City of San Diego Auditor Luna gets snubbed

A city can have an independent auditor or it can have an “independent” auditor. To no one’s surprise, San Diego has the latter.

City auditor Eduardo Luna, who was told he would be independent, has battled city leadership over numerous snubs and insults: in May, he asked for $60,580 in legal-defense fees he incurred after former mayor Jerry Sanders spent almost $123,000 of city money to investigate him. Luna was essentially exonerated, but he can’t get his money and is now being told he shouldn’t have hired a lawyer to defend himself. He is being required to sign a statement saying that the city’s audit committee reprimanded him. But his lawyer, Mike Aguirre, says he should not sign it because it is not true.

In his claim seeking the payment, Luna puts blame on the city attorney’s office for holding up his reimbursement. During the investigation, that office provided advice to the audit committee at the same time it claimed to be representing Luna. “That’s a blatant conflict of interest,” says Steve Erie, professor of political science at the University of California San Diego and an expert in local governments. City attorney Jan Goldsmith “is a partisan politician first and a lousy lawyer second.”

Erie coauthored Paradise Plundered: Fiscal Crisis and Governance Failures in San Diego, an award-winning book that shows how San Diego leadership has let the infrastructure and neighborhoods rot to steer money into corporate-welfare projects downtown. Erie is now working on another book to be named Coup D’état San Diego Style: Sex Scandal and the Politically Orchestrated Removal of Mayor Bob Filner.

The investigation and city’s refusal to reimburse his legal fees is not the first insult Luna has had to tackle. When former police chief Bill Lansdowne got into trouble for officer misbehavior, Luna’s office was not invited to investigate. When city employees were suspected of gasoline theft, the police department was given the investigative job — not the auditor. When drug-seizure money was not accounted for, the city initially gave the sleuthing job to the comptroller, although the auditor’s office later checked the findings.

Why has Luna been treated this way? He incurred Sanders’s wrath by investigating the Development Services Department and finding, among many things, that its computer system was a mess and that people were being overcharged and undercharged. Development Services is “the honeypot for the real estate development industry,” says Erie.

Historically in San Diego, real estate developers — a major source of politicians’ lucre — are considered sacred. Cross them at your own risk.

Luna also ruffled the leadership’s feathers by agreeing with the growing chorus of voices saying that the convention center was cooking the books by overstating hotel-tax receipts, attendee spending, and the center’s economic impact. Luna was stepping on more sacred toes.

Luna “looked so mild when he came in,” says Norma Damashek, a political commentator. “He looked like he was going to be a quiet pushover, and he turned out to be a tough guy in the best sense of the word. So, now [San Diego’s leadership] is trying to humiliate him or make his life so hard that he will resign before his time is up.”

The clandestine attempt to frighten Luna was entirely predictable from the outset. In mid-2006, the city, deep in a fiscal hole, was found to have issued false information when it sold municipal bonds. The auditor at the time had ignored the falsehoods. “No office…failed the City and its investors more than the Office of the City Auditor and Comptroller,” said a report by Kroll, Inc., which investigated the scandal.

The federal Securities and Exchange Commission demanded that the city have an independent auditor. The city attorney at the time was Mike Aguirre. “I sat in a meeting with the [Securities and Exchange Commission]. Sanders promised San Diego would have an independent auditor who can be a watchdog — no more politics,” recalls Aguirre. “Sanders is a liar.”

Sanders had earlier appointed a so-called charter-review committee — made up primarily of developer lobbyists and downtown boosters — which recommended that the mayor appoint the auditor. “It was a stacked-deck sham committee,” says Erie.

After some discussion, it was decided that the mayor would appoint an auditor who would report to an audit committee, not the mayor, and hold the job ten years. Supposedly, then, the auditor would be independent. This idea was to go before the voters in 2008 as Prop. C.

Donna Frye, Aguirre, and John Torell, a former auditor who departed blasting the administration for dishonesty, realized this was a case of the fox guarding the henhouse. They opposed it strenuously. But favoring the proposition was the well-financed corporate-welfare crowd: Mayor Sanders, Sempra Energy, the Building Industry Association, the Union-Tribune, the San Diego County Taxpayers Association, and the San Diego and Imperial Counties Labor Council.

Prop. C won. The citizenry was promised an independent auditor, but the language of Prop. C assured that the auditor would be “independent.” Luna, who had been hired in 2007, was given a ten-year term in spring of 2009. He would report to the five-member audit committee, which, predictably, had a three-person Republican majority: councilman (now mayor) Kevin Faulconer, Carl DeMaio, and Tom Hebrank, a Log Cabin Republican.

“It was a stacked-deck audit committee, too,” says Erie.

Because Aguirre is even more unpopular than Luna with the downtown clique, the refusal to pay the legal bill “is a double wipeout,” says Damashek. “Luna is being punished for being honest. This is a real test of the balance of power in our city.” Local politicians are “too timid — won’t stand up for the public interest when it comes to clean government, open government, and investigating the wrongdoing.”

“The city is slipping back into the practices” that caused the securities agency to demand an independent auditor, says Aguirre, “but the idea of an independent auditor is a sham.” Instead of facing the pension-caused deficit, the city continued to cook the books by “defunding city services, roads, sidewalks, rec centers, libraries, the police department.”

Faulconer did not respond to questions, but a spokesman for Goldsmith claims the city attorney wants an independent auditor.