The 700 Club
Top city officials take little stock in state-required statements of economic interest
*Includes additional comments and clarification on reporting procedures.
Dr. Eric Walsh, the former Pasadena Health Director who resigned after it was learned that he disparaged gays, Catholics, Muslims and others in sermons as a paid Seventh-day Adventist associate pastor, may not have been in violation when he failed to report that income to city officials in April.
According to City Clerk Mark Jomsky, officials are required to report additional income if they are earning money from a separate business within two miles of Pasadena.
“A person that is reporting might include something that is within the two-mile region or if it is just outside of it as a precautionary measure,” said Jomsky.
The problem for some employees is the requirements for filling out the forms are so complicated officials interviewed for this report could not say with certainty what they are required to report.
As explained by city spokesman William Boyer, the purpose of these reporting forms, also known as statements of economic interest (SEIs), is not to provide “financial transparency,” as Boyer said, but to indicate a specific “conflict of interest” by city officials.
“The forms are not a financial report, not even a comprehensive or less comprehensive financial report. These are disclosure statements for the purposes of determining any possible conflict of interests,” Boyer said.
According to City Attorney Michele Beal Bagneris, residences outside the city are not reportable, and investments are only required if the official, or his or her spouse or dependents “have a 10 percent or greater interest totaling $2,000 or more and which is located in, doing business in, planning to do business in, or which has done business during past year in the jurisdiction,” Bagneris said.
“It is not a listing of all of your assets,” said Jomsky. “But it lists the things that could be in conflict with your interests and people disclose it so that we know if they have to recuse themselves.”
Two weeks ago, Walsh, who took over the city Health Department in 2010, was given nearly $115,000, the equivalent of six months of salary with benefits, following a city investigation into whether his role as a paid church leader interfered with his duties as the city’s health officer.
Like all other city employees, Walsh was supposed to report additional income and other information on the form, also known as Form 700, which is required by the state Fair Political Practices Commission (FPPC) of all public employees, including city workers and elected officials.
City officials receive the forms every March in a 75-page packet that includes the city’s 41-page conflict-of-interest policy, Form 700 and other information on what they may be required to disclose. The packet must be completed by April 1, according to Jomsky.
Walsh only filed the required paperwork for 2013 and 2011, and did not disclose his moonlighting as a paid associate pastor on the 2011 forms.
On his 2013 Form 700, Walsh declared between $10,001 and $100,000 in income from speaking as an associate pastor at “SCC SDA,” or the Southern California Conference of Seventh–day Adventists, on Chevy Chase Drive in Glendale. He listed the same income range for his third job, this one as a doctor with the Huntington Medical Foundation’s urgent care facility in Altadena.
Walsh actually filed two Form 700s for 2013, one on March 31, one day prior to the April 1 filing deadline and a month before the sermon controversy resulted in his resignation. The second amended form was filed on May 7, shortly after Walsh’s videotaped sermons became public and the day he was sent home on paid administrative leave. It’s in the second disclosure form that Walsh reveals his association with the church and the medical group.
According to Boyer, a person’s home is not subject to disclosure. “None of the city officials have to declare ownership of or location of their primary residence or any personal residence no matter where it is,” he said. “It is also very important to note that even if an official does own rental property, commercial property or other real estate interests it is only reportable if the property is held or owned within the jurisdiction of record.”
For 2013, 10 of the city’s 16 department heads did not report stocks or other investments. None of the 10 reported receiving gifts of value in those 12 months. Nine of those 10 department heads checked the box marked “None — No reportable income on any schedule” on the first page of the form, marking the full extent of their reporting.
Local officials are guided in filling out their Form 700 paperwork by provision of the city’s conflict-of-interest code, which determines what employees must disclose based upon their positions.
“Disclosure categories are tailored to different departments, commissions or different levels of authority,” Jomsky said. “The level of disclosure for each person is based on the disclosure category they have.”
For instance, City Council members and department heads are in disclosure categories one and two, which require them to report gifts totaling more than $500, loans, business assets, stocks, bonds, investments totaling more than $2,000, and real property.
The City Clerk and the Director of Public Health are in less-broad category six due to their smaller spheres of influence. In category six, employees do not have to report business assets unless that business is in Pasadena or could do business with the city. Employees must report their homes if the owner claims a business deduction valued at $2,000.
In addition, “city officials are required to report 50 percent of their spouse’s income and a home office,” said FPPC spokesperson Dixie Johnson.
Last year, failure to accurately fill out Form 700 led to a total of $25,000 in fines being imposed across the state, according the FPPC Web site.
Jomsky said the city has no enforcement authority when it comes to ensuring the forms are filled out correctly.
According to the city’s conflict-of-interest code, deferred payment, stocks included in IRAs and 401Ks, and CALPERS retirement funds do not have to be reported.
“It is determined by the position they hold,” FPPC spokesperson Jay Wierenga said of state reporting requirements. “The conflict-of-interest code specifies who has to complete the Form 700 and what types of income is reportable. Some positions could be under limited disclosure.”
For his part, Beck acknowledged a handsome stock portfolio, owning stock valued at between $10,001 and $100,000 with the Walt Disney Co., International Business Machines, Actavis Inc., a pharmaceutical company, and Canadian Utilities Ltd. Beck also holds stock valued at between $2,000 and $10,000 with SDPR, a gold holding company, and General Electric Co. When it came to gifts, Beck listed six meals at League of California Cities conferences totaling just more than $350.
Although state law allows employees to redact certain private information, such as the names of spouses, one department head employed a creative way to maintain his privacy, listing his property, valued at between $100,000 and $1 million, by its lot number with the Los Angeles County Recorder’s Office. City Transportation Director Fred Dock also listed between $100,000 and $1 million in investments with Pasadena-based Parsons Corp.
Boyer, who is not a department head, disclosed investments in 17 major companies. Boyer has stock valued at between $2,000 and $10,000 with Sirius, Dole, Lululemon, Merck pharmaceuticals and Raytheon. Boyer also holds stock valued at between $10,001 and $100,000 with Time Warner. Twitter, DirecTV, Facebook and Ford Motor Co., according to the documents.
“It’s fair to say the documents can be very intimidating to people that are not familiar with them,” Boyer told the Weekly. “There are multiple pages of forms and instructions, people do the best they can t1o disclose the information, but the process is not easy to do. I tend to over-report just to be on the safe side.”
For more on statements of economic interest, visit http://www.fppc.ca.gov.