County pension trustees won’t pursue case against former portfolio strategist

The San Diego County pension system does not want to pursue a whistleblower complaint against its former portfolio strategist and other advisers and instead is asking a judge to dismiss a False Claims Act lawsuit filed earlier this year.

In a 20-page pleading filed in Superior Court this week, lawyers for the San Diego County Employees Retirement Association urged the judge to close the case filed in February by Jeff Baker, a former staff investment officer for the pension system who was fired in 2011. A hearing is scheduled Oct. 27 before Judge John S. Meyer.

According to the filing, Baker failed to support his allegations against former portfolio strategist Lee Partridge, the Texas-based consultancy Salient Partners and several other financial advisers.

The February claim by Baker accused the advisers of misleading the retirement board about investments and alleged that Partridge violated county rules governing the level of risk he was permitted to take with the retirement fund.

“Baker’s claims are meritless because reports submitted to the board are not ‘false claims’ for payment,” the retirement board lawyers argued.

Baker told his bosses, two trustees and the county internal investigations office about his concerns that Partridge was not informing officials about risks in the investments that he made for the retirement system.

Pension officials rejected Baker’s concerns, even as they went on to adjust their investment policies to allow for a wider tracking error, or the amount any particular asset class should veer from a pre-set risk limit.

Baker attorney Josh Gruenberg said his client made specific allegations that could be pursued at a limited cost — or even on a contingency basis — and pension officials should work to recover damages for retired county employees.

“The idea that they are dismissing it without any investigation is bizarre,” he said. “We’re talking about millions of dollars at stake for retirees. For the county to dismiss it out of hand is very disappointing.”

County pension trustees terminated their relationships with Partridge, Salient and longtime chief executive officer Brian White in 2016 after The San Diego Union-Tribune reported the $10 billion fund was heavily invested in default swaps and other exotic investments that exposed it to losses equal to double the fund’s value. (619) 293-1708 @sdutMcDonald

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