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California asks Bell to investigate police disability pensions

State retirement system officials are examining whether former City Administrator Robert Rizzo used workers' comp and disability pensions to pad payments to police chiefs who were being forced out.

May 12, 2011|By Jeff Gottlieb and Ruben Vives, Los Angeles Times

This bundling of vacation and sick time into a workers' compensation settlement would violate tax codes, several tax experts said.

If the allegations are true, "they're in essence depriving both the federal government and the state government of income tax payroll withholdings," said Gonzalo Freixes, associate dean at UCLA's Anderson School of Management. "They would both be criminally liable for tax evasion. The employee is guilty because he committed the tax evasion," and the employer "would be guilty of aiding and abetting tax evasion."

John Barcal, an associate professor of accounting at USC's Leventhal School of Accounting, added that the allegationsamount to falsifying documents.

Barcal said retirees could face charges if they knew it was wrong. If they didn't, he said, they would have to pay back taxes, interest and penalties.

Not every Bell police chief took the city up on its offer.

Former Chief Mike Trevis said he turned down Rizzo's offer of a disability retirement when he was fired, even though a lawyer for the city had the paperwork prepared.

The attorney said, "Fill them out and I'll take care of the rest," Trevis said. "There was nothing wrong with me, frankly, and I didn't think it was an honorable way to leave."

Besides Probst, three other former chiefs, Dennis Tavernelli, David Reed and Michael Chavez, received disability retirements. Chavez receives $116,040 a year; Tavernelli $165,708 and Reed $175,715. They declined to comment.

In addition to their disability pensions, Bell's chiefs received workers' compensation awards that ranged from Chavez's $140,000 to Tavernelli's nearly $400,000. Because they refused to talk to The Times, it could not be determined if their unused vacation and sick leave were included in their settlements.

Former Police Lt. Sergio Camacho, who took a disability retirement in 2009, said Rizzo and former Assistant City Manager Angela Spaccia told him his vacation, sick days and workers' compensation settlement were rolled into his workers' compensation payment of $96,354. He has a bad back, according to his workers' compensation file.

"I don't think my workers' compensation claim was more than $10,000," he said.

State pension administrators have also asked Bell to verify that Rizzo had the authority to approve disability retirements. In August 2000, Rizzo appears to have created a resolution in which the council granted the city administrator authority over disability retirements. State law requires that council resolutions must be signed by the mayor and city clerk. The resolution is signed only by Rizzo, and city officials said they could find no record of a council vote.

CalPERS has a 1990 resolution granting the city administrator authority over disability retirements. The resolution predates Rizzo, and CalPERS has asked the city to verify that it remains in effect.

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