CalPERS to Announce Loss of JJ Jelincic in Board Election; Dirty, Illegal Tactics Against Jelincic Undermine Legitimacy of Incumbent’s Win

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Today, CalPERS will announce the results of the election for the retiree board seat, which pitted challenger and former board member JJ Jelincic against incumbent Henry Jones. As a result of an unheard-of level of spending on a CalPERS board campaign, including dark money that violated financial reporting rules, illegal see-through ballot envelopes, and board members and CalPERS employees engaging in illegal electioneering, Jelincic lost.

On Tuesday, observers of the opening and scanning of the mailed-in ballots, which constitute the majority of the votes, were able to conduct a large sample by virtue of close observation. Their running tallies showed Jelincic losing markedly to Jones. There is every reason to think that the other two voting methods, voting by phone and by Internet, which will be officially tabulated today along with the mailed ballots, will skew even more for incumbent Jones. That is due to those channels being more likely to reflect an intense phone campaign on behalf of Jones out of an SEIU call center in New York, as well as being tamper friendly.

But as we showed in a September post, even the mailed ballots were designed for abuse by virtue of using see-through envelopes that violated the California constitutional requirement, “Voting shall be secret.” Below is a ballot envelope held up to light. You can read all the words inside, particularly the candidates’ names and the voter choice:

We showed in another photo that you don’t need to hold the envelope to the light to see how someone voted; you could see through the envelope in normal light when it was flat on a table.

Jelincic reports that his mother is glad he lost. She said abuse he took on the campaign trail would be a pale shadow of what he would have endured for four years in office.

Jelincic was favored to win before CalPERS and its allies put their thumb heavily on the dial via the illegal ballots, illegal electioneering, and massive spending. Jelincic was contesting the retiree seat. The major retiree organizations had not only endorsed Jelinicic, but on one call, even pressed Jones not to run.

The fact that some CalPERS board members, the staff, and their union allies were so determined to defeat a pro-transparency board member who also happens to know something about investments is a very bad sign about their honesty and priorities. As we noted earlier:

Jelincic’s sin was exposing that the supposedly most sophisticated public pension fund was incompetent and asleep at the switch. The vehemence of the campaign against Jelincic suggests that exposing the low standards of public pension fund management and board oversight threatens a lot of rice bowls.

This loss is also a dramatic proof of political scientist Tom Ferguson’s “Golden Rule” theory of money in politics, that the campaign that spends more money typically wins.

Historically that has not been the case for CalPERS board seats. $20,000 was an adequate campaign budget for a CalPERS board candidate, enough to fund a lot of Facebook ads and travel around the state to woo voters. Two years ago, challenger Margaret Brown spent only $17,800 to beat incumbent Michael Bilbrey, who spent $118,400 (no typo). Last year, Jason Perez, who spent $49,100, defeated Board President Priya Mathur despite her $65,400 in expenditures.

But the allies of CalPERS’ executives launched a massive campaign against Jelincic, including multiple costly mailings and the heavy phone banking effort in the closing days. On top of that, as we’ll show shortly, one mail drop was designed to look like official state mail and contained a law-breaking letter on State Treasurer Fiona Ma’s official letterhead, making it much more likely to have been read than typical election junk mail.

As we discussed long form on September 10, SEIU was one of moving forces behind the anti-Jelincic campaign; another was the firefighters’ union. Note that effectively none of the voters in this election were union members.

Not only was this the first time that dark money participated in a CalPERS election, and on top of that, on a carpet-bombing scale, but we also described how the mailings were illegally funded. The groups taking credit for them filed implausibly close to the actual mail drops. They thus hid the existence of their firepower until it was too late for Jelincic to have responded.

Fundraising and spending so close to an election in California has to be reported on a close to real-time basis. It is impossible to have ginned up these mailings without large deposits if nothing else to hold a slot with the fulfillment house. Similarly, we showed one filing that listed expenditures exceeding receipts, and both of the dark money groups showed large debts as of their latest filings. Pray tell, how will they be paid off?

