CalPERS, Treasurer Fiona Ma, Board Members David Miller and Theresa Taylor, and CalPERS Employees Engage in Illegal and Dishonest Electioneering Against Candidate JJ Jelincic

On Sunday, we documented one of the illegal and desperate measures CalPERS and its election vendor, K&H Printing, are taking to try to defeat JJ Jelincic, the favorite in current election for the retiree seat, which is the use of see-through ballot envelopes that expose the voters’ choice. Making votes visible through the sealed envelope allows for election tampering by throwing out votes for Jelincic before they are tabulated as received. We described how this scheme constitutes mail fraud, a Federal crime, as well as violating the California constitution.

Today, we turn to the second of the illegal and reckless measures, that of prohibited electioneering by CalPERS as an institution, key board members, and certain employees. Keep in mind that California, like many states, does not allow officials and employees to use government resources in any election campaign. Yet these parties have flagrantly violated these requirements, with Treasurer Fiona Ma using her state letterhead in a twice-circulated missive attacking Jelincic. Stunningly, a large-scale mailing of this letter included address formats that exist only in CalPERS member database, which is a flagrant violation of the law and beneficiary privacy. Similarly, board member David Miller illegally spoke from the CalPERS dais to campaign against Jelincic, and two CalPERS employees sent out e-mail hit pieces signed as “CalPERS Team Members”.

Sadly, we also have to spill some ink debunking the smear propagated by these players. Jelincic was sanctioned by the State Personnel Board in 2011 for discourteous behavior towards three women, none of whom reported to Jelincic.1 He got the mildest sanction, a reprimand. That is all that happened. You’d never imagine that given the histrionics and wild distortions. The mischaracterization of gender-line-crossing faux pas trivializes actual abuses and gives #MeToo a bad name. As one prominent beneficiary put it (emphasis original):

At the time everyone knew that this was a slander-campaign orchestrated in response to JJ attempting to hold CalPERS management accountable, and if there had been any real substance to these allegations, JJ would never have subsequently been re-elected to the CalPERS board AND as president of his union local. Dragging it up is simply another campaign by CalPERS managers and their flunkies to avoid having to report to a board that holds them accountable, as fiduciaries should do.

Using Official Resources to Electioneer Is Criminal

California Government Code Section 3204 states:

No one who holds, or who is seeking election or appointment to, any office or employment in a state or local agency shall, directly or indirectly, use, promise, threaten or attempt to use, any office, authority, or influence, whether then possessed or merely anticipated, to confer upon or secure for any individual person, or to aid or obstruct any individual person in securing, or to prevent any individual person from securing, any position, nomination, confirmation, promotion, or change in compensation or position, within the state or local agency, upon consideration or condition that the vote or political influence or action of such person or another shall be given or used in behalf of, or withheld from, any candidate, officer, or party, or upon any other corrupt condition or consideration. This prohibition shall apply to urging or discouraging the individual employee’s action.

Section 3205 (d) makes violations subject to prosecution. California Government Code sections 19990 and 19572 also restrict political activity of state officials and employees. CalHR provides guidance on what activities are permissible.

Needless to say, there are grey areas. For instance, while State Controller Betty Yee reportedly believes that endorsing any candidate for state office would violate the restrictions on campaigning by government officers and employees, others do not share that view. However, as we’ll explain, the violations by CalPERS, certain board members and employees, are egregious.

State Treasurer Fiona Ma’s and CalPERS’ Violation of the Law

On July 15, Treasurer Fiona Ma, who also sits on CalPERS’ board, wrote a letter on her official letterhead, with her seal of office, demanding that JJ Jelincic to abandon his board seat campaign.

Even if this had been strictly a private communication, it would constitute a criminal violation of Section 3204. Note that state senator Connie M. Leyva and CalPERS board member Theresa Taylor also had their names on the letter but that Taylor did not affix her signature.

Ma made sure her “open letter” was circulated widely. She posted it on her official State Treasurer Twitter account, and curiously had no mention of it on her personal Twitter account. It was picked up the same day by the Sacramento Bee. Taylor lost no opportunity to pile on. At the board offsite that started early the week following, where her presence was funded by the state, Taylor repeatedly touted the letter and hectored retirees who voiced support for Jelincic.

