Defense attorneys in the federal pension-fraud case have notified the judge of a favorable development in the separate state pension case that they say will have “a profound impact” on both prosecutions.
The state trial, which had been scheduled for Feb. 26, was recently delayed indefinitely after the California Supreme Court ordered a hearing on why the case should not be thrown out. The move gave a boost to the defense, which has long argued that criminal charges are baseless and should be dismissed.
The defense in the federal case reasoned in a court document filed Friday that if the state court ultimately decides the case should be dismissed, then the federal case should meet the same fate.
“The issues presented to the court of appeals, which now will be heard and decided, (have never been litigated) and will have a profound impact on both the state and federal criminal prosecutions,” wrote defense lawyer Frank Vecchione, who represents former assistant city auditor Teresa Webster, a defendant in both the state and federal cases.
But the government responded that the cases are in different jurisdictions and cannot affect each other. Government attorneys cited case law that shows a state prosecution does not bar a federal one, and vice versa.
“The government has every intent to proceed with this case, regardless of what happens in the state case,” prosecutors wrote in their response. “Accordingly, with the state trial vacated, this court should maintain (or expedite) its May 15, 2007, trial date.”
When setting the federal trial date for May, U.S. District Judge Roger T. Benitez indicated he wanted the state case – which preceded the federal indictments – to be tried first. It's unclear whether he will decide to postpone the federal trial indefinitely, or proceed in May as planned or sooner.
A hearing is scheduled for this morning in federal court on this and other matters.
The state case involves conflict-of-interest charges, while the federal case alleges fraud and conspiracy. There are three common defendants in the state and federal cases.
The state case accuses the former pension trustees of violating the state conflict-of-interest law when they voted on a proposal in 2002 that allowed the city to underfund the pension system, which now has a deficit of at least $1.43 billion.
State prosecutors contend the vote was linked to a package of enhanced retirement benefits given to all city workers, including the board members, so those members illegally benefited from their votes.
In January, state Superior Court Judge Frederic Link ruled there was enough evidence to try those three former pension trustees – Webster, Cathy Lexin, Ron Saathoff – plus three others, John Torres, Mary Vattimo and Sharon Wilkinson.
Defense lawyers in that case have tried three times since then to overturn the ruling. First, another Superior Court judge agreed with Link. Then, the 4th District Court of Appeal declined to review the rulings.
The defense went to the state Supreme Court with a petition focused on their key contention: that pension benefits are part of a public official's salary, and votes on salary issues by public employees are exempt from the conflict-of-interest law violations.
In a brief order late last month, the high court directed the 4th District court to hold a hearing to decide why the criminal case should not be dismissed.
A status hearing in the state case is scheduled for June.
Both the state and federal cases rely on much of the same evidence, facts and behavior, but the federal case charges Lexin, Saathoff, Webster and two other former pension officials – Loraine Chapin and Lawrence Grissom – with fraud and conspiracy.
The federal indictment, issued by a grand jury in January, says the defendants deprived citizens and pensioners of their right to honest services by conspiring to illegally obtain enhanced retirement benefits for themselves in exchange for allowing the financially strapped city of San Diego to underfund the pension system.
Kelly Thornton: (619) 542-4571; kelly.thornton@uniontrib.com