As we pointed out in early September:

The Sacramento Bee earlier today exposed the role of the union SEIU as the not-so-hidden hand behind the Fiona Ma mailer described above…

However, the article missed or chose to sidestep several key issue, such as the unprecedented magnitude of the spending, and the dubiousness of a union throwing its financial weight around to influence the election for the retiree seat, when the union represents effectively no retirees and hence has no proper role. Recall that six of the 13 board seats are elected by various classes of beneficiaries. It’s appalling to see the SEIU try to buy the retiree seat, one where unions don’t represent the voters, as opposed to the five others, where it has a more legitimate nexus.

This is where the dark money spending stood on September 9, roughly one third of the way through the balloting period:

As grotesque as this is, the spending total for these dark money groups now stands at just under $440,000.

But it wasn’t just the unprecedented level of spending that sank Jelincic. A particularly nasty bit of business was the dressing up by one of the dark money groups of an illegal letter by Treasurer Fiona Ma. That letter violated the law by using her official stationery with her seal of office to campaign against Jelincic. As we explained earlier, citing the applicable statutes, this is a criminal violation of California campaign laws:

This letter served as the centerpiece of an early September mailing by one of the astroturf groups, designed to look like an official state communication in Ma’s name:

Ma’s office has piously claimed they had nothing to do with this package. As we said earlier:

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.

This was the most egregious illegal use of state resources against Jelincic, but it was far from isolated.

For instance, at an August board meeting, two CalPERS employees, wrapping themselves in the #MeToo banner, smeared Jelincic by presenting the falsehood that he’d been sanctioned for sexual harassment. Jelincic has indeed been sanctioned, in 2011, for discourtesy towards three female co-workers over whom he had no influence. He was given the minimum punishment, a reprimand. That was it. Yet this office foot-fault (which JJ admittedly compounded by not refraining from telling one of the three women that she had nice shoes after having been told to cut it out) was turned into a funhouse mirror distortion.1 As bad as this display was, board members (who normally remain silent and poker faced during public comments) piled on, with David Miller making clearly illegal remarks against Jelincic.

Similarly, those same two women continued their illegal campaign, sending out mass mailings as “CalPERS Team Member”.

Another nasty element was CalPERS providing impermissible assistance to the dark money mailing and phone campaigns. We received notice from multiple independent recipients of having gotten mail pieces using name variants that only CalPERS had, meaning an official CalPERS address list went illegally to the astroturf group. Similarly, CalPERS beneficiaries got calls at phone numbers that only CalPERS has. Mind you, this may not have been formal cooperation; CalPERS employees may have tossed files over the fence. But it’s still illegal.

So why so much flagrantly impermissible behavior by Fiona Ma, David Miller, and CalPERS employees? Effectively, only the State Attorney General could take these abuses on, and he’s part of the CalPERS protection racket. From a February letter by the California Fair Political Practices Commission:

Multiple statutes prohibit public officials from using public resources for campaign activity.1 Also, misappropriation of public funds can result in criminal prosecution.2 Further, the California Supreme Court has ruled it is a violation of the State Constitution for public agencies and officials to spend public resources on campaign activities absent express statutory authority.

Current law does not permit the Commission’s Enforcement Division to investigate or pursue legal action against public agencies and officials for spending public funds on campaign activity. The law authorizes the Attorney General, district attorneys, and city attorneys in cities with populations of 750,000 or more people to bring civil actions enforcing the prohibition.

Finally, the Sacramento Bee behaved disgracefully, keeping up a barrage of negative articles against Jelincic reminiscent of the Washington Post’s efforts to sandbag Sanders. Notably, the Bee also refused to run any of three op eds in support of Jelincic, one of which was by a heavyweight.

So as much as Jelincic started his campaign as the favorite, the combined forces opposing him were overwhelming. I hope reader will still congratulate Jelincic for putting up a valiant battle. It took concerted dirty campaigning to beat him.

