CalPERS Audit Discovers Former Police Sergeant, City of San Fernando Made Fraudulent Claim

Part One

In February, the California Public Employees’ Retirement System (CalPERS) — an organization built on the largest pension fund in the United States, which distributes retirement payments and benefits to more than two million members — won a judgement against former City of San Fernando police officer William Bailey, who CalPERS claimed had fraudulently received more than $200,000 in what is known as Industrial Disability Retirement payments (IDR).

CalPERS also alleged that then San Fernando City Manager Brian Saeki, with the tacit approval of the City Council — at which time consisted of Jesse Avila, Sylvia Ballin (mayor), Joel Fajardo, Robert Gonzalez (mayor pro tem) and Antonio Lopez —  knowingly approved a fraudulent claim by Bailey.

Bailey claimed to have been injured while working as a police officer. But CalPERS officials said they later learned that instead of retiring because of injury, Bailey was being fired by the City of San Fernando for having lied on a promotion application, claiming he had a college degree from Cal State University, Long Beach. He had been promoted to the rank of Sergeant when he filed for the disability retirement.

Bailey had moved near the top of the promotion list in part because he was a college graduate. But Bailey not only didn’t have a degree from Cal State Long Beach, he did not have a degree from any other college or university.

Bailey appealed the firing, and eventually reached a settlement with the City. Instead of fighting with Bailey over the termination, Saeki presented the council with a resolution that would allow Bailey to file an IDR claim; in exchange, he would drop his appeal and waive filing any further claims against the City. The resolution was passed, approved and adopted by the council on Aug. 4, 2014.

(Saeki left San Fernando in 2016 to become the City Manager for Covina. Last November, he accepted the same position for the city of Whittier.) 

After winning the judgement, CalPERS attorney Matthew Jacobs said his organization had referred the case to the offices of state Attorney General Xavier Becerra, and LA County District Attorney Jackie Lacey, “because it seemed to us to be such a clear case of conspiracy, really, between the police officer and the City on a false disability claim, which is very detrimental to the whole thing we’re trying to do here; the whole idea of why this disability retirement benefit was established.”

“I don’t know if I would characterize it as a ‘major get’; it’s unusual in the brazenness, if I might, with which it was undertaken,” Jacobs continued. “It’s just a flat-out deal. It’s documented in the settlement agreement between the City and Mr. Bailey that this [deal] is what’s gonna happen. It’s pretty crazy.”

The City of San Fernando, as a public agency, is contracted with CalPERS for disability and retirement benefits for eligible employees. An industrial disability retirement claim is made by those who are injured on the job and cannot return to work. These payments are tax-free, meaning the recipient receives more money than from a standard disability claim.

Jacobs recoiled at the notion of this being a “victimless crime.”

“There’s a lot of things at play here,” he said. “You’ve got a benefit that is supposed to go to legitimately disabled workers, state and municipal workers, in compensation for the sacrifices they’ve made. And every time you get a false one, it undercuts the legitimacy of the whole benefit, I would say.

“It raises questions in the public’s mind about ‘is everybody doing this?’ Because it’s not real disability. At a different level — I won’t say higher or lower — but a different level in my mind, it kind of undermines public trust in government and, in this case, the police, which is terrible. And you’ve got a city official here.”

CalPERS is making Bailey repay a total of $230,938.66. So far, according to CalPERS, Bailey has returned $86,442.68. Currently, all of his monthly gross retirement check of $2,951.23 goes toward the repayment.

The judgment was posted on the CalPERS’ website’s public board meeting. When contacted by the San Fernando Valley Sun/El Sol, Jacobs confirmed the organization’s case and judgement result, as well as its efforts to have the overpayment returned.

According to CalPERS officials, in order to be eligible for a disability retirement, a person must also have the ability to be reinstated to his/her former position if they recover from their injury. When they are terminated for cause, the option of returning to work isn’t an option, which therefore makes them ineligible for a disability retirement.

When the San Fernando Valley Sun/El Sol asked if the City could be considered liable for its role in this false claim, Jacobs said it would be now up to the state Attorney General’s office or the LA County District Attorney’s office to pursue further action.

“We don’t have a great insight into how rare or not it is. Hopefully it’s rare,” Jacobs said. “But it’s easier to sign somebody off on a disability retirement. The payment ends up being tax-free, so the city suffers less financially.”

Any other role the City Council may have had in approving the “deal” with Bailey, beyond signing off on the resolution, has not been disclosed. It has also not been disclosed why the City would agree to grant an industrial disability claim when it already had cause to legally fire him for lying on his resume.

CalPERS officials were also asked if the City of San Fernando had provided documentation supporting the claim that Bailey’s disability had occurred by having an accident or just being injured while on the job. Calpers officials indicated that it is not required, and cities can simply verify claims themselves without providing proof.

They went on to say that CalPERS couldn’t confirm if San Fernando had “any other members who were falsely retired on an Industrial Retirement Disability, as Bailey was.”

Part Two of this story will appear next week in the San Fernando Valley Sun/El Sol.