People in glass houses should not throw stones. We’ve reported on how CalPERS is engaged in what Pulitzer Prize winner Mike Hiltzik called a “witch hunt” against board member Margaret Brown by restricting her ability to perform her duties on fabricated grounds.1 Yet it has ignored an apparent felony among its own board members, in this case Theresa Taylor, who is the Vice President of the CalPERS board and its Investment Committee chair.
As we’ll show, Taylor has made a cut-and-dried violation of California requirements for California officials to report all income and assets received from non-government sources in their jurisdiction. Specifically, Taylor hid at least $30,000 of income she received as Vice President/Secretary-Treasurer of SEIU 1000 from 2016 to 2018.
Taylor failed to disclose this income on the Fair Political Practices Commission’s Form 700, a disclosure of economic interests, which is a form sworn under penalty of perjury. Perjury is a felony in California. Taylor has self-identified as unfit to continue in office through this repeated, willful violation.
The failure to report such a large and readily documented source of income also raises the question as to whether Taylor has failed to report other income. For instance, the FPPC requires California government officials to report gifts of over $50. Has Taylor received concert tickets, or meals, or had travel or hotels paid for by California interests that she similarly failed to report?
And Taylor is far from the only CalPERS board member to flout FPPC rules. Former board president Priya Mathur was a serial violator, repeatedly filing Forms 700 and campaign disclosure forms egregiously late. The FPPC commissioners even took the unusual step of increasing a 2014 fine considerably higher than what enforcement staff had recommended due to her being a recidivist.
The FPPC has also fined board president Henry Jones. From April 2020 (emphasis original):
In the Matter of Henry Jones for CalPERS 2015 and Henry Jones; FPPC No. 18/109. Staff: Theresa Gilbertson, Commission Counsel and Patricia Ballantyne, Program Specialist. The respondents were represented by Leilani Rudow Beaver and Joseph Guardarrama of the Kaufman Legal Group. This matter arose from two mandatory audits conducted by the Fair Political Practices Commission. Henry Jones was a successful candidate representing retired members of the California Public Employees’ Retirement System (“CalPERS”) Board of Administration. Henry Jones for CalPERS 2015 was his candidate-controlled committee. The Committee and Jones have signed an agreement to toll the statute of limitations, effective March 27, 2020. The Committee and Jones failed to open a separate controlled committee and campaign bank account for Jones’ 2015 candidacy, by April 7, 2015, in violation of Government Code Sections 84101, 85201, and Regulation 18521 (1 count). Fine: $2,000.
Sadly, FPPC fines tend to be of the small beer level.
Evidence of Theresa Taylor Committing Perjury by Failing to Disclose Income for Years
Below is the confirmation of former CalPERS board member and former California State Employees Association president JJ Jelincic of his complaint regarding Theresa Taylor.
From: Complaint org-wide <firstname.lastname@example.org>
To: email@example.com <firstname.lastname@example.org>
Sent: Tuesday, June 30, 2020, 02:45:26 PM PDT
Subject: FPPC Complaint Submission Confirmation
We have received your complaint.
For future reference, the Complaint Number is: COM-06302020-01129 and the respondents listed on the complaint are: Taylor.
If you have filed a sworn complaint, we will notify you of our intended action in approximately 14 days.
If, however, you did not file a sworn complaint, you can track the resolution of your complaint via our website at http://www.fppc.ca.gov/.
Once you have submitted your complaint, you can check the status of the complaint by emailing your complaint confirmation number to email@example.com.
Jelincic sent me the text of his complaint, which is a public record and can be obtained via the Public Records Act:
Theresa Taylor is a member of the CalPERS Board and an 87200 flier.
In early 2017, 2018 and 2019 she filed Form 700s covering the calendar years 2016, 2017 and 2018. She failed to disclose income from SEIU Local 1000.
A Form 700 clearly require the disclosure of Income on Schedule C. Each of those forms contain the following:
I have used all reasonable diligence in preparing this statement. I have reviewed this statement and to the best of my knowledge the information contained herein and in any attached schedules is true and complete. I acknowledge this is a public document.
