Legal Briefing: California Sues City Officials for Overpaying Themselves

Legal Briefing: California Sues Bell City Officials for Overpaying Themselves
Legal Briefing: California Sues Bell City Officials for Overpaying Themselves

A daily look at legal news and the business of law:

California Scheming? AG Brown Brings Suits Against Town Officials

Excessive compensation isn't reserved for corporate executives. Bell, Calif., a poor city near Los Angeles, somehow came up with the funds to pay its city manager $790,000 a year, its police chief $460,000 a year, its assistant city manager $380,000 a year, and its five part-time counsel members nearly $100,000 a year. Part-time counsel members in cities of comparable size -- about 40,000 residents -- typically rake in about $5,000 a year for their services. And this took place in a town with a median household income of $37,000, compared to $59,000 in Los Angeles County overall, and $60,000 nationally.

So how did the city of Bell come up with all that cash to lavish on its elected officials? Apparently one fundraiser was a policy of targeting Hispanic residents' cars for towing, another was overcharging sewer fees, and a third was overcharging property taxes.

California Attorney General Jerry Brown has sued eight current and former city executives over the salaries, the Associated Press reports. Additionally, Brown, who is also the Democratic candidate in the gubernatorial race, has subpoenaed documents from the nearby town of Vernon, a town of under 100 residents that paid its current and former leaders hundreds of thousands a year: Some had two jobs and brought home over $1 million annually, the Los Angeles Times reported. Vernon's tax base depends on its heavy concentration of businesses.

But public officials giving themselves obscene salaries and perks isn't just a California problem. The Chicago Tribune reports, for example, that the town of Joliet, Ill., wrote the practice of pension spiking into its employee handbook, costing taxpayers an extra $500,000 on just one employee's retirement.

Countrywide's Mozilo to Face Trial

A judge has ruled that ex-Countrywide CEO Angelo Mozilo must face trial on charges he illegally cashed out $140 million in Countrywide stock while artificially keeping the share price up. The SEC alleges Mozilo kept telling the public everything was fine and dandy, at the same time as he was issuing internal warnings that the bank was in danger. Bloomberg reports that Mozilo's attorneys didn't seem particularly concerned about the ruling denying their effort to scuttle the case, as it merely means that facts are in dispute and doesn't address the strength of the SEC's case against Mozilo.

Attorney Crime

So far, no charges have been reported about this situation, and in fact the local ethics committee basically shrugged, but surely this counts as some form of criminal sexual harassment:

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Kenneth Kratz, a Wisconsin district attorney prosecuting a man for choking his ex-girlfriend, sent some 30 text messages to the victim propositioning her during the prosecution. For example: "I'm the attorney. I have the $350,000 house. I have the six-figure career. You may be the tall, young, hot nymph, but I am the prize."

Until the scandal broke, Kratz was the chairman of the Wisconsin Crime Victims Board. He has since resigned from that post, but that's as much contrition as he's willing to show. The married Republican is staying in office as DA, at least until voters have a chance to oust him in a couple of years. At least for now: The brazen nature of the texts suggests this woman is not likely his first victim. (Another text: "Are you the kind of girl that likes secret contact with an older married elected DA ... the riskier the better?")

If there are other women who have been targeted by this "prize," come out, come out, wherever you are: You can bring him down if you speak up.

And in the Business of Law:

Calling all law and economics professors: Push your school to complete the new survey from the Law School Transparency Project, which aims to empower potential law students with the information they need to behave like rational economic actors. If it were filled out by most schools (instead of the mere four who are considering responding, out of the 12 that deigned to answer the letter requesting survey completion), the survey could impose a bit of market discipline and transform the legal education landscape. Professors, such a result is theoretically up your alley, so go talk to your deans and demand your school participate.

Similarly, big foundations that want to advance free-market ideology and possibly reduce the number of trial lawyers, open up your checkbooks. Real transparency about job prospects for law grads would reduce the number of people who go to law school, and undoubtedly the worst schools would be forced to improve or close. With enough funding -- many millions, mind you -- a team of people could acquire graduation lists, contact law school alumni, and generate the same information externally that the schools could do more easily internally.