Tuesday, April 26, 2011

Bell California's Fiscal Problems May Get Boost From Just Discovered Pension Slush Fund

Bell, California is again in the news as investigators have uncovered a $4.5 million slush/pension fund for the indicted former leaders of the nearly bankrupted city. The former city leaders saw their city's residents as an unending piggy bank - illegally raising property taxes to line their pockets, both in exceedingly high salaries, and now with a slush/pension fund that investigators are hoping to use to compensate the city and its residents.
The discovery of the money could be a huge boost for the finances of Bell, whose entire operating budget is about $13 million and is faced with major budget cuts in the wake of a corruption scandal. City officials said Monday that they were looking into whether they could use the $4.5 million to reduce the city's budget deficit.

In 2008, Rizzo said he wanted the city to spend $14 million to fund this second retirement account. Lourdes Garcia, the city's director of administrative services, testified that Rizzo said the city needed to place $2 million a year into the account, even as Bell's finances were deteriorating.

"My reaction was 'That's a lot of money,' " Garcia testified. "The city doesn't have that kind of money…. He knew that money was getting tight."

According to the transcripts, even after Rizzo left office last summer following The Times' disclosure of his enormous salary, he called Garcia on her cellphone on a Saturday and told her to move money into the Wells Fargo account set up for his and Spaccia's retirement. Garcia balked, telling him he was on administrative leave.

"I'm still the CAO," Rizzo told her, according to the transcripts.

The revelations come six months after The Times reported that Rizzo had created the supplemental pensions, which allowed employees to circumvent retirement limits set by California. Employees who worked in Bell for 25 years and retired at the age of 55 could get 90% of their salary — far more than most public employees who retire at the age of 60.

But prosecutors allege that Rizzo and Spaccia secretly schemed to give themselves an even richer supplemental pension. Prosecutors allege that they went to great lengths to hide the value of their pensions.

"What's important is that … they didn't just write a plan in which everybody got the same thing," Deputy Dist. Atty. Max Huntsman told the grand jury last month. "They very carefully crafted a plan to benefit themselves.... He planned to receive a heck of a lot of money further down the road. That was always his plan."
Bell is an exceedingly poor community, and the indicted former city leaders saw their residents as a piggy bank and unjustly enriched themselves by securing high salaries for themselves and other excessive perks.

Hopefully, the state and new city managers can recover these funds and use them to help bail the city out of its dire fiscal situation.

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