What do you get when you cross Little Mary Sunshine with the Abominable Snowman? You get an email newsletter named Wolverine Network, sent to a list of prominent San Diegans, some still powerful. The publisher is John Kaheny, who as the second-highest official in the city attorney’s office advised the San Diego City Council in 1996 when it increased pension benefits and decreased pension contributions — a move that started the City on the way to financial perdition. Kaheny did not tell the council to reject the deal, charges City Attorney Mike Aguirre. Kaheny says he was in no position to do so. Their mutual contempt grew. Kaheny, after retiring as Chula Vista’s city attorney, is running this newsletter that drips with both pathetic naïveté and seething hatred.
Get this: on May 5 of this year, Kaheny sent to his network some opinions penned by a Wolverine member. The member wailed about the “false theories of bankruptcy and the pension ‘crisis.’ ” By putting the word crisis in quotes, the Wolverine correspondent was saying the pension debacle was fabricated. This is a conclusion that one investigator after another has thoroughly rejected. Opined the writer, “No one in City hall had ever uttered the word bankruptcy in a meeting.” (Is that a surprise?) The Wolverine Network writer went on to bemoan “the savage raid on San Diego’s good name and reputation…orchestrated, manipulated, and fueled by Shea, Shipione, Lam, and Aguirre’s greed.” (That’s lawyer Pat Shea, pension whistleblower Diann Shipione, former U.S. attorney Carol Lam, and Aguirre, the main target of the Wolverine Network’s venom.)
By now, most San Diegans know that in 1996, the council and pension board voted to increase pension benefits and decrease funding. The idea was to raise money for the Republican convention, which was to be a vehicle to tout then-Mayor Susan Golding for higher office. Then the council went on to add more pension goodies for employees and stated that if the pension ever got below 82.3 percent funded, the City would have to kick in more money. By 2002, it was clear that the pension deficit would be crashing through that 82.3 percent safety net. So in 2002, the council and pension board voted to ignore that threshold — and further boost benefits to appease the labor unions. Shipione, a member of the pension board, complained loudly, calling the move “almost corrupt.” Two years later, the pension fund was not even two-thirds funded.
Shipione pointed out that the City was putting false information about the pension deficit in its bond prospectuses. When Aguirre got into office, he wanted to see the wrongdoers punished. The Wolverine Network lamented that the bad publicity began with “Pat Shea and his Bush/Republican/back east NY Times connections.” Ulp! Such nonsense. Any number of publications cocked an eyebrow at the San Diego scandal: The Wall Street Journal, Fortune, Forbes, Business Week, the Financial Times, not to mention local publications including the Reader, Voice of San Diego, and even the Union-Tribune. The book While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis, by best-selling author Roger Lowenstein, devoted several excellent chapters to San Diego’s scandal. Some investigative entities spent months studying what happened: Kroll Inc., the Securities and Exchange Commission, accounting firm KPMG, the district attorney, the U.S. attorney, as well as Aguirre. Importantly, the media and investigative entities in essence came to the same conclusion: fraud was rampant as the City cooked the books, drained the pension fund while raising benefits, and concealed the illegal activities from the citizenry and bond investors.
But John Kaheny still doesn’t get it. Consider his statement of January 26 of this year: “Granted some things went very wrong in 1996 and 2002, but they could have been easily fixed by real changes until the Emperor [Aguirre] decided it was better to have a witch hunt and a lynching party.” Kaheny is saying that the politicians and bureaucrats of San Diego, blessed as they are with high intelligence and impeccable personal integrity, would have smoked out the pension deficits, honestly addressed them, and set San Diego’s books in order — presumably keeping the populace and bondholders completely informed. If you believe that, you should see a psychiatrist — immediately. You are too gullible to be walking the streets or opening emails from Nigeria.
But Kaheny thinks Aguirre should see the psychiatrist. In his writings, Kaheny refers to Aguirre’s “paranoid mind (or what’s left of it).” He says that Aguirre is “seditious against his clients.” Seditious?
Now, who receives these emails? Kaheny says the list originally went to friends and alumni of the city attorney’s office. The list “grew by word of mouth.… No one is on the list who has not asked,” says Kaheny. The Reader was able to get the Wolverine Network list. To be sure, being a recipient of an email doesn’t mean one believes all the contents. But of the more than 500 recipients, most appear to be San Diegans who, pathetically, believe that the City is clean and its critics are wrong. Of course, Jan Goldsmith, the establishment toady opposing Aguirre in the upcoming election, is a member of the Wolverine Network. Not surprisingly, the former bureaucrats who are under indictment in the pension fraud are members: Cathy Lexin, Mary Vattimo, Terri Webster, and Lori Chapin. Other hate-mail recipients are ex-bureaucrats cited for wrongdoing by the Securities and Exchange Commission: Ed Ryan, Pat Frazier. And those criticized in the Kroll report: councilmembers Scott Peters and Jim Madaffer and former city manager Jack McGrory.
Getting the hate messages are Mayor Jerry Sanders aides: Kris Michell, his political manipulator; Jay Goldstone; Greg Levin; Maureen Stapleton; Patti Boekamp; along with his former real estate czar, Jim Waring, who left in a hurry. There are former councilmembers: Michael Zucchet, Barbara Warden, Judy McCarty, Harry Mathis (the last three approved the 1996 deal and Zucchet approved the 2002 arrangement). And officials of the pension system involved in the controversies: Keith Enerson, Doug McCalla, Fred Pierce, Roxanne Parks. And Bruce Herring, former deputy city manager who retired at age 56 at $144,000 a year. And former officials of the city attorney’s office who ran for Aguirre’s job, Leslie Devaney and Deborah Berger. And former district attorney Paul Pfingst, who was instrumental in getting Padres majority owner John Moores off the hook after he showered gifts on a former councilmember. And Tom Story, former top city bureaucrat who became an official of the notorious Sunroad, and his lawyer, Pam Naughton, along with Sunroad lawyer Steven Strauss. And, of course, establishment darling Alan Bersin and Sheriff Bill Kolender.