Ma got to double down via a large-scale mailer funded by the dark money group “Concerned Retirees for Pension and Health Care Security.” We’ll have more to say about that in a separate post.

You can see that the intent was to make the mailing look like an official state communication, with Ma’s name festooned on the envelope:

The first page identifies the astroturf group, which implausibly registered only on August 22, when it had to have funded this mailing easily a month before that, and subsequently misrepresents the State Personnel Board action:2

The July 15 letter comes next, where you can see the criminal abuse of Ma’s letterhead:

Amusingly, this heavy-handed ploy appears to have backfired. The “Important Information” gimmick has become common among scummy financial institutions and cable companies, and wound up signaling that the message might not be on the up and up. It also called attention to Ma’s abuse of her emblems of office.

Ma has now tried implausibly to deny that she had any knowledge of this mailer. Recipients who complained to Ma’s office were first ignored, but as the numbers grew, they received messages similar to the one sent by her communications director Mark DeSio sent to me yesterday:

I read your story in Naked Capitalism.
Here is a statement that we have been issuing from our office to the public ever since learning about the mailer:

“The packaged mail that you received that includes a letter from Treasurer Fiona Ma regarding CalPERS was not originated from Treasurer Ma or the State Treasurer’s Office. Tax dollars were not used to circulate the package. Treasurer Ma and the State Treasurer’s Office did not authorize the sender of this package to circulate it and we are unaware of how they received your address to send this to you. If you wish to file a complaint please contact the Fair Political Practices Commission at (916)322-5660.”

If you think anyone who wanted to have a political future in California would cross the state’s second highest officer by sending out a mass mailing without her knowledge, I have a bridge I’d like to sell you.

Moreover, the indignation is hard to swallow. Since when does anyone need permission to reproduce an “open letter”?

And if Ma’s office thinks they are the victims of an abuse of the Fair Political Practices law, why aren’t they making a complaint, which the FPPC would take very seriously, as opposed to asking not-influential CalPERS beneficiaries to do their heavy lifting?

Moreover, Ma’s supposed unhappiness with the dark money group making use of a letter she’s heretofore been eager to have circulated widely conveniently diverts attention from the real issue, which is her misconduct in having illegally issued the July 15 missive on her official letterhead.

The Sacramento Bee today did Ma a favor in publishing an article about the mailer controversy that completely ignoring the issue of her illegal campaigning against Jelincic. As one connected CalPERS beneficiary noted:

I love it when a biased media outlet gets caught on both sides of an issue.

As for the FPPC — they’re aware of this but haven’t initiated a formal investigation? Typical behavior by an organ of our one-party state! Just like Xavier Basura being the only AG outside of Alabama not to investigate Google and Facebook for anti-trust violations.

CalPERS is complicit in this misconduct. In theory, the astroturf group should not possess a mailing list of retirees.

However, we have direct reports from individuals who received the Fiona Ma mailing using a unique name/address combination which only CalPERS has for official CalPERS communications. This suggests that someone at CalPERS shared at least some addresses from mailing list with the dark money group to try to reach retirees.

Bear in mind that while CalPERS’ retiree names are public, their addresses are not; this was resolved in court. That means that sharing the addresses is a violation of beneficiary confidentiality.

There are only two ways to look at this. Either CalPERS’ officials chose as a matter of policy to provide addresses to the dark money group to better tarnish Jelincic. The other possibility is that an employee on an unauthorized basis tossed some addresses over the fence to allies. The first possibility means CalPERS as an institution broke the law. The second means that CalPERS has deficient controls over its own data and records. What else might rogue employees choose to share and sell?

Board Member David Miller Illegally Electioneers; Other Board Members Violate the Public Employee Retirement Law to Smear Jelincic

Board Member David Miller has also made what looks to be a clear-cut criminal violation of Section 3204. At last month’s board meeting on August 19, two CalPERS employees, Charity Joy Bowman and Gabriela Urdeneta spoke in public comments, peculiarly claiming to act as mouthpieces for the staffers who had complained about Jelincic years ago.