CalPERS and its union allies appear to have lost perspective. They may have won this battle, but in the long term, the display of openly crooked and even criminal behavior means that fewer and fewer people who are paying attention have any illusions about the giant pension fund. Some prominent financial reporters say privately that CalPERS is the most difficult and deceptive organization they cover. When CalPERS funded level falls, as it is certain to do as nosebleed financial market values revert to something less stratospheric, they’ll find they have far fewer allies than they thought. Mercenaries are fair weather friends.

____

1 With the benefit of hindsight, Jelincic erred in not demanding that a 2011 Los Angeles Times article, apparently taking its cue from the CalPERS PR department, that also exaggerated the charges and sanction, be corrected. So successfully getting a distorted account in the media allowed for it to be repeated.

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22 comments

  1. ALM

    I am a CalPERS retiree. Last month, I submitted a complaint to CalPERS objecting to the outrageous campaign mail I received in the recent election for the retiree seat. The following is the response I received this week from the CalPERS Compliance Office:

    “Thank you for your concern about mailers being sent to CalPERS Retiree voters. We investigated the source of the mailers and our legal office reported them to the Fair Political Practices Commission for enforcement.”

    I am not optimistic that there will be any follow through. I remain astonished at the ferocity of the attack against Mr. Jelincic. I have never seen Board opposition in an election before or union backed dirty campaign mail. Clearly, Fiona Ma and SEIU share a rabid interest in keeping Mr. Jelincic off the CalPERS Board. Any thoughts why?

    Reply
    1. Yves Smith Post author

      This is a critically important question and due to the hour, I can’t give a full response right now. Let me address one large part of the equation and I plan to address some of the elements later, when I am back on the grid, so please forgive me for asking you to return.

      Terry Brennand of SEIU has long regarded certain if not all of the non-retiree seats as his. Margaret Brown knocked out Michael Bilbrey, who Brennand knew would always vote the way Brennand wanted. Brown’s win was seen as a fluke. Then Corona police sergeant Jason Perez won the Public Agency seat, another SEIU fiefdom. And my understanding is that now that the “badges,” meaning the cops and firefighters, won a seat, they don’t intend to give it up.

      Note that one of the dark money groups targeting Jelincic had as part of its name that it was supposedly representing firefighters, which really meant the union. So the firefighters may have gotten the memo that to keep their newfound seat, they needed to help SEIU claim the retiree seat.

      You might still ask why would Brennand prefer Henry Jones, a member of management, to Jelincic, who had been a shop steward at CalPERS and a union president?

      Guys like Brennand want people who take his marching orders, not people who think for themselves and might have different ideas than Brennand as to what would be best for CalPERS and even for SEIU.

      That does not explain at all the open animosity and gleeful vindictiveness of many of the board members toward Jelincic, who has always been polite, in fact too polite for his own good. For instance, when he was asking questions that that staff should have been able to answer and they instead stumbled all over themselves, Jelincic would routinely let them off the hook when they had admitted something of significance rather than drive the point home.

      I’ll return to this issue later.

      Reply
      1. WS

        I’m a Calpers retiree AND a member of the IAFF, there are probably thousands of Calpers members and other retirees that are still members of the IAFF. So Yves is clearly incorrect when she makes a statement that no union members voted in this election.
        I’m also curious about why my comments don’t get posted here?
        Censorship?

        Reply
        1. Yves Smith Post author

          Straw manning is against our site Policies. I did not say unions represented no voters. I said …”one where unions don’t represent the voters” which means in aggregate. Union membership among the retirees is microscopic.

          CalPERS shows that there were just short of 600,000 retirees receiving an allowance as of fiscal 2017-2018. The number is probably higher now. I’ve been told the number of union membership is in the hundreds, but being in the low thousands would be in range with that and consistent with your claim. That’s under 1% and likely rounds to zero.

          And you know that.

          Better trolls, please.

          Reply
      2. Jerry B

        ===Guys like Brennand want people who take his marching orders, not people who think for themselves and might have different ideas than Brennand as to what would be best for CalPERS and even for SEI===

        This was in the Water Cooler on 10/1/19: “Why Underachievers Dominate Secret Police Organizations: Evidence from Autocratic Argentina (https://onlinelibrary.wiley.com/doi/full/10.1111/ajps.12475)

        In his comment on the excerpt of the post, Lambert mentioned that he thought the point of the article had no obvious contemporary relevance. However, on reading the article one of the first things that popped into my mind as an example was the CalPERS saga, along with police depts, military, politics, ideologies, and many other bureaucracies.

