Dick Jones’ Sweet Deal in Westminster

Richard D. Jones at a city council meeting in Westminster.

Thy Vo

Richard D. Jones at a city council meeting in Westminster.

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A familiar sight at Westminster City Council meetings is an older gentleman with droopy eyelids sitting at the end of the dais dozing into his palm.

His name is Dick Jones and there’s a good reason why he’s so sleepy.

In addition to serving as the city attorney of Westminster, Jones is also the city attorney for the cities of Fullerton, Whittier and La Habra, and is the sole owner of a law firm, Jones & Mayer, which contracts with dozens of public agencies across the county and state. He’s also a paid board member for Cal Domestic, a private water wholesaler, and for Cadway, a real estate agency.

Last year, Jones & Mayer, of which Jones is the sole owner, collected at least $2 million in billings from just the four cities that he personally represents.

Yet for 21 years, Jones also claimed to be a full-time employee of Westminster and took home a salary, which was $210,000 last year. His status allowed him to pay into CalPERS, the state’s public employee retirement system and he could end up collecting a large pension when he retires.

All this despite the fact that, except for bi-weekly council meetings, Jones only occasionally shows up at city hall and doesn’t have an office, or even a desk. In fact, City Manager Eddie Manfro freely acknowledges that Jones “never” works a 40 hours per week schedule for Westminster.

“They don’t keep office hours, there’s no desk,” Manfro said, referring to Jones and other lawyers in his firm.

When asked to explain Jones’ situation, Manfro defers to his counterparts from decades ago. “This was a deal he had worked out with previous city leaders. His arrangement was odd, but he had to be paid according to the contract,” Manfro said.

An excerpt from a 1993 memo from Richard Jones to the Westminster City Council.

City of Westminster

An excerpt from a 1993 memo from Richard Jones to the Westminster City Council.

The deal Manfro is referring to is a request Jones made to the City Council in 1993 to make him a full-time employee. He had been Westminster’s contract city attorney since 1989, and had no intention of actually working full-time for the city. But he needed to get ahead of a bill pending in the state legislature aimed at pension-spiking abuses that would also eliminate the ability of certain part-time city attorneys to participate in the state pension system.

Jones’ request was granted, and for more than two decades city officials apparently had no issues with calling Jones “full-time,” despite a roster of outside commitments that made it impossible for him to spend as much time at city hall as his timecards indicated he did.

At least until earlier this year, when former Westminster City Clerk Robin Roberts filed a lawsuit claiming that she was harassed and intimidated for raising questions about the legality of certain city practices, including Jones’ employment arrangement.

“Jones as a full-time employee is paid a full time salary but does not work full-time. This action to hire Jones as a full time-employee was done by the City Council without the advice of separate counsel,” Roberts lawsuit claims.

The same contract that outlines Jones’ employment deal also appoints Jones & Mayer as the city’s contract firm for legal services, an arrangement that Roberts’ claims is a conflict of interest.

“Furthermore, it would appear that Jones has a financial interest in insuring the legal business of the City goes to his firm and that he is actually better off performing as little work as possible for his salary and instead have members of his law firm bill legal work under the contract to maximize profits,” the lawsuit continues.

Robins is still negotiating a settlement with the city. Meanwhile, her attorney, Dennis Wagner, said both Jones and the city were working together to game the pension system.

“You’re working the system. And when caught, they [the city council] gets rid of the issue and reward him with a new contract,” Wagner said.

Roberts’ lawsuit and questions from a Voice of OC reporter led Jones in August to ask the City Council to reclassify him from a full-time employee to independent contractor, a request the Council approved unanimously and without discussion.

“I recognize that this arrangement that was put in place so many years ago has become controversial and become the subject of challenges from a former employee and arguably the press,” Jones wrote in a memo to council members.

He also explained that his full-time employment has been for the “sole purpose of becoming eligible to receive a retirement pension under the PERS system…While I believe that we have all acted in good faith, I think that this potential controversy serves no one well.”

A Special Arrangement or Pension Fraud?

Without the lawsuit and the questions it generated, it is likely that Jones would have been able to continue as he had been for 21 years and retired with a a sizable pension.

Things are far murkier now. The main question is whether Jones’ change of status will nullify the Westminster pension altogether, or, perhaps get him in more trouble.

Jones is adamant that despite the unusual arrangement, he has done nothing wrong and points to the fact that all of the pension payments on his behalf have come from his pocket, not the city’s coffers.

He said as much when he proposed the deal back in 1993.

“I have spoken with Jamie Miller and Brian Mayhew who indicate that this can be arranged without any problem or cost to the City,” Jones wrote in a 1993 memo to the City Council. “…I would pay for those PERS contributions under the terms of the agreement between myself and the City.”

