Matthew Jacobs, a white-collar Sacramento lawyer who in 2011 won one of the region’s biggest lawsuits in years, has been named general counsel at CalPERS.
Jacobs is a partner at DLA Piper’s Sacramento office and has experience with the U.S. Department of Justice in Sacramento and Washington. He replaces Peter Mixon, who retired from CalPERS last fall.
Jacobs joins the California Public Employees’ Retirement System as the pension fund wrestles in a Sacramento courtroom with a potentially explosive issue: whether government pensions are still ironclad.
The case involves Stockton’s municipal bankruptcy. The city has decided to leave its pension plans untouched and continue to pay CalPERS more than $29 million a year. But one of the city’s creditors, Franklin Templeton Investments, wants a better payout from Stockton and is demanding that the city’s pension contributions to CalPERS be scaled back. That would free up more money for Franklin, which stands to receive about a penny on the dollar on a $35 million bond debt.
The Stockton case, pending in U.S. Bankruptcy Court in Sacramento, is the latest in a series of legal challenges to public pensions around the country. The city of San Bernardino, which also went bankrupt, owed CalPERS millions of dollars in overdue payments and has signaled it might want to try to reduce its pension contributions.
CalPERS has consistently maintained that pension benefits are constitutionally protected, and cities like San Bernardino and Stockton have to make full payments to keep their retirement programs intact.
While at the Piper law firm, Jacobs secured a $30 million jury verdict in 2011 against the tribal owners of Red Hawk Casino in a breach-of-contract case. The verdict in El Dorado Superior Court, involving the tribe’s former casino-management partner, was cited by the National Law Journal as one of the year’s “top 100 verdicts.”
The casino’s owner, the Shingle Springs Band of Miwok Indians, said the verdict was devastating financially and jeopardized the casino’s existence. Since then, the tribe was able to restructure other debts and renegotiate the casino fees it pays to the state, shoring up its finances considerably. The tribe is appealing the 2011 verdict.
More recently, Jacobs waded into the Ponzi scheme run by Deepal Wannakuwatte, who was owner of the now-defunct Sacramento Capitals professional tennis team. Jacobs and a law partner sued Wannakuwatte on behalf of a group of investors who were allegedly defrauded. Wannakuwatte recently pleaded guilty to fraud charges and is expected to receive a 20-year prison term. The prospects for recovery by his investors are unclear.
Jacobs will be paid $322,000 a year at CalPERS and is eligible for performance awards that could reach as much as 40 percent of his base pay, said CalPERS spokesman Brad Pacheco.
Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.