Convicted Felon Darrell Reese Directs Richmond Union Political Strategy
October 14, 2001

A story in today's West County Times relates how Darrell Reese continues to dominate the political strategy of the Richmond firefighters union, Local 188, despite the fact that he cost that union $17,000 in fines levied by the Fair Political Practices Commission last year. The story can be seen on the Times Internet site at http://www.contracostatimes.com/community/wct/stories/reese_20011014.htm, and it is reproduces below. Reese continues to scoff at his income tax evasion conviction as being the only outcome of a 1999 FBI investigation into Richmond political influence peddling. Said one astute observer, "Remember, the only thing the feds were able to get Al Capone on was income tax evasion." Another Richmond political organization, the BMW, headed by former council member Lonnie Washington is a mirror image of Local 188, and consists essentially of three people, Nat Bates, George Livingston and Washington. The BMW endorsements for mayor and city council are identical to those of Local 188.

Published Sunday, October 14, 2001

Union weighs in on election

Controversial Fire Fighters Local 188 endorses Nat Bates for Richmond mayor
By Peter Felsenfeld

CONTRA COSTA TIMES

RICHMOND -- Tales of dauntless rescuers ascending the World Trade Center steps as panicked civilians rushed toward the ground floor have established the firefighter as a prominent national symbol of courage and honor.

But in Richmond politics, controversy and accusations of corruption have long followed the Fire Fighters Union Local 188 and its consultant, Darrell Reese. As the contentious November election draws near, the union's influential political action committee has once again entered the fray.

Local 188 has chosen to endorse Nat Bates for mayor, Richard Griffin, Jim Rogers and Maria Viramontes for four-year City Council seats, and Lynn Wade for the two-year council term.

With four council seats and the mayor's office at stake, Local 188's latest efforts to promote candidates are encumbered by some troubling history. Four years ago, the union spent $39,000 -- a large portion of which came from a circus fund-raiser -- supporting candidates for the Richmond City Council, the West County School District board and the West County Waste Water Board.

Disagreement exists over whether or not the circus was deceptively marketed as a charity event. Last year the state Fair Political Practices Commission fined Local 188 $17,000 for illegally avoiding state campaign contribution limits by reporting the circus proceeds came from 96 retired firefighters.

Reese, a retired Richmond fire captain and former union president, pleaded guilty in February to filing false income tax returns two years in a row.

Despite the two setbacks, Local 188 continues its association with Reese, whom political foes characterize as a ruthless power broker, able to make or break candidates at will and able to determine the fate of developments through his influence over the Richmond City Council.

Last week, Reese, a Rodeo resident, said he was simply a committed political consultant with a sincere interest in Richmond's well being.

"The assumption is that I'm a crook," Reese said. "But where's the proof? Candidates that can't deal with the real issues look to create a straw man and I'm the straw man. That's the strategy."

As for the $17,000 fine, Reese said the union got burned for following inaccurate filing advice that came from the Fair Political Practices Commission. The tax conviction? Reese said he simply misunderstood the IRS procedure for filing returns on an offshore account.

If anything speaks to his innocence, Reese said, the tax foible was the only wrongdoing the FBI unearthed in a two-year investigation of allegations of influence peddling. "The FBI raid was without a doubt politically inspired," Reese said. "Watergate was nothing compared to this. One hundred agents hit the city; they were listening to my phone calls, and guess what? Not one indictment."

The probe began just weeks before the 1999 election, and the attendant publicity might have played a role in electoral losses for four of the five candidates Local 188 backed. The election changed the complexion of city government, with Mindell Penn and Gary Bell -- both widely considered independent voices -- joining the City Council. With this year's election, the union hopes to make up some ground, and nowhere is Local 188's presence felt more strongly than in the race for the two-year City Council term.

Councilman the Rev. Charles Belcher and Chevron auditor Lynn Wade are vying to fill the seat Alex Evans vacated midterm.

Belcher, appointed in January to fill the seat, was running unopposed until just days before the deadline for candidate filing.

Belcher said he met with representatives from Local 188 throughout the spring to discuss the proposed firefighters' benefits package, known as "3 percent at 50." Over time, Belcher said, the union sought his unconditional support for the plan, which he refused.

Late in the spring, during a pivotal breakfast meeting with Reese at Richmond's Marriott Hotel, Belcher made it clear he wanted neither Reese's nor Local 188's participation in his campaign.

"When Darrell and his group decided I wasn't on board for 3 percent at 50, that's it," Belcher said. "I became the enemy and I had to be removed." Reese said the meeting never happened. However, in July a candidate materialized to challenge Belcher: the wife of a firefighter, who has no previous political experience and little community involvement.

Lynn Wade said Jim Russey, president of Local 188, early in the summer asked her to consider running. Russey was alarmed, Wade said, because an independent audit determined that $11 million was missing from the firefighters' and police officers' pension fund.