Bear in mind that their comments should have been cut off immediately because they violated the law that governs CalPERS, the Public Employees Retirement Law (PERL). It states:

Chapter 2, Article I – General
552.1(b)(1) Public Comment
…… public comment is limited to the subject matter jurisdiction of the board.

These presentations looked orchestrated. Board members piled on, thanking the women for their courage (huh?) and finger-wagging. This reaction stands in stark contrast to virtually all other public comments at CalPERS, including ones made by prominent union figures who are clearly aligned with the majority of the board. Board members remain silent and move on to the next item.

David Miller’s comment was clearly outside the pale:

Board Member David Miller: Yeah. I also want to thank you for your courage in being here and bringing this and to the victims. I think there are serious legal constraints on what we as Board members, and we as a Board can do. I’ve raised this before in a broader sense in terms of us not really having the tools, constitutionally or otherwise, to deal with failures of good behavior or even egregious or criminal behavior. And that is something that I’m hoping, in the long term, gets remedied. But what I would say to you is, for example, for my part, I’m — I, and I know others are on this Board, are support and endorsing Henry Jones. And that is a major, if not the most significant, part of my reasoning for doing that, beyond just, you know, Henry’s experience, his knowledge, his commitment. He’s been steadfast and a solid leader, but his integrity is peerless. And I think the message I would have, too, is your — is there’s not much that we can do. There’s not a real role to play. But where there is something that we can and could do, I would certainly support Ms. Taylor in working to see what we could do and suggest that maybe your communication to those others who have endorsed Mr. Jelincic might be a better place to try to communicate and have some dialogue.

Even the normally “see no evil if it advances CalPERS’ interests” General Counsel Matt Jacobs roused himself to rein Miller in:

General Counsel Matt Jacobs: Yes. I would just gently recommend to the Board that we not get drawn into the electoral debate. You can obviously address the comments, but I would — you need to stay away from any kind of electioneering or anything that can be interpreted that way.

Treasurer Fiona Ma’s designee Frank Ruffino took the position that facts don’t matter if the topic is Jelincic:

Acting Board Member Frank Ruffino: Thank you, Mr. President. Real quick, we –I echo all the comments that have been made. But I just wanted to say not only thank you for being here, we — the Treasurer hears you loud and clear. And the Treasurer did took action when it was brought up to her attention. We do not know the history. And it doesn’t matter.

As a prominent female retiree who attended the board meeting wrote:

Henry Jones not only allowed the two women to comment on a subject matter that the board has no control over, he then allowed each board member to make comments on it as well. It had the appearance of a coordinated 15 minute campaign event in favor of Henry. Especially David Miller, who straight out said he supports Henry for the seat. At the end of the Public Comment section, Al Darby, President of RPEA, asked to give J.J. equal time. Henry did not allow it.

CalPERS Executives Allow Employees To Send Jelincic Hit Pieces in CalPERS’ Name

The same two CalPERS employees who spoke impermissibly in public comments in August, Charity Joy Bowman and Gabriela Urdeneta, have also been sending e-mails attacking Jelincic and favoring Jones signed “CalPERS Team Members” and “CalPERS Employees”. This is a clear violation of Government Code 3204 which as we pointed out earlier provides for criminal prosecution. It is also a violation of the PERL, the statute that governs CalPERS (emphasis ours):

§ 554. Election of Board Members Board member elections shall be conducted by the Election Coordinator designated by the Chief Executive Officer in accordance with procedures adopted by the Board. All CalPERS staff involved in conducting Board elections shall be required to sign a statement that they have fully complied with the CalPERS Board election procedures and have faithfully performed their assigned duties in the election. These statements shall be on file with the Election Coordinator and shall be completed each time an election is held. No CalPERS staff shall use his/her official position to favor one candidate over another.

