to the Council. On 3 December 2002 Mr. Zucchet did vote in favor of Item- 50 (Ordinance O-2003-67), which granted Fire Fighters Local 145 members additional benefits. Those benefits consisted of (1) allowing Fire Fighters Local 145 members to "convert Annual Leave accrued after July 1, 2002 to service credit in SDCERS or extend their participation in the System's Deferred Retirement Option Plan ("DROP");" and (2) allowing the purchase of creditable service to apply towards the ten year vesting requirement. Mr. Zucchet also voted to approve municipal bond disclosure documents for some offerings. There is no finding of wrongdoing by Mr. Zucchet.

The remaining council members fall along a continuum. The Mayor and Council Member Scott Peters have the most relevant training for understanding the underlying complex facts and circumstances. Both are Phi Beta Kappa graduates with economic degrees. Mayor Murphy holds a Masters of Business Administration Degree from the Harvard Business School. Council Member Peters is a graduate of Duke University. Mayor Murphy has a law degree from Stanford University; Council Member Peters has a law degree from New York University. Mayor Murphy was an associate in the law firm of Luce, Forward, Hamilton & Scripps. Council Member Peters was an associate at the firm of Baker & McKenzie. Mayor Murphy served as a Municipal and Superior Court Judge for 15 years. He was admitted to practice 16 December 1975. Mr. Peters had considerably less experience than Mayor Murphy, having practiced in the field of environmental law before his election to the Council in December 2000. He was admitted to practice in California on 6 June 1989.

At the other end of spectrum is Council Member Donna Frye. Council MemberN Frye has no advanced degrees in business or law. She has no expert training in law or business. Although she voted in earlier Closed Sessions to extend more benefits and to continue the underfunding she was the only council member to vote against extending those benefits when it went to a later public vote. She also voted against the ballpark bonds offering documents. Council Member Toni Atkins also has no expert training in law or business. However, Ms. Atkins voted to underfund the pension system and to exchange benefits for a waiver of the trigger and balloon payments.

Between these two points stand Council Members Brian Maienschein, Jim Madaffer, and Ralph Inzunza. Council Member Maienschein is an attorney but he had a community based practice. Council Members Madaffer and Inzunza have no relevant expert training. Council Member Madaffer attended Grossmont College and San Diego State University. Council Member Inzunza is a graduate of San Diego State University but his area of expertise is Latin American Studies.

Two former Council persons participated in the matters addressed in this report. They are former Council Members Byron Wear and George Stevens. Neither of these Council Members had expert training in law or business. KPMG has cited to the conclusion reached in the 16 September 2004 report of the City's outside counsel that Aany attempt to conceal the SDCERS funding situation would have been an >exercise in futility.'

The San Diego City Attorney concludes in this Second Interim Report that there is substantial evidence consistent with a finding that the Mayor and City Council did attempt to conceal and did conceal the 11 October 2004 and 29 October 2004 KPMG letters to San Diego Assistant City Attorney re: City of San Diego Fiscal Year 2003 Audit. (Exhibit 76)
granting of pension benefits in exchange for the waiver of the trigger and balloon payments.

The City Attorney of San Diego further concludes that there is substantial evidence consistent with a finding that the Mayor and City Council concealed the other aspects of the underfunding, trigger, balloon payments, wrongful accounting and funding practices as set forth in this report. Finally, the San Diego City Attorney concludes that there is substantial evidence consistent with a finding that the Mayor and City Council engaged in the alleged wrongful conduct either knowingly or
recklessly.

The San Diego City Attorney has investigated the issues raised by KPMG in their correspondence of 11 October 2004 and 29 October 2004 and related writings. This investigation has been conducted to resolve the federal securities law issues raised in those writings. Additional City Attorney reports will address other possible illegal acts and other responsible parties, if and when requested by KPMG.

Finally, it should be stressed that much of the evidence set forth in this report was made available to the investigation only because the Mayor and Council made the honorable decision to waive the confidentiality privileges held by the City. They did this knowing that it would put them at risk.

MICHAEL J. AGUIRRE, City Attorney
By _______________________________
Michael J. Aguirre
City Attorney

[Tom Poole]

This is another crappy story from California and San Diego should be made the example. Not only should the perpetrators be penalized but if any pensioner loses, the city should be liquidated and pensioners paid off. This should include sale of the court house and related real estate, vehicles, furniture, etc. If citizens suffer for absence of services, simply imprison everyone who knew and don't let them out until everyone harmed is paid in full. City, county, state and federal bureaucrats have been insulated from punishment long enough. It's time for the people to take back their government.
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