Compliance July 5, 2006

Conflict-of-Interest Ruling Prompts New Hearing in SD Pension Case

July 5, 2006 (PLANSPONSOR.com) - A case settled last week by California's 2nd District Court of Appeal that further defined the state's conflict-of-interest law may have bearing on an ongoing dispute over contested San Diego pension benefits, the judge handling the pension case said.
Reported by

California Superior Judge Jeffrey Barton said that the appeals court ruling   – which said the state’s conflict-of-interest law “must allow society to reverse the course and turn back the clock” – might affect his ruling on whether former San Diego pension officials broke the law by voting to approve a plan that allowed the city to put less money into the retirement system in return for larger pensions (See Six ex-SD pension Officials Bound Over for Trial).

The appeals court ruling was in favor of Carson Redevelopment Agency on its complaint to recover $850,000 from the owners of a housing complex. The money was paid to the owners through a public contract that was approved and signed only after they paid $75,000 in extortion money to the former mayor pro tempore of the City of Carson, according to news reports.

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The judges found a conflict-of-interest because the official voted to approve the agreement “based on his greed rather than on the due diligence and integrity he owed the city of Carson,” and they ordered the $850,000 be repaid.

According to the San Diego Union-Tribune, Barton called the attorneys handling the pension case back into the courtroom Wednesday for a hearing to discuss the matter.

City Attorney Michael Aguirre is trying to use the conflict-of-interest law to undo pension increases that were approved in 1996 and 2002, arguing that the boosts helped to underfund the city’s retirement system, the newspaper reported. But lawyers for the unions that stand to have their benefits rolled back say that it was the City Council and not the pension board that approved the labor contracts to increase retiree benefits (See San Diego’s Aguirre Demands Court Roll Back Pensions ).

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