There are several versions of this e-mail and the pair appears to have tried to circulate them widely. We’ve reviewed two, one signed only by Bowman, the other by both. Each contains complete fabrications, such as attributing getting Jelincic relief time, as do all of the five board members in beneficiary-elected, non-retiree seats, as related to his sanction and allowing him to goof off. In fact, the purpose of relief time is to allow board members to review the large volume of board materials before each meeting, participate in the meetings, and engage in other board activities, such as attending conferences and meeting with beneficiaries. It should be noted that Jelincic was demonstrably better prepared for board meetings than any of his colleagues.

CEO Marcie Frost has made herself complicit in this misconduct. Board members Margaret Brown and Jason Perez each notified her of this abuse but there is no sign she has taken any corrective action.

The one bit of good news in this sorry picture of CalPERS’ corruption is that these ham-handed efforts to sandbag Jelincic are boomeranging. If anything, the crass letters, e-mails, and electioneering from the dais have angered many retirees and galvanized them to get out the vote for Jelincic. CalPERS might consider the old saying, “When you are in a hole, stop digging.”


1 In addition, Jelincic did not have input into their work assignments or evaluations. However, the manager who oversaw the internal CalPERS investigation which lead to the letter of reprimand was the mother-in-law of one of the three accusers.

2 We are not going to dignify these smears by reproducing them.

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  1. Charger01

    Incredible. Good work, NC. Thanks for exposing the dirty kindergarten playroom that CalPERS officialdom has become. How long will Ms. Frost sit on her hands?

    1. vlade

      Frost is the cause for all this, she should have been turfed out long ago.

      On the “good” side, it looks like the cabal is actually run by Frost, since if it was run by anyone more powerful, it would have makde a lot of sense to turf her out with a golden parachute and play the game “we’ll make it up” for a while.

      Or the cabal is extremelu dumb.

      1. Bob

        Ms. Frost is a small cog in the machine. It fact a cog so small that it will not be missed.
        This is not a machine that Ms. Frost has constructed. She is a poor manager or rather an operator of the machine. An easily manipulated, inexperienced, prideful operator.

        Can the money be followed ?
        The real question is where is the money going ? A guess is that part the money it is going from the pensions to the electioneering effort.
        It would be interesting to know if money also flows from private equity funds to local pols ?

        Is it possible for private equity to be a money laundering operation ?

        1. Yves Smith Post author

          With all due respect, you do not understand CalPERS. “Cog” assumes that there are mechanical and operational constraints. That isn’t the case here.

          CalPERS is a $360 billion institutional investor with effectively no oversight. It has a state Constitutional guarantee of its pensions, and is in charge of its own spending.

          The board is supposed to keep the place on the rails, and actually did a very effective job of that in the 1990s, when CalPERS was also perceived to be a cool place to be, to the degree that Wille Brown pulled strings to sit on the board. But that dynamic changed in the early 2000s, and the lack of supervision led with surprising speed to a CEO taking cash in paper bags.

          CalPERS is legally very well bunkered thanks to other state Constitutional provisions. No one can get rid of Frost save the captured board (as in na ga happen) or prosecution. The Governor could conceivably tell her to pack her bags, but Gavin Newsom is not that kind of governor. Enough heat from the legislature could have that effect, but that will be hard to elicit absent a further decay in its funded status, or possibly blowback from the long-term care debacle which is shortly to come to a head in court.

          Having said that, CalPERS and Frost are bizarrely sensitive to bad press, and the overreactions to that are driving a fair bit of their bad behavior.

          Frost does not have any grand vision. She’s the sort it is easy to underestimate, not all that bright but very cunning. She’s all about self promotion and has a reputation going back to Washington of being a vindictive, scapegoating manager.

  2. George Phillies

    One awaits the report that someone has filed charges or suit, or sought an injunction. over the allegedly illegal action.

    1. flora

      ‘Forget it, Jake. It’s Chinatown.’

      … and they mock fly-over country, which is more honest in every respect, imo. Maybe that’s why ‘the-fix-is-in’ coastal enclaves hate fly-over country.

      Thanks to NC’s continued reporting on CalPERS, pensions, and PE.

