Saturday, January 07, 2006 | A federal grand jury returned criminal indictments against five current and former city of San Diego pension officials Friday on charges of fraud and conspiracy for their part in the 2002 pension deal at the heart of the city’s fiscal and legal crisis.
Prosecutors from the U.S. Attorney’s Office allege that the officials deprived city employees, retirees and city residents of honest governmental services by personally and financially benefiting from a deal that they helped create and enact.
The deal, known as Manager’s Proposal 2, has been the primary focus in the city’s financial crunch and political upheaval for more than two years. The deal allowed the city to restructure its pension obligations and offered city employees increased benefits at a time when the city faced having to infuse between $25 million and $75 million into its troubled pension fund.
Charged are: Ron Saathoff, firefighter union president; Cathy Lexin, the city’s former human resources director; Terri Webster, former assistant auditor; Lori Chapin, chief pension attorney; and Larry Grissom, former retirement system administrator.
Saathoff, Lexin and Webster served as trustees of the San Diego City Employees’ Retirement System when Manager’s Proposal 2 passed.
“The citizens of America’s Finest City have the right to expect that those who are paid with taxpayer dollars to provide essential services are doing so with absolute integrity and without self-dealing,” said Daniel Dzwilewski, special agent in charge of the FBI’s San Diego office.