San Diego Business Journal

San Diego Deputy Mayor Toni Atkins on Oct. 4 called for the resignations of Lawrence Grissom, administrator of the San Diego City Employees' Retirement System, and Loraine Chapin, the system's general counsel.

"I am outraged to learn that the SDCERS board and its administrator, for nearly two years, have withheld from the government authorities and the city of San Diego, critical documents which contain vital information concerning the pension system," she said after reviewing documents that were released by SDCERS to the city's audit committee.

Atkins also repeated her call for the resignation of Peter Preovolos, the board's chairman.

"I'm calling for their resignations based on the failure to release the March 5, 2003, advice letter from SDCERS outside counsel Seltzer, Caplan, McMahon, Vitek which indicates that actions taken by the board with regard to the 2002 employee benefits proposal were a breach of their fiduciary duty to the SDCERS beneficiaries."

The board, said Atkins, "should have disclosed this and any similar document."

"Their refusal to do so, until now, has cost the city's taxpayers millions of dollars. It has needlessly prolonged this matter. Even worse, they may have concealed this information from other trustees on the board," she added. "If so, this paints a very dark picture of how the board operates. This raises very serious questions, and the SDCERS board members who knew about this must answer questions regarding why they did not bring this to the attention of the city's employees and the City Council."

Atkins said that SDCERS needs people "who are committed to transparency in government and willing to make the difficult decisions legally that are necessary to resolve this issue."

She added, "I believe these resignations, along with the appointment of new board members, are necessary steps to put us on the path to restore the credibility of SDCERS and the integrity of the pension system."

Rebecca Wilson, a spokeswoman for SDCERS, responded that, "The acting mayor doesn't bring us into the loop when she's doing press conferences. We had no communication from her about this."

Both Grissom and Chapin are employed at the will of the board, Wilson explained, not the City Council.

"Ms. Atkins is welcome to her opinion, but there is no intention currently at this time for the board to ask for those resignations," said Wilson.

Meanwhile, San Diego City Attorney Michael Aguirre, supporting Atkins' call for the resignations, also called for City Manager Lamont Ewell to step down.

"The Seltzer Caplan document is disturbing because it mirrors whistle-blower Diann Shipione's November 2002 testimony during which she urged council members not to support the pension under-funding proposal," said Aguirre. "With the exception of (City Councilwoman) Donna Frye, all the then-sitting council members voted to ratify the agreement. These council members and City Manager Ewell have an obligation to tell the people of San Diego what they knew about the link between the expanded benefits and the pension system under-funding and when they knew it."

But Aguirre also chided Atkins for not pushing his reinstatement as the chief legal adviser to SDCERS.

As a result of the information revealed in the Seltzer Caplan letter, said Aguirre, he will file a motion asking Superior Court Judge Charles Wickersham to reconsider his recent decision to dismiss Aguirre's lawsuit alleging that the city and SDCERS' officers held financial interests in "illegal pension benefits that they created as part of the 2002 quid pro quo contract."

Aguirre also said that he intended to file a new lawsuit that will allege "a conspiracy to cause SDCERS board members to breach their fiduciary duty."

Ewell, who months earlier had announced his intentions to step down by year's end, was not available to comment on Aguirre's latest remarks, according to his spokeswoman. However, in an earlier statement, Ewell had accused Aguirre of "misrepresenting facts for his own personal agenda. He does not have the citizens' best interests at heart.
"I will not allow my integrity to be questioned because he is upset over (a) judicial ruling in which the court threw out his unfounded legal theory."

Ann Smith, legal counsel for the San Diego Municipal Employees Association, which frequently butts heads with Aguirre, also referenced the Wickersham ruling in an Oct. 5 memo to Judie Italiano, MEA president, and copied to Ewell and the City Council.

"Aguirre needed a new 'big splash' to overcome the significance of that defeat," wrote Smith, adding that the Seltzer Caplan document "provided just the right opportunity for such a splash."