Felons and public pensions
Contra Costa Fire Capt. Jon Wilmot stole hundreds of items from county firehouses, everything from tools and toilet paper to binoculars and chain saws.
Los Angeles County Fire Capt. Tod Hipsher, while on duty, ran an illegal bookmaking operation and directed the physical intimidation of clients who failed to pay their gambling debts.
Wilmot and Hipsher, who worked, respectively, for 27 and more than 30 years, each pleaded guilty to felonies. The question now is whether they can keep their full pensions.
Their cases provide the first legal tests of a controversial provision in Gov. Jerry Brown’s 2012 statewide pension changes. Under the law, workers convicted of job-related felonies lose pension benefits from the time they start committing their crimes.
The legal issue is whether the law violates employees’ “vested rights,” the constitutionally protected pension promises they received when they started working.
Last week, a Contra Costa judge upheld the reduction of Wilmot’s pension, but did so in a surprising ruling that didn’t address the vested rights issue. Wilmot’s attorney says he will likely appeal.
Meanwhile, Hipsher’s attorneys have already asked the state Court of Appeal to overturn the ruling against him. Last year, the Los Angeles County judge in his case upheld the new law.
The cases challenge how far government can go to punish employees who violate the public trust. For each of these felons, there’s at least $1 million at stake, assuming they live their full lifeexpectancy.
Wilmot retired in 2012 and collected his full pension until after he entered his guilty plea. In April 2016, the Contra Costa retirement system retroactively reduced his payments from $105,000 a year to $34,000 annually.
Wilmot lost 13 years of service credit, from when he started embezzling from his fire district in 2000 to his retirement at the end of 2012. And his pension was recalculated based on his salary before his crimes.
The pension system also retrieved about $250,000 in overpayments Wilmot had already collected. But it gave him back a nearly identical amount for the pension payments he had made during the disallowed 13 years.
Wilmot’s attorneys claimed the new law didn’t apply to him because he retired 19 days before it went into effect on Jan. 1, 2013. Consequently, they argued, the county retirement system couldn’t trim the pension he was promised when he started working.
Attorneys for the county retirement system said Wilmot’s retirement date didn’t matter; the law applied because his conviction occurred after the law took effect.
And attorneys for the state argued that the benefit promised when he started working was premised on providing “faithful service,” which Wilmot failed to do during his years of criminal activity.
In a perplexing ruling, Judge Charles Treat forged his own path. He concluded that because the retirement board didn’t act on Wilmot’s pension application until early 2013, he hadn’t officially retired before the new law took effect.
Essentially, he rejected the firefighter’s timing argument and sidestepped the key vested rights issue.
Unlike Wilmot, there was no dispute that Hipsher retired after the new law took effect. And, in his case, Los Angeles County Judge Joanne O’Donnell addressed the vested rights issue head on, ruling the state could modify his pension because the cuts were “proportional to the employee’s dereliction of duty.”
Hipsher claims his bookmaking scheme was unrelated to his work. But, according to investigative reports cited in the court ruling, he ran the illegal gambling operation while on-duty.
Hipsher even twice met in the fire station with undercover Immigration and Customs Enforcement officers posing as members of an outlaw motorcycle gang, and instructed them to physically intimidate gambling clients who hadn’t paid their debts.
The Los Angeles County retirement system wiped out his service credits back to 2001, reimbursed him $48,243 for pension contributions he had made since then and cut his annual pension from $82,000 a year to $35,000 annually.
He also lost the conversion of his pension to a tax-advantaged service-related disability because the injury occurred after he first committed his crimes. And his retirement health care subsidy was cut from 100 percent coverage to 68 percent.
It’s now up to the state appellate courts to decide whether the claw backs will stick, whether public employee pensions are so protected that no crime can undo them.