Friday, May 13, 2011

CalPERS Goes After Shady Disability Pensions in Bell

The LA Times reported yesterday that CalPERS is making its first appearance in the seemingly endless public corruption scandal in the Los Angeles County city of Bell. Acting in response to Times allegations that disgraced ex-administrator Robert Rizzo used disability pensions and workers' compensation settlements to force officers out of the Bell police department, the retirement fund has asked the new City Council to investigate.

I hang over this town like smog in August.
According to the Times, at least ten former Bell police officers (including four chiefs) received disability pensions and worker's comp settlements that Rizzo deliberately boosted in order to induce them to leave the department. As described by former Chief Andreas Probst, "If Rizzo wanted to get rid of you, he'd make some way to pay you off and make it beneficial for you financially. Too many people I can name retired on medical. Bob took care of them". In the case of ex-Chief Randy Adams, it appears that the scheme was used to entice Adams to join the department in 2009. Evidence suggests that Adams and Rizzo negotiated a deal promising city support for Adams' application for a disability pension based on his neck, knee, and back injuries (Adams resigned from the department when Bell's pay and pension scandals exploded last year). All of the disability pensions and worker's comp settlements in question were approved by Rizzo without City Council review.

CalPERS has asked the city to look into the disability pensions, and if records cannot demonstrate that they were based on "competent medical opinion", the benefits could be cut off. The legal issues arising from the worker's comp settlements are potentially more serious. Two city retirees have alleged that the city wrapped severance pay and unused vacation and sick time into these settlements. If this is true, the city would face charges of aiding and abetting tax evasion. The retirees themselves would face tax evasion charges if it could be established that they knew the settlements were illegal, and if not they would still be liable for back taxes, interest, and penalties.

And this sad story just keeps on going.


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