    2. Procopius

      I would not want to criticize or discourage Yves from continuing these articles. I love gossip, even when it’s about people who I don’t know. However, I admit I’m a little tired of the references to “illegal.” I find the references to specific sections of the statutes interesting, but what’s the point? We all knew already that this is not a nation of laws. It’s a nation of “who do you know?” Obviously, the California Attorney General now is no better than Kamala Harris was when she held that office.

      1. flora

        The muckrakers played a highly visible role during the Progressive Era period, 1890s–1920s.[1] ….
        The term eventually came to be used in reference to investigative journalists …who reported about and exposed such issues as crime, fraud, waste, public health and safety, graft, illegal financial practices.

        CalPERS won’t be cleaned up or reformed over night. Without NC’s reporting it probably won’t be cleaned up at all. No wonder CalPERS and the SacBee regard NC as “the blog that must not be named.” ;)

      2. Yves Smith Post author

        I disagree. You seem to forget this is an institution whose former CEO is in Federal prison. All the evidence is that CalPERS has drawn all the wrong lessons from that episode.

        CalPERS is very sensitive to its image and its beneficiaries are starting to get how bad its conduct is. CalPERS is a fiduciary, so mere laziness is a no-no. This level of misconduct should have people fired and in some instance, worried about wearing orange jump suits.

  3. ChrisPacific

    I have nothing but admiration for JJ Jelincic for being willing to wade back into that cesspool after how he was (and continues to be) treated.

  4. The Rev Kev

    I suppose that you could sit down and draw up a chart of who in CalPERS and associated organizations are involved in such shenanigans – a shadow Table of Organization if you will. You do have to admire their dedication to what they are doing. Personally, I would never be willing to risk prison time for such a cause but if they feel differently about the subject, well good luck to them. I wonder if they figure that they have political cover for all their crimes, errr, acts. If so, I find their faith touching. I mean, being willing to stake your liberty and livelihood on a politician’s promise shows such idealism and dedication it gives you such a feeling (thumps chest) right here. Its not like the streets in Sacramento are not filled with people living on the streets themselves to show them what fate might await them if all goes wrong.

    I am beginning to think that what they have been doing has now crossed the threshold for the RICO (Racketeer Influenced and Corrupt Organizations) Act to kick in. After all, their dealings with K&H Printing could fall under one of the 35 offenses that criminal RICO covers – that of mail and wire fraud. I would argue that there would be a prima facie case for conspiracy at work here. Certainly that David Miller has a case to answer for. I looked up his background and found why he was the person to attack Jelincic. It seems that Miller has a background in Toxic Substances Control and Hazardous Waste Management so it appears that he would have been the ideal person due to his background. You just can’t make his stuff up. As for J. J. Jelincic, I say “Good luck – and good hunting.”

    1. Joe Well

      Wouldn’t a prosecution of a Democrat-controlled corruption machine that rips off the middle class be catnip for Trump’s Justice Department? I wonder why it hasn’t happened.

  5. Tom Stone

    Attorney General Becerra is gonna be all over this like “Wite-Out:” on a computer screen!

    More seriously, Becerra IS doing his job, which is to protect the powerful and maintain the status quo.

  6. Lambert Strether

    > a large-scale mailing of this letter included address formats that exist only in CalPERS member database, which is a flagrant violation of the law and beneficiary privacy

    Extraordinary and seemingly disproportionate resources devoted to defeating a single candidate for the Board (not even a reformist slate). It would be irresponsible not to speculate that the payoff would be extraordinary as well.

    Also, salting the CalPERS database is good (if you want to find out who else your data got sold or given to).

  7. Enrico Malatesta

    If the CALPERS strategy of using the see-thru envelopes is to toss JJ’s votes, there is an obvious danger to such a strategy – in our 2019 surveillance state, every piece of USPS mail is scanned and the image is stored. It would be simple arithmetic to figure out how many mailed ballots hit the waste basket.

  8. Senator-Elect

    Astonishing misbehaviour. This is like campus politics. Do none of these political types ever grow up?

    Based on this article, at least 4 heads should roll. Don’t worry, I’m not holding my breath.

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