I certify under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Given that she failed to report the income three years in a row it would suggest not only a failure of “reasonable diligence” but a deliberate withholding the information.
Given the following set of facts it is unlikely that she was unaware of where the extra money
in bank accounts was coming from:
• As a member of the Board of Directors of SEIU 1000 she voted on the officer stipends,
• As Secretary-Treasurer of SEIU 1000 she knew that the local was paying the officers (including herself) stipends,
• As a Tax Compliance Officer for the Franchise Tax Board she knew that compensation for service was income, and
• As a recipient of a year-end tax form she was informed that she had received income.
Below is the evidence of Taylor’s income from SEIU. These are the levels set for 2016, starting as of July; remember that Taylor was in office all of calendar 2016, all of 2017, and the first half of 2018. Her stipend box is where the “Vice President-Treasurer” row and Column D “Proposed Officers SEIU
Annual Stipend Salary” meet, for $16,708.
Pull out a calculator. Assuming the stipend was not increased for fiscal year 2017-2018, Taylor received $16,708 x 2, or $33,416 (her stipend started only as of July 2016; in 2018, she was only in office for the first six months).2 We have posted Taylor’s Form 700 for Calendar 2016 below.
You can see she did not fill in a Schedule C, which is where she should have reported the income from SEIU 1000. You can see here that she omitted Schedule C from her filing as a candidate, and also failed to file it and disclose the SEIU 1000 income in 2017 and 2018. Note that Taylor later amended her 2017 form to add the receipt of gift income.
It is also telling that CalPERS removed its board member Form 700s from its website recently, and restored them only after I submitted a Public Records Act request for them. No doubt they recognized I intended to post them, so they appeared to have restored the board member Form 700s in order to prevent Naked Capitalism from becoming an even more important resource on CalPERS than it already is.
Jelincic’s closing bullet points vitiate any attempt at a defense by Taylor.
There is no way SEIU didn’t send Taylor and the IRS a report of the income she received; the organization would be in a ton of hot water if it failed to send out the required income documentation to executives and the IRS.
There is no way that Taylor as a Tax Compliance Officer can pretend she didn’t understand income is income
There is no way Taylor can credibly mount a lame excuse, like she didn’t understand that SEIU 1000 wasn’t a government body when she sat on its board
Please e-mail the editor of your local paper and TV station about this double standard, of CalPERS tolerating repeated abuses of disclosure and campaign finance laws, in this case rising to a felony by virtue of apparent perjury, yet waging a war of harassment and fabricated abuses against its lone pro-accountabiilty board member Margaret Brown. Demand as a minimum that Taylor be removed from the Investment Committee, since she can’t be trusted with numbers, and that she be replaced by Brown.
Send a copy to CalPERS board president Henry Jones firstname.lastname@example.org, and the heads of the California legislative committees that oversee pensions:
And please also circulate this post to CalPERS beneficiaries and California taxpayers. Thanks!
1 As we described longer form, and was confirmed in comments, the issue was Brown’s supposed misuse of the CalPERS name as part of her Twitter handle, even though other current and former board members have done the same without being sanctioned. Hiltzik explained in his column why Brown’s use, by her having a clear, legitimate, and disclosed relationship with CalPERS, and not being used to sell a product or service, did not fall afoul of California law, as CalPERS misleadingly claimed. CalPERS also asserted trademark and copyright violations, which are similarly implausible. A single word cannot be copyrighted. And to have any defensible intellectual property claim, CalPERS would have to have consistently and pro-actively pursued alleged abuses, which it has fatally undermined by allowing Brown to have her Twitter account for eighteen months and not asking the many other CalPERS and non-CalPERS members who incorporate “CalPERS” into their Twitter handles to cut it out.
2 For you close readers who noticed that the table was only a proposal, rest assured that we also have a copy of a screenshot from the site SEIU1000Workers, with 2016 announcement that the board had voted through the proposed stipends. I would be happy to forward the image to anyone interested. The text at its start:
00 2016 Statement of Economic Interests Taylor
June 29, 2016 David Bouilly
Local 1000 Exec Stipends Passed
In a message from DLC 781 president, Latreece Smith, Local 1000 Council (Since 2014 legally referred to as Board of Directors) passed a stipend package for the Local 1000 executive staff which is to go into effect immediately.