Under the terms of that agreement, Jones received a salary paid to him every two weeks with no vacation or sick time or other benefits. According to Jones, at the end of every month, his two-week salary was deducted from the city’s bill with Jones & Mayer, his law firm that provides the city’s legal services.

At the end of every fiscal year, Jones also receives a bill from the city’s finance department summarizing the total city expenses for his PERS retirement, Medicare tax and workers’ compensation — which totaled $46,174 for the 2014-15 fiscal year — which he typically pays in three installments.

“Mayor [Charles] Smith asked and it has been the practice for the past 25 years that all city costs that result from my being designated as an Employee be paid by me,” Jones wrote in his August memo.

Jones said the deal is “cost neutral” for taxpayers because he reimburses the city for the full cost.

He said that he has personally invested “several hundreds of thousands of dollars” into the state pension system, an annual cost that is now “economically impossible” for him to keep paying.

“Your story might have some legs if the city was paying for any of this, but they’re not,” Jones said to a reporter. “The real story here is that I may have made a very bad investment.”

However, the requirements for membership in the pension system go beyond who makes the payments. How much and where Jones works does matter in how the state and IRS distinguish between independent contractors and full-time employees.

Although some California cities still retain their own attorney as a full-time city employee, the majority of cities contract with firms that specialize in providing legal services to government agencies.

At heart of pension issues for many government attorneys is whether they are considered to be working as an independent contractor providing a discrete service, or as an employee of the agency, answering to and receiving direction from agency officials.

Although there’s no cut-and-dried definition, one of the principal tests for whether a worker is an independent contractor is whether they have the right to control and direct the manner in which they do work.

A number of other factors also come into play, according to Michael Roush, the contract city attorney for the city of Brisbane who authored a paper for the League of California Cities on pension issues for municipal attorneys.

Those factors include the level of supervision over the individual, the level of skill required for the job, where the work takes place and the length of time spent on the work, method of payment, and the relationship between the individual and employer.

“If were trying to prove I was an employee, I’d try to show the employer had the right of control over my hours – when I showed up, where I left,” said Roush. “I’d have a time card of some sort, I’d come to work at least every other day, stay until five o’clock, have my own office.”

It’s unclear how Jones split his time between his work for Westminster and his other obligations, which included 17 years as an elected board member for the Lowell Joint School District between 1983 and 2000.

Before becoming a CalPERS member through the city of Westminster, Jones was a member through the school district in 1991, according to public records. After his position in Westminster became the primary agency, Jones continued to collect retirement credits through the school district as overtime.

When Jones is unable to attend city council meetings, another attorney from his firm, Christian Bettenhausen, serves as Assistant City Attorney.

According to timecards submitted by Jones between March 2011 and May 2013, he logged an identical schedule every week for nearly three years, working nine hour days Monday through Thursday and four hours on Fridays, for a total 40 hours a week.

Other records show that pattern of billing continues for the rest of 2013 through 2015.

When asked how he is able to maintain such hours with three other jobs, Jones said, “I’m a professional…there’s no requirement for how many hours I work.”

“I am my firm — my firm is me. I own 100 percent of it,” Jones responded, when asked if he is personally able to work full-time.

According to Jones’ August memo to the City Council, “there was never any expectation that [he] physically perform in city hall any defined amount of time.”

His 1989 contract did, however, require Jones to attend all City Council meetings, maintain a minimum of 4 office hours a week at City Hall, and attend any other meetings as requested by the city manager.

The 1993 amendment to his contract required that he be available “on a full-time basis to provide legal services to the City during all regular business hours.”

However, Manfro, the city manager, is clear in saying Jones and associates of his firm did not work on-site. He said the time card system was only used for a few years so that the finance department would know to pay Jones bi-weekly, although that practice was eventually discontinued.

Although the arrangement is unusual, Manfro does not think it is unprecedented.

“It has, in my opinion, occurred in other places. He said he checked it out with CalPERS and they said it was okay,” Manfro said.

Manfro is right on that point. Given the increasing use of contract firms for legal services among government agencies, a number of municipal attorneys have faced questions about whether they qualify for a state pension.

Jennifer Lyon, the attorney for Calexico in San Diego County, had her PERS benefits revoked earlier this year after the city manager raised questions about whether Lyon worked enough hours to qualify for a public pension.

Oakdale City Attorney Thomas Hallinan faced similar questions about his status as a full-time employee in 2012, according to the Oakdale Leader.

A 2012 audit of the City of Vernon by CaLPERS, which found a number of issues with how the city was enrolling its employees, found that the city’s assistant city attorney Jeffrey Harrison was enrolled in the pension system for five years despite not qualifying for the benefit.

