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— Davis and one other prominent San Diegan told the City how it could finance the bonds much more cheaply, but they were told to shut up. "Murphy was being politically expedient. He had decided he wanted the bonds sold, and so he was not going to let the developing situation affect that," says Davis.

The City went on to peddle other bond issues that omitted mention of the pension deficit. To Aguirre, that's proof of scienter -- deliberately covering up the pension shortfall. That conclusion is undeniable.

Kroll drops the ball in several other places. For example, it notes that outside pension counselors such as the actuary and fiduciary counsel were initially opposed to the underfunding schemes but were pressured to change their minds. But in some cases, Kroll doesn't specify who pressured the outside counselor. The mayor? Councilmembers? For $20.3 million, it would seem Kroll could follow the trails.

Some people who have been involved in the pension imbroglio are not as critical as I am. "It's pretty thorough, found a lot of fault, came down on the side of securities violations, doesn't pull any punches," says attorney Mike Conger, who has won key pension-related suits against the city. "It's time to stop looking for goats and move forward."

Carl DeMaio, president of the Performance Institute, a government-reform group, says that when the Securities and Exchange Commission reviews the report, it may well lift the culpability classification on securities violations from negligence to a tougher level, such as recklessness. Kroll found councilmembers "felony stupid, not felony criminal. People have their own views on whether there was intent or this was just incompetence," says DeMaio. The Securities and Exchange Commission will use San Diego as the canary in the coal mine for other cities ailing from pension woes. "San Diego will be a model of what to do and what not to do."

In my opinion, it's the Kroll report that will become a model of what not to do -- namely, swindle a strapped city. The report was a $20.3 million scissors-and-paste job, and anyone who studied Levitt's all-bluster/little-action history should have expected it.

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