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Brown Sues to Recover Bell Officials' Excessive Salaries and Cut Their Pensions, and Announces Other Steps on Public Pay and Benefits

Wednesday, September 15, 2010
Contact: (415) 703-5837

LOS ANGELES -- Attorney General Edmund G. Brown Jr., charging fraud, civil conspiracy, waste of public funds and breach of fiduciary duty, sued eight top Bell officials and council members today, and demanded they return hundreds of thousands of dollars in unwarranted salaries.

Brown’s lawsuit also called for a reduction of pension benefits for the officials.

“We are filing our lawsuit on behalf of the public to recover the excess salaries that Bell officials awarded themselves and to ensure their future pensions are reduced to a reasonable amount,” Brown said.

Brown also said he is widening his statewide probe of public salaries and benefits, and called for specific legislative action to reform salary and pension practices.

As part of the broadened investigation, he is serving a subpoena on the city of Vernon to obtain compensation records for city officials and employees. News articles have reported that one city official there received an annual salary of $785,000, and another received compensation totaling $1.6 million in a single year. Vernon, an industrial city near Bell, has a population of less than 100.

Brown’s statewide probe will focus on the many local and other government agencies that are paying annual salaries in excess of $300,000 and on the dozens of public pensioners who are receiving annual pensions in excess of $200,000. Examples include:

• An annual pension for a former city manager that is over half a million dollars.

• Annual compensation for the chief administrator of a public hospital that is over $800,000.

• Annual compensation for a county administrator that is over $420,000.

• Annual compensation in a single year of over $438,000, including payments for unused sick leave and vacation, for a city manager of a city of 36,000.

“These high salaries and pensions demand prompt and comprehensive reform,” Brown said. “Accordingly, I am calling for legislative action to:

• Establish a Compensation Commission to cap public salaries at reasonable levels,
• Eliminate loopholes that allow exceptions to the limits on pension benefits,
• Require a full and complete public posting of all public employee salaries, and
• Amend the state Constitution to require charter cities to comply with salary and pension laws.”

Brown’s lawsuit was filed against former city manager, Robert Rizzo; former assistant city manager, Angela Spaccia; former police chief, Randy Adams; council members Oscar Hernandez, Teresa Jacobo, and George Mirabel; and former council members Victor Bello and George Cole. The suit’s charges include fraud, civil conspiracy, waste of public funds, and breach of fiduciary duty. It also alleges that the defendants deliberately misled the public about the true amount of their compensation.

The suit demands the defendants return all excessive compensation and asks the court to establish appropriate salary levels for pension purposes. Rizzo’s last annual base salary was $787,638, Adams’ $457,000, and Spaccia’s $336,000. Bell city council members were paid $96,000 a year before they took a recent cut. Cities of similar size pay their council members $4,800 a year.

Since 1993, the Bell city council raised Rizzo’s salary 16 times, with an average increase of 14 percent a year. In 2005 alone, the city council raised his salary by 47 percent. Since 2003, council members also awarded themselves salary increases of 16 percent a year.

In 2008, Rizzo had a phony memorandum prepared for public distribution that showed council members were paid $673 per month and Rizzo was paid $15,478 per month, Brown charged. In fact, council members were actually paid $7,666 per month, and Rizzo was paid $52,325 per month.

“I’m going to continue to do everything in my power to go after corrupt officials who, rather than doing the public’s business, scheme behind closed doors to line their own pockets,” Brown said. “These officials must be forced to give up their ill-gotten gains, and we must enact strict reforms to prevent these kinds of abuses in the future.”

CalPERS, the state’s public employee retirement system, applauded the Attorney General’s efforts.

“We welcome the support and involvement of the Attorney General in helping to scrutinize extraordinarily high compensation,” said Anne Stausboll, Chief Executive Officer of CalPERS. “I'm confident that CalPERS’ own efforts and those of the Attorney General will help protect our members and employers, and restore public confidence in pensions and their value in public service.”

Copies of the complaint and subpoena served in Vernon are attached.

# # #
AttachmentSize
Vernon Subpoena453.93 KB
Complaint3.81 MB

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