Ambitious president under fire in lawsuit claiming financial impropriety
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The president of the San Francisco Deputy Sheriffs' Association, who has made no secret of his larger political ambitions, is fighting a lawsuit by union members who allege that he embezzled money and improperly donated union funds to local campaigns.
The suit seeks to oust David Wong as president and force an audit of the union's financial records.
Captain Johna Pecot, Chief Deputy Thomas Arata, senior deputy Rick Owyang, Lieutenant Stephen Tilton, and deputy Joseph Leake allege in the lawsuit that Wong collected a double salary, used union money to pay his personal mortgage, made numerous unauthorized political contributions, began an outside foundation using the SFDSA's name, and ended an important union affiliation, all in violation of the SFDSA bylaws.
On top of that, they say he led a campaign to kick Pecot and Arata out of the union after the two began requesting to look into the SFDSA finances.
The lawsuit has obvious political implications. Wong is an elected member of the San Francisco Democratic County Central Committee. He challenged incumbent Sheriff Mike Hennessey for the elected post in 2007, and has said that he would consider running again in 2011. Some observers say that Hennessey, who has been in office 28 years, may be ready to retire at the end of this term.
Pecot and Arata are senior officers and close to Hennessey.
Wong's attorney, Larry Murray, says the complaint, filed in federal court Nov. 10th, has "no specific information" about the alleged fraud. He's asked that the case be dismissed. "The Complaint reveals nothing more than a round of an ongoing local dispute between union management and a few disgruntled members whose allegations long ago have been independently investigated and proven without merit," according to Wong's motion.
Wong wouldn't comment to us about the case, although he told Vic Lee of KGO-TV that "This is purely politics, political." But if any of the serious charges stand up in court, it could complicate any future run for office.
"We have not asked for any money in our lawsuit, we have asked that there be accountability and the books be opened," Tilton told us.
In 2002, the union board approved a plan to pay the salary of a full-time union president, the suit states, and between 2003 and 2005, funds totaling $285,367 were appropriated to pay Wong. However, it states, "in 2003 SFDSA members learned that the sheriff's department was continuing to pay David Wong his regular ... salary." Upon the discovery the board cut his union pay to $24,000 a year, but "the excess funds ... have never been restored to SFDSA," the suit charges.
The exact financial figures would come out in a trial, but at this point, the picture is murky. Susan Fahey, a spokeswoman from the sheriff's department, said that Wong is considered a permanent civil servant and that under the collective bargaining agreement between the city and the DSA, 40 percent of his $86,538.92 salary is paid by the sheriff's department and 60 percent is paid by the SFDSA.
"It's not double salary," Murray said. "There's two employers: one hires him for 40 percent of the time, the other 60 percent."
The lawsuit claims that the union used a rather unusual procedure to compensate Wong. Instead of paying his salary directly to him, it alleges, the union paid the money to the banks that held Wong's mortgage.
A 2004 report on an internal union investigation of the practice, a copy of which was filed with the suit, notes that the plan was a "Creative way to compensate the President of the DSA for the salary difference ... in a manner that did not create liabilities to the Association as an employer." The investigation found that Wong "has not committed any violation of law" but stated that the judgment used to devise this compensation method was "extremely poor."
Eileen Hirst, the San Francisco Sheriff's Department chief of staff, wouldn't comment on the case, calling it "entirely internal" to the SFDSA.
This isn't the only lawsuit involving the union, Arata, Pecot, and Tilton. The three senior staffers are named defendants in a gender-discrimination lawsuit filed last year against the sheriff's department.
Murray Wong's lawyer also represents the plaintiffs, 35 male and female deputies, in the 2007 case that alleges that the sheriff's department practice of allowing only female deputies to enter women's jail pods exposes those deputies to greater harm and amounts to gender discrimination. Wong isn't mentioned in the suit by name, but his response to the more recent case refers to it as "round one of this dispute."
In the fall of 2007, shortly after the gender discrimination case was filed, Pecot and Arata began looking into the SFDSA books. Pecot, who is a sheriff's captain, told the Guardian that after she requested access to the records, Wong began a campaign to have the SFDSA bylaws amended by vote so that captains and chiefs who are senior managers in the department could no longer be SFDSA members.
The union membership approved the change in April, Pecot told us. According to the 2008 complaint, Wong had been "disseminating false and misleading information regarding Plaintiffs in attempt to wrongfully expel them from membership in the SFDSA."
The lawsuit also alleges that Wong and SFDSA's treasurers have "divest[ed] the SFDSA of more than $500,000 of its funds" since 2002. That money, the suit claims, may have gone to the SFDSA Foundation an organization that, according to the complaint, has no affiliation with the SFDSA.
The complaint states that Wong "deliberately chose the name for his sham organization to deliberately confuse and mislead the public" and "used the income derived from his racketeering activities to establish or operate the SFDSA Foundation."
The suit charges that Wong made $65,000 in political contributions that weren't approved by the union board. Since 2002, the SFDSA has made contributions to candidates such as Assemblymember Fiona Ma, former state treasurer Phil Angelides, state senator Leland Yee, former secretary of state Kevin Shelley, and other state politicians.
Another point of contention revolves around a building fund that Pecot said was created by the SFDSA to purchase a headquarters building. The union's been doing business at 444 Sixth Street for the past six years. Pecot says that until recently, she thought the property was owned by the SFDSA. She found out that in fact Wong was leasing it with nearly $200,000 from the building fund, and the complaint specifies that Wong and the treasurer at the time "falsely represented to the SFDSA membership that the SFDSA had purchased a building and was paying a mortgage."
Another money issue that the plaintiffs say they tried to resolve before going to court concerns funds that allegedly have been missing since the termination of the SFDSA's affiliation with Operating Engineers Local 3. When Wong became SFDSA president in 2002, the SFDSA was affiliated with OE Local 3, another union that handled some legal work for deputies, a service for which each SFDSA member paid $27 per month. But Wong ended the affiliation in May of this year a move plaintiffs say was not approved by the board.
Wong sent out a memo at the end of May that explained why he ended the affiliation. The document states that the Operating Engineers wanted SFDSA members to pay twice the amount for the same legal defense and since that wasn't "fair to the membership," he reached a new agreement with a private law firm for legal representation.
After ending the affiliation, however, the SFDSA continued to collect $27 a month from each member, totaling more than $67,500, according to the complaint.
During a Nov. 21 press conference, plaintiff Leake read from a statement that said, "Because of President Wong's concealment and refusal to provide access to DSA records, we are not able to determine the exact amount of missing funds, nor are we able to identify all the recipients of the misappropriated funds."
"President Wong has thus far avoided accountability for these missing funds by conducting a practice of concealing and refusing to provide access to SFDSA records," said Leake.
Even though SFDSA bylaws say that "all members in good standing shall have the right to examine the books," Owyang said the union members found it necessary to file a lawsuit to get internal financial information. "It's a sad situation," Tilton said, "when we have to get books opened up in federal court."
Murray said that he's provided the plaintiffs' attorneys with all of the information they need. "Some financial information was provided to us," said Louis Garcia, attorney for the plaintiffs. "But we have no confirmation or information regarding its authenticity. Also, the information is only a small portion of the total records that we're entitled to inspect."