Wow. Good for J.J.Jelincic for filing this complaint. Taylor and the rest of the board seem almost irrationally determined to stop Brown from asking questions about CalPERS finances and investment decisions. Now I wonder just how much board members in their personal capacities have to hide.
Thanks for your continued reporting on CalPERS, PE, and pensions.
Ditto! I do hope it was a ‘sworn complaint’.
Wow. I guess that when you are allowed to get away with so much over the years that you get to feel that you can get away with anything. But Sacramento is a long way from Wall Street. Do they really think that it is a good idea to play fast and loose with the IRS? I have my doubts.
I am here reminded of the great Al Capone. Over the years he killed people, tortured them, stole, blew up buildings with people in them, bootlegged, kidnapped people, bribed and all the rest of it. But in the end it was not the FBI that got him but the IRS that nailed him – for not paying his taxes while doing all of this stuff.
If things go really south one day because the IRS decides to take a look at the financial dealings of the CalPERS Board, Margaret Brown may find herself with Marcie’s job – by virtue of being the last person standing.
The IRS has been defanged since it brought down Al Capone, to important applause. No idea if it could still be up to the job.
Why does Calpers have a staff at all? What happens if you just put everything in index funds and let them take care of themselves?
Why invest at all? Pension payments can be disbursed for taxes or willed into existence via MMT.
No, California is a currency user. It has to borrow or tax to spend.
I agree with the general concept that a much stronger Social Security system would be the better way to provide for pensions, but that is not where we are.
Fair point, but why couldn’t pension payments flow from the federal level to the recipient? The way pension funds are currently being managed, we will be doing that one way or another unless The Money Party has their way and screws beneficiaries out of their pensions.
The odds of a Federal bailout of public pension funds is zero. First, there are a couple of states (CA and IL) where the state guarantee is very strong and there would be claims they didn’t need to be helped. On top of that, there are too many funds where their troubles were clearly self-created, like NJ deciding in the early 1990s not to fund the obligations, and Kentucky, with massive corruption.
FPPC and other government rules are for the little people, not for the union bosses that run calpers.
Maybe Taylor received shady “income” and gifts from disreputable sources that she was trying to hide. Maybe she thought it better to fail to disclose and hope that no one notices. This may have felt like a good bet to Taylor since union boss tentacles run deep in Sacramento, well a good bet until Yves and sources started digging. Imagine how much more malodorous Calpers would be without reporting, especially by Yves.
Calpers is run by union bosses? I thought it was run by private equity barons. I’m just a reader though.
See, this is the problem. That most people assume “unions = good”. It’s the same as assuming “representative republic/democracy = good”.
They are just institutions, which are not good (or bad) on their own. They will be only as good as the people elected to run them. Since we can safely assume that thugs will be elected now and then, the system is only as good as the people who participate.
I’ve argued for a long time that democracy (and unions or other similar institutions) take more work in than you get immediate benefits out. It’s only over long time where the benefit exceeds the efforts – or, if a vast majority of participants puts in a significant effort.
As you say, glasshouses and stones. The question is, is CALPERS board really mostly a collection of idiots, or do they just feel inviolable (or both)?
It certainly isn’t a collection of geniuses, or even reasonably street smart people. If it wasn’t for the political cover they are getting (by the Cal gov’t choosing to do nothing), they would not be allowed to run a lemonade stall.
This may have been asked a long time ago and I missed it, but why does the board president have/use a private email account? Seems like all board members should be issued an email address upon joining the board, and that they be required to use it.
He does have a CalPERS e-mail account but staff reviews all e-mails and since they screened (and some were withheld) physical mail, they would screen his e-mails too. Plus Jones presumably would check his personal e-mail regularly, but I understand accessing the CalPERS e-mail accounts from outside CalPERS is cumbersome, so he would likely not receive it as promptly as by e-mailing to his personal account. And it’s not as if his personal e-mail is a state secret; I’ve seen it publicly before.
E-mails received personally pursuant to official CalPERS business are subject to disclosure under the Public Records Act. so there is no loss in transparency in going this route.