Vernon officials also erroneously classified attorneys as public safety employees, enabling them to receive the higher pension formula available to police officers and firefighters.

Both the IRS and state law have penalties for employers who “willfully misclassify” their employees as independent contractors, which is typically done to avoid paying health and other benefits required for full-time employees.

But there doesn’t appear to be a penalty for employers who do the opposite — intentionally misclassify employees so they can receive a pension.

“I guess from PERS’ point of view, if the contributions are being made by both the city and the individual, I’m not sure they are going to look real closely at that,” Roush said.

Although CalPERS declined to comment on Jones’ employment arrangement, weeks after Voice of OC’s initial inquiry, spokeswoman Amy Morgan said the agency has begun investigating Jones’ employment with the city and his CalPERS membership.

That process, in which began in late October, takes up to 120 days, Morgan said.

After the meeting, Jones maintained that there was nothing unethical about his previous contract.

“There is no ethical question in my mind. I’ve been doing this [job] for forty years,” Jones said. “Anything I do is based on my reputation, and my name is my reputation. I wouldn’t do anything to harm that.”

Contact Thy Vo at tvo@voiceofoc.org or follow her on Twitter @thyanhvo

  • Larchmonter445

    This is Fraud. Prosecution is required. A District Attorney should stop this. The public is being defrauded by a bogus contract that was created as a fraud.

    This isn’t a clever gaming of the system. It is bold faced Fraud.

    Send him to prison for his pension years.

    Recover all the assets he has. They belong to the people.

    In China, they know what to do with this kind of corruption. Everyone goes down, prison or lethal injection. Used to be a bullet in the back of the skull.

  • Not only is Richard Jones not likely working as a full-time city employee, he’s grossly overpaid. Compare.

    Jones is the City Attorney, and apparently he has no attorney employees working for him. Perhaps he has a staffer or two — at most. He makes $210,000.

    The City Attorney of my city (San Diego — 7th largest city in the nation) has 155 attorneys working under his management, and 355 employees total. http://www.sandiego.gov/fm/annual/pdf/fy16/vol2/v2cityattorney.pdf

    San Diego runs a big misdemeanor department, handling FAR more issues and cases than Westminister’s Richard Jones deals with. The county handles Westminister’s misdemeanor load.

    San Diego City Attorney Jan Goldsmith’s 2014 salary was $202,000.
    http://transparentcalifornia.com/salaries/2014/san-diego/jan-i-goldsmith/

    • LFOldTimer

      Thanks for the shared information, Richard. And I’m pretty certain that CA Goldsmith does not have the time to own and operate an independent law firm that contracts with the City of San Diego for profit either. Is that a fair assumption? No doubt being the CA for San Diego is a full-time job. Yet, compared to San Diego Westiminster is a one-horse town that pays it’s CA more than Goldsmith? What’s up with that? The dirt in the news on Westminster has been abundant in the last several years. I guess the citizens of Westminster don’t mind their city being run like Hanoi. Sad.

  • Tall Talk

    dont you just love communism? just a few in the ruling class, “serving” multiple roles, all of them covering for each other…..and other people pay for it….

  • John Claxton

    “There is no ethical question in my mind.” Clear case of John Williams syndrome.

    He admits that he was not an employee of the City. He admits that he paid for all the payments into The retirement system. I don’t think this should end well for him. His time in the school district can also be rolled into this retirement plan. These are the kinds of situations that make the public distrust our elected officials. The city manager should be fired and the council should be recalled.

  • kburgoyne

    Seems like a rather interesting case of “out sourcing services” but then arranging for the out source contractor to get all the benefits of being an employee. The best of both worlds.

    When a government agency has employees who do everything, then there is a struggle with managing employee expenses. Then people use that as an excuse to out-source government services which then result in sweet deals for the contractor that prove just as much a problem, and often worse, than trying to manage employee expenses. At least the employees are held under more accountability than out-sourcing contractors.

    If there is justification for having Jones on the payroll, then either make him accept the job as a legitimate employee (which he won’t), or dump him and go hire a legitimate employee to do the job. If it doesn’t make sense to go hire a legitimate employee to do the job, then kick Jones out of the employee role because it will have been established it doesn’t make sense.

    • LFOldTimer

      “At least the employees are held under more accountability than out-sourcing contractors”
      The problem is that government workers don’t have the brainpower to make things work properly – like in hi-tech. When government workers are in charge there’s more down time than up time – and nothing gets done organizationally since everything is dependent on the operating system. And government workers aren’t held accountable. ha. Are you joking? You can be the biggest screwup in the world in a government job and remain on the payroll, compliments of the public unions. If you work in government you should already know that.