        Below is an excerpt from the Conclusions in the above paper:

        “A second key implication concerns the institutional roots of authoritarian stability. Conventional wisdom sees patrimonial relations as key elements of a durable autocratic architecture. By contrast, our study shows that an institutionalized, meritocratic bureaucracy does not contradict autocratic longevity.

        Hierarchical organizations with established career trajectories and merit-based promotion systems produce the incentives for unconditional loyalty, which can be exploited by regimes. Even in such an institutionalized apparatus, individuals may be willing to serve their leaders and ruthlessly target societal opposition groups This might be bad news for democracies, where performance-based careers are the cornerstone of the state apparatus. Our study explains how governments can accomplish swift autocratic turns without major bureaucratic resistance. Officials facing career pressures are likely to serve as willing executioners, while their well placed peers remain silent bystanders”

        Reply
        1. skippy

          The term in management is – malleability – management would rather have a sub par person in a position than have someone that challenged orthodoxy, especially with facts.

          Both my wife and youngest daughter have experienced that perspective in the last year. Daughter whilst working for big telco refused on ethical grounds to sell product to customers that would cause them financial harm. Then the screws were slowly applied to encourage her to quit.

          Wife on the other hand having over 13 years in clinical experience and 5 years of University teaching got into a policy and educational internal regional admin job. Curiously management staffed the majority of this new policy with younger and less clinically experienced people, in some cases only 2 years.

          Wife lasted about 6 months after butting heads with various sorts over non compliance factors and poor educational methodology for field clinicians.

          Curiously these young go get’ers were payed significantly more than their more experienced field clinicians, basically the experienced had to suffer the aggressive new batches self awarded [$$$$$$] superiority complex and jump through hoops.

          Might pop back latter to extend the thought via some old AET spreading the good word pre GFC at conferences, something about everyone in attendance authority was self evident.

          Reply
  2. pretzelattack

    was money funnelled through the union?
    i look at this and see it being repeated in the democratic primaries against sanders.

    Reply
    1. Clive

      Yes, as part of another story I’m researching, I’ve been looking at another aspect of the state’s regulatory efforts — or, more accurately stated, lack thereof.

      When I lived in Japan, the overly-cosy relationship between government and the industries which it was supposed to be supervising was notoriously bad. California seems worse.

      Reply
  3. The Rev Kev

    This could actually prove to be a watershed in the long run this. The forces mustered against J.J. Jelincic were way beyond what should have been necessary. It was bizarre. But in doing so, they have had to expose themselves. Look, in a way I do not blame the CalPERS Board and Staff here. I mean you don’t blame a dog for eating its own vomit after all. It is just what they do.
    But I do question the origins of all this dark money. I think that questions need answering such as the origin of that nearly half a million dollars in dark money. It was not a gift that. It will be expected to be paid back in either cash or favours done. And Treasurer Fiona Ma certainly crossed a boundary. So it’s not over yet!
    What really concerns me here is how the media went along with a malicious campaign to denigrate Jelincic using the #MeeToo movement, especially the publication the Sacramento Bee. I would seriously like to know who had the pull to get a major newspaper go along with being CalPERS attack dog and malign Jelincic in such a despicable way.
    By coincidence, a movie about Richard Jewell is coming out now. If you do not recognize the name, he was the security guard that found those bombs during the 1996 Atlanta games and was called a hero afterwards – briefly. With a lack of suspects, the FBI decided to nail this poor sucker for planting the bombs. With this go-ahead, the media set on him like a set of attack dogs and tried to tear him apart. Same here in 2019. The right people gave the signal and the media did the bidding of those with power. So no, the media is not your friend. Their performance has been noted.

    Reply
    1. David in Santa Cruz

      Gil Duran, former-Governor Jerry Brown’s longtime press secretary, runs the Editorial Page at the Bee.

