Diann Shipione

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Diann Shipione (a vice president at UBS Financial and wife of businessman Pat Shea) is a former trustee of the San Diego, California City Employee's retirement pension board, credited with exposing unlawful underfunding of the pension fund and omissions in municipal bond sales.

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[edit] Situation Background

The San Diego retirement system had been underfunded in some form for more than a decade. As a result of decreases in value of investments[1] in 2001, the fund fell below funding targets.

[edit] Escalating Conflict

In 2002, Diann Shipione, a pension board trustee, raised concerns to the San Diego City Council about a proposal that would essentially reduce money going into the retirement fund and increase money going out of it. In 2003 she complained that an announced bond sale prospectus had material omissions as a result. [2] Through a combination of dislike of her personality, the many people who disagreed with her, and other factors including attributing her behavior as a form of revenge for not going forward with a business deal with her husband, her warnings were discounted.[3]

Conflict came to a peak on November 19, 2004 when she was ordered to leave a closed session of the trustees, and a plan to place her under citizens arrest and have police remove her was almost implemented, but she left as ordered. The other board members voted to file ethics charges, ask for her removal as a board member, and ban her from meetings.[4]

[edit] Fallout

The investigations already had a life of their own, however, and once details came to light the tables were turned, producing many quick changes to the political landscape. The situation led to the resignation of newly reelected Mayor Dick Murphy, by way of an unflattering article in the New York Times. (Note that the financial scandal is unrelated to the replacement of three of the city council members resulting from bribery allegations, but which increased the magnitude of the change and seemingly would have been to the benefit of a whistleblower.) As beneficiaries of the retirement program themselves, five of the board members who recommended the 2002 plan were indicted with fraud.[5] The entire board was restructured and replaced by the voters in 2004, Shipione among them.[6] There had been an effort to ban financial professionals from the new board (not enacted), and despite calls for Shipione to be appointed to the new board, she was not.

[edit] After the Scandal

Shipione's husband unsuccessfully ran for mayor. In 2006 she is known to have been recovering from cancer surgery.[7]

[edit] References

  1. ^ "Pension fund lost millions last year", San Diego Union-Tribune, 2002-04-05. 
  2. ^ "Sunny San Diego Finds Itself Being Viewed as a Kind of Enron-by-the-Sea", New York Times, 2004-09-07. 
  3. ^ "Politicians Dismissed Whistleblower as Crazy, Vengeful", Voice of San Diego, 2006-08-22. 
  4. ^ "Citizen's arrest of Shipione weighed", San Diego Union-Tribune, 2004-12-16. 
  5. ^ "5 current and former pension figures charged", San Diego Union-Tribune, 2006-01-06. 
  6. ^ "Pension board in flux", San Diego Union-Tribune, 2006-01-12. 
  7. ^ "Whistle-blower was right, but feels no vindication", San Diego Union-Tribune, 2006-01-07.