  • David Zenger

    This article is missing a key ingredient, namely the desperate financial condition the City is in. It doesn’t work to blame the City Manager and Council from 25 years ago. Jones’s deal can be stopped at any time by a council that really wants transparency and accountability.

  • Kathleen Tahilramani

    This is just a joke. So what if he paid money into the system, in theory what he gets upon retirement will far exceed that amount. This is a good example of playing on both sides – he is an employee, contractor and owner of the firm that provides legal services – all at once or in whatever combination serves him at any given time. And the person who has the nerve to question this mess gets fired. And then there will be a lawsuit and a settlement. All on the city and taxpayer dime. This is greed pure an simple. Shameless people who could care less about anyone but themselves. They serve themselves.

  • LFOldTimer

    Anybody else think he resembles Steny Hoyer – that dinosaur dem congressman who’s been in politics ever since Christ was a 3rd grader?

    • kburgoyne

      Are you THAT desperate to try and bring party politics into this?

  • Paul Lucas

    This sounds like such a gnarly criminal act and there is good basis to see it that way, but it is actually the norm.

  • LFOldTimer

    ha. What a gig, eh? Only in government funded w/ other people’s money. Only in government can you line up at the feeding trough and eat until your belly bursts. Only in government. And they said Bell would never happen again! ha. 🙂

    • kburgoyne

      Really? I can think of numerous CEOs at corporations who are very well positioned on the feeding trough thanks to their buddies on the board of directors. We’ve even got executives at large corporations starting to try and legally challenge the ability of shareholders (the actual owners of the corporation) to impose their will upon the executives.

      • LFOldTimer

        A CEO’s survivability at a corporation is based almost exclusively on performance. Otherwise the corporation is broken up into a million pieces to pay it’s creditors and then sold to the highest bidder. Inept government managers thrive because there’s a never-ending flow of taxdollars regardless of how many lunkheaded blunders they make. Once the corporate shareholders are severed from authority over who gets hired and fired – the solution is easy. Withdraw all stock and bond funds. That settles that. But taxpayers can’t stop paying taxes without bad consequences (confiscation or even jail). So they are held hostage. See the difference yet, Mr. Burgoyne?

        • kburgoyne

          False. A CEO’s survivability at a corporation is based almost exclusively upon his buddies on the board of directors. Incompetent CEOs of large corporations can readily survive because there is a ready stream of income from existing business operations and the work performed by lower level people who actually accomplish what needs doing. Large corporations can easily survive having an incompetent CEO so long as the CEO does not actively engage in destroying the corporation’s operations. See how there is little difference, Old Timer?

          • LFOldTimer

            It’s obvious you haven’t spent very much time in corporate America, Burgoyne. Go ask Meg Whitman or Carly Fiorina what happens to incompetent CEO’s. ha. You see, it’s the shareholders who determine whether a company thrives or dies. Shareholders aren’t held captive or held hostage like taxpayers are by governments. Shareholders are free to invest their money in companies that are competently run. Just the opposite of government where taxpayers are FORCED against their will to finance incompetent government managers. See how it works, Burgoyne? This lesson was free of charge.

  • KenCoop

    There seems to be no end to how public employee executives (aka non-union) scam the system.

    • kburgoyne

      At least the arrangement with unionized employees is more widely publicized. Most of these executive deals are executed in the shadows hiding from the sunlight. You might be able to go digging to find them out, but everybody in the deal does their best to make sure reporters and the public don’t get a hint that perhaps there is some new deal they should go digging to look for.

  • David Zenger

    Faking time cards is fraud, right?

    • LFOldTimer

      It depends upon who you are and who you know. In some cases it’s called “fraud”. Other times it’s called “inadvertent oversight”. Attach a name to it and I might be able to give a more specific opinion.

    • Kathleen Tahilramani

      Past history shows that if you are working on your future bosses campaign for the OC BOS, it is not a crime – it’s easy you move the American flag and some photos and workie looking crud into an office and have a nameplate installed. The vanish and have some manager/victim complete your timecards (as you are so busy) and when that manager goes to the HR Manager and the HR Manager goes to the Department Head to express concern – you both get told to leave it alone and the Department head fills out the timecards and/or orders someone else to “handle it”. Easy. And when a manager complains that the “vanished” employee has no work assignments, the Department Head tells HR that that person is working on a “special project”. Of course that special project is BS. So, remember that the next time Nelson prattles on about accountability, transparency and all that crap.

    • John Claxton

      Not according to county counsel or the reputable Dr Peter Hughes, who after John Williams the former disgraced PAPG was found perjuring himself his finding stated that filing out time cards was too confusing for Mr. Williams. I am sure it’s the same excuse here.