"He asked if I would run for the City Council because of my auditing background," Wade said. "I thought about it, and I decided to go ahead because this is an important issue. If we get our financial situation in order, a lot of things will fall into place."

Russey said the audit, conducted in 1999, demonstrated funds were taken from the police and fire pension fund and laundered through city departments back into the general fund. At the time, Richmond's firefighters had the lowest salary and benefits package of 12 Bay Area cities, Russey said.

"All the publicity about our union being influential is really false," Russey said. "We are politically active, but the results we've gotten have been minimal."

Despite her connections to Local 188 and Chevron, Wade vehemently defends her integrity and ability to make independent decisions."

"I'm not anybody's pawn," Wade said. "Nobody's going to tell me how to vote or influence my decisions; my vote is not for sale."

If a private audit was conducted, its results were never shared with the city's finance department, said Anna Vega, Richmond's Financial Services Agency director. The city contracts with Caporicci, Cropper & Larson for external auditing services, and the firm has found no irregularities with the pension fund, Vega said.

"The auditors have to be satisfied that all transactions are legal," Vega said. "I've gone back and looked at the records myself and I can't see where any money was illegally moved."

Candidates running without Local 188's endorsement are highlighting the omission as a badge of sincerity, while those backed by the union tend to emphasize their connection with the working firefighters.

City Council candidate Maria Viramontes said she was surprised to receive Local 188's endorsement; Reese and the firefighters fought against her bid for the Contra Costa Community College Board in 1989 and the Contra Costa Board of Supervisors in 1994.

Nevertheless, Viramontes said she doesn't hold a grudge, and she feels a responsibility to remain available to all the city's constituent groups.

"People have to understand that individual firefighters are out of the loop when it comes to this kind of stuff," Viramontes said. "And when you look at New York, how can you be upset with the firefighters?"

Peter Felsenfeld covers Richmond. Reach him at 510-262-2725 or e-mail pfelsenfeld@cctimes.com .

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Pension Fund Raid Falsely Claimed By City Council Candidate
October 14, 2001

City Council candidate Lynn Wade is challenging Rev. Charles Belcher for the two year Richmond City Council seat. By all appearances, Wade is an intelligent and accomplished professional with a compelling personal story of achievement. Unfortunately, she appears to have fallen under the spell of Darrell Reese, the convicted felon who guides the political strategy of Local 188, the union to which Wade's firefighter husband belongs.

In her opening salvo, Wade, who is an auditor, claimed that a private audit had discovered "$11 million illegally taken from Richmond Police and Fire Pension Fund." She went on to state: "The private audit also confirmed the earlier grand jury investigation that showed City financial records were so poor you cannot trail the money."

What are the facts?

On March 30, 1999, the Richmond City Council passed Ordinance 9-99 authorizing the issuance of taxable limited obligation bonds for the City's Police and Firemen's Pension Fund. The fund is used to pay the pensions of 164 former employees who retired prior to the initiation of the current pension plan administered through California PERS (Public Employees Retirement System). The purpose of the bond was to guarantee the future pension obligations under the old plan while freeing up excess money to contribute to the current PERS plan. The result would reduce the amount of pension money required to come from the general fund and, in turn, allow approximately $3.8 million annually to be used for other purposes, including current salaries and infrastructure. All in all, it involved some creative money management in which all the citizens of Richmond were winners. The City Council voted 6-1 to pass the ordinance, with Butt, Evans, Marquez, Anderson, Powers and Corbin voting yes and Griffin voting no. Bates was absent.

Presumably, the $11 million to which Ms. Wade alludes is the excess amount generated in the pension fund to be transferred to PERS. Since the issuance of the pension bond, the 2001-02 fiscal year budget reflects all tax override funds receipted in a separate fund from the General Fund. These tax override monies will be used for the annual bond debt payment and the balance is reserved pending the outcome of a lawsuit in Huntington Beach that challenges the authority of a public agency collect tax override funds in excess of that needed to service the original pension plan.

In fiscal year 2000-01 The City of Richmond transferred $1.8 million from the General Fund to the Pension Fund. These funds were designated to pay for the employee's share of PERS, however it was determined in March 2001, that this was one of the issues in the Huntington Beach lawsuit. This was conferred with the City Attorney Malcolm Hunter in which he concurred that those funds should be set aside until the litigation is resolved.

If a private audit was conducted, it has never been provided to the City Manager or the City Council. The City contracts with Caporicci, Cropper & Larson, LLP for external audit services. Copies of the audit may be obtained from the city manager's office or the Richmond Library. The 2000-01 fiscal year audit is currently underway. The 1999-00 Audit was completed and provided to the City Council.

A Contra Costa Grand Jury Investigation focused on the Recreation and Parks Department was completed in 1999. The Report, No. 9903, as well as the City's response is old news. A story about it appeared in the April 14, 1999, West County Times and can be viewed at http://www.tombutt.com/media/990414.htm . The entire Grand Jury Report can be viewed by clicking here.