      Follow the money…

      Reply
    2. Joe Well

      >>I would seriously like to know who had the pull to get a major newspaper

      But isn’t part of the problem that with the of exceptions of NYT and WSJ, US newspapers are just weak shells of their former selves, perpetually on the edge of bankruptcy, and perhaps more susceptible to any kind of pressure?

      But yeah, it would be fascinating to know who precisely it was.

      Reply
  4. WS

    I’m a retired Calpers member and ALSO a member of the IAFF. So Yves is incorrect when she said “Note that effectively none of the voters in this election were union members.” I voted in the election.
    Also she is alleging that Calpers threw away ballots without a SHRED of evidence. I wonder what else she got wrong?

    Reply
    1. BillC

      I can’t find any allegation that ballots were actually thrown away, but how would you explain the near-transparent return reply envelopes? How often have you received a business reply envelope that is not opaque? (Remember the ones we used to send checks back in for utility bill payments? No way could you read the check amount if you started worrying after you sealed the envelope!)

      Sounds like nearly a half-million dollars of direct mail shots and call center badgering made it unnecessary to “disappear” ballots, but it sure looks like CALPERS management had plan B ready to go should plan A not quite work out. Too bad they didn’t do the same for their private equity schemes that continue to disappoint.

      Reply
    2. Joe Well

      >>she is alleging that Calpers threw away ballots

      Please quote exactly where she makes that allegation.

      She did say that the electronic voting is tamper-friendly. Do you deny that?

      Reply
    3. Yves Smith Post author

      I address this point above. You are straw manning the post. I did not say union members did not vote. I said the unions did not represent the voters. Union membership looks to be at or below 1%. That is the functional equivalent of zero.

      And I never made the other statement regarding the ballots you tried pinning on me, as other readers pointed out. So we have two incidents of straw manning in one comment.

      I will also note I got reports of retirees who were freaked out when they saw the ballots were see through because they were afraid of vote tampering and wondered if they should bother voting. So they independently had concerns about the fairness of the election.

      There is no way that K&H Printing and hence CalPERS, did not know the envelopes exposed the voter choice.

      Reply
  5. NoBrick

    On keeping Mr. Jelincic off the CalPERS Board…

    R.W. Emerson: “I am ashamed to think how easily “we” capitulate to badges and names, to
    large societies and dead institutions…”

    While many can hear above the “din” of concocted notoriety…

    We hold these myths to be self-evident, that we are endowed by their mythology with certain unalienable Rights, that to secure these rights, myths are instituted among Men, deriving their just powers from the mythology, that whenever any form of mythology becomes destructive of these ends, it is the Right of the People to alter or to abolish it.

    Point: The afflictions of the Bosses’ mythology won’t be cured with the bosses’ mythology.

    Reply
  6. Tom Stone

    Attorney General Becerra is going to be all over this!

    More seriously, consider this a preview of the 2020 California primary.

    Reply
    1. George Phillies

      Indeed, the fish rots from the head. The corruption starts with he Attorney Generals who failed to enforce the laws on these matters. One might imagine a Republican running a campaign against this, but Republicans cannot win in California in most places. Californians have given themselves a one-party state, and are earning the rewards for their decision.

      Reply
      1. Joe Well

        Sorry, the only thing worse than a one-party state is a two-party state where one of the parties is the Republicans. They make may good criticisms of Democrats but they do worse themselves when in office. Their version of fiscal responsibility is taking money from those who need it most and borrowing rather than taxing.

        Reply
  7. marku52

    My son lives in SoCal, hates the state gov and the democrats. I can’t blame him. I’d like to say Dems can run things better, but Cal is no shining example.

    I live in blue OR, where the dems now run the state senate and the governorship, and they aren’t covering themselves in roses either. Gov Brown seems OK but out of her depth, not very competent at administrating, and just recently, the head of the state transparency council resigned in frustration. Brown’s head lawyer had been telling her not to release docs that would make the state gov look bad.

    Oops. Just did.

    Reply

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