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Former City of Bell, California Manager Robert Rizzo (L) and former City of Bell, California council member Victor Bello (R) appear in court with six other current and former City of Bell officials at Los Angeles County Criminal Courts September 22, 2010.
The mayor of Bell said today he and other city officials are working with lawyers to try to recoup $4.5 million that was set aside as a special pension fund by former Bell City Administrator Robert Rizzo and his top aide.
The new mayor of Bell Ali Saleh said the fund could provide a potential lifeline to a city on the brink of insolvency.
Saleh has been in the job for a couple weeks and is trying to fix the city’s budget in the wake of a corruption scandal. Eight former Bell officials face charges.
"At the moment we are really in need of that money," Saleh said.
According to grand jury testimony obtained by the Los Angeles Times, Rizzo established two pension plans designed to provide retirement income above the level he and other employees would receive from the state pension system.
One retirement account covered about 40 employees, giving them benefits that exceeded those allowed by California's public employee pension rules; a second was just for Rizzo and his deputy, Angela Spaccia, according to the transcripts, allowing them to get around IRS regulations capping government pensions.
The discovery of the money could be a huge boost for the finances of Bell, whose entire operating budget is about $13 million and is faced with major budget cuts in the wake of a corruption scandal.
City officials said Monday that they were looking into whether they could use the $4.5 million to reduce the city's budget deficit.
In 2008, Rizzo said he wanted the city to spend $14 million to fund this second retirement account. Lourdes Garcia, the city's director of administrative services, testified that Rizzo said the city needed to place $2 million a year into the account, even as Bell's finances were deteriorating. ``My reaction was `That's a lot of money,' '' Garcia testified. ``The city doesn't have that kind of moneyâ€¦. He knew that money was getting tight.'' According to the transcripts, even after Rizzo left office last summer following disclosure of his enormous salary, he called Garcia on her cell phone on a Saturday and told her to move money into the Wells Fargo account set up for his and Spaccia's retirement. Garcia balked, telling him he was on administrative leave.
The proposed retirement plan for Rizzo and Spaccia was so secretive that Garcia, who was in charge of the city's finances, didn't know about it until Rizzo mentioned it to her in 2008, three years after it was first considered. Rizzo, she testified, ``called me into his office to let me know that the fund wasn't fully funded, why I haven't funded the plan as directed, and at that point I didn't understand what he was talking about.'' Garcia testified under a grant of limited immunity, as she did in the preliminary hearings of the Bell officials. She said Rizzo looked for ways to find cash for his retirement fund when she told him the city didn't have the $2 million annually. She said Rizzo and Spaccia discussed whether employees who quit rather than retired could be eliminated from the plan. About 40 Bell employees are eligible to receive the supplementary pension. Pedro Carrillo, Bell's interim chief administrative officer, put a halt to all payments several months ago.
The supplemental plan also covers City Council members, who approved it in 2003, guaranteeing them minimum payments of $2,000 a month if they quit as early as age 52 and had spent five years in office, in addition to their normal payments from the state retirement fund.
The grand jury also heard testimony about attempts to hide the $457,000 annual salary of Police Chief Randy Adams by splitting it into two contracts, one as police chief and the other as special police adviser. Rizzo told then- City Atty. Edward Lee that hiring Adams would save the city money.
Huntsman said that the council never approved Adams' contracts, which Bell's charter required.
KPCC's Shirley Jahad and Jason Kandel contributed to this story.