What’s the future of a small California police department after a pension fraud scandal

A small Northern California police district is fighting for its financial survival in the aftermath of pension fraud that the California Public Employees Retirement System says resulted in top chiefs and commanders being paid more than $2.5 million in illegal benefits.

Broadmoor Police Chief Michael Connolly is trying to save the small police department, but he concedes he is also looking at alternatives because the district could run out of money and be forced to shut down.

Connolly began his second stint as chief in January, after a two-year tenure ended in his resignation in 2021 following charges of impropriety in his appointment process. Connolly pleaded no contest to the charges but was not barred from holding the position again.

He returns to the helm of a department on the financial brink.

“At some point we might not be able to afford to gas up the patrol cars,” said Connolly in an interview at police headquarters in the community near San Francisco. He said that someday could be as soon as 2024.

CalPERS, the nation’s largest retirement system with more than $450 billion in assets, covers retirement benefits for those who work for more than 2,800 California government entities plus all state employees.

Discoveries by CalPERS of intentional and widespread fraud are rare. Broadmoor is believed to be a first example where a series of retirement law violations by employees could set in motion the collapse of an entire government agency.

A CalPERS audit found that for more than a decade from 2009 to 2020 four police chiefs and commanders at Broadmoor collected more than $2.5 million in illegal retirement benefits, double-dipping while continuing to work in their jobs. CalPERS said two of the chiefs, David Parenti and Greg Love. retired on disability pensions and went right back to work full-time.

The pension plan is demanding that Parenti pay $1.8 million in retirement benefits. Love, meanwhile, has been charged criminally with grand theft fraud by the San Mateo County District Attorney’s Office.

He has voluntarily repaid CalPERS around $700,000 in retirement benefits.

“Although we take any allegation of fraud — no matter how big — seriously, Broadmoor is one of the most egregious double-dipping cases we’ve seen, “ said Matthew Jacobs, CalPERS General Counsel. ”Its deliberate evasion of the retirement laws to enrich a few already well-paid individuals is completely unacceptable.”

The department, with only seven uniformed police officers, has a yearly budget of $2.7 million. It is almost entirely funded by the 5,000 residents in the small district that covers an urban and suburban area slightly larger than a half-square mile. It is surrounded by larger Daly City and the small community of Colma. in San Mateo County. It is only a mile from the San Francisco line.

CalPERS doesn’t just want its money back from the police officers. It says the Broadmoor Police Department itself never made the right pension payments for the four police chiefs and commanders and is seeking an approximate $250,000 payment from Broadmoor. It is just one of the financial headaches Connolly must deal with in the aftermath of the CalPERS pension scandal.

It’s unclear how soon Broadmoor will have to pay the money back to CalPERS. Since exact tallies of what Broadmoor owes CalPERS are still being calculated, “we are not prepared to discuss repayment at this stage,” said Amy Morgan, a CalPERS spokeswoman.

Connolly is worried the CalPERS bill could balloon. He said he has found at least 15 cases in which former Broadmoor police officers worked for the district but were not enrolled in CalPERS benefits as required by law.

He said the police department is now making payments to the retirement system after several of the former employees stepped forward. The affected employees also have to make back payments to CalPERS for their share of retirement costs.

Connolly said it’s complicated because police department records are missing and he has to work with San Mateo County to reconstruct their the officers time on the police force.

Connolly said if all 15 employees ask for their benefits, and they can show they were entitled to them, Broadmoor could be forced to give CalPERS several hundred thousand dollars a year in additional pension payments.

Broadmoor already contributes more than $500,000 a year to CalPERS to cover the pensions of existing and former employers.

Broadmoor Police Department saddled with expenses

High legal bills and insurance costs are another problem for Broadmoor, Connolly said, and the CalPERS fraud is only part of the problem.

He said outstanding lawsuits continue between the department and several former police officers that he fired because of improper practices. This includes Parenti, who was named in the CalPERS complaint, and is accused of taking $1.8 million in illegal retirement benefits.

Parenti was fired by Connolly in 2020. Connolly replaced Parenti as chief in 2019, but Parenti continued at the department as a commander. Connolly said he fired Parenti after he found that overtime payroll records kept by him weren’t accurate.

Parenti, who denies he was involved in collecting illegal retirement benefits, said he was fired because he was a whistle-blower trying to stop Connolly from hiring his friends as police officers.

Parenti insists in legal filings that he did not break any CalPERS rules and that the retirement benefits he obtained were sanctioned by the three-member citizen committee governing the Broadmoor Police Department,

But members of the Broadmoor Police Commission say they agree with CalPERS’ findings that Parenti, Love, and other commanders illegally took several million in retirement benefits.

The Broadmoor Police Chief also serves as the Broadmoor Police Department manager, running the administrative affairs of the governing district, said James Hutchens, who has served one as of the three members on the commission since 2007.

Hutchens said he’s only an unpaid elected official who is relying on the police chief to tell the truth about what is occurring at the police department.

“If the police chief is robbing the bank,” Hutchens said, “he is the only one who is going to know.”

Hutchens said he has no doubt that Connolly is honest. He had worked himself up to deputy chief, the third highest spot in the San Francisco Police Department, in a career spanning three decades before joining Broadmoor in 2019.

Hutchens said he’s lived in Broadmoor for 50 years, Connolly for 30 years. “We have been neighbors for a long time,” he said.

Hutchens said he is worried about the lawsuits against the police department in addition to the aftermath of the CalPERS mess.

The lawsuits have resulted in more than $650,000 in legal fees for Broadmoor in the last year and a half.

Another $700,000 lawsuit settlement last year covered a period when Connolly was not chief. The department settled out-of-court charges that it had discriminated against a Lebanese-American police officer.

Mark “Tony” Awad resigned in 2019 from Broadmoor after two years of being the subject of “countless incidents” of racial harassment from fellow officers, according to a lawsuit filed in San Mateo County Superior Court.

The former police officer described incidents in the lawsuit including how a digitally altered image showing a parade of Islamic State group militants was posted in his locker. Another altered photo, the lawsuit states, showed Awad holding a sword and standing in front of a camel in the desert.

Connolly said he could not comment on the case.

Broadmoor’s bottom line

Connolly said Broadmoor’s cash reserves have plummeted from $1.4 million a year ago to around $400,000 today.

A government monitoring group, The San Mateo Local Agency Formation Committee, said last month in a report that Broadmoor will have a $450,000 deficit by June 30.

The agency said Broadmoor has run budget deficits in five of the last six years totaling $1.4 million but has survived by borrowing money from cash reserves.

Each of the 5,000 residents of Broadmoor pay an annual $490 assessment to the police district. The fee is doubled for businesses. Broadmoor also receives a 1% tax assessment from all property owners in its community. The exact fee received depends on the assessment of individual properties.

Connolly has cut one of his eight uniformed police officers and turned another position into part-time in an effort to cut costs, but he concedes it may not be enough to counter the cost of defending lawsuits, insurance costs and CalPERS payments.

He said cost-saving measures could involve merging the department with the larger department serving Daly Center, population 100,000, or with the San Mateo County Sheriff’s Office or dissolving the Broadmoor Police Department.

Connolly said that his first choice is to preserve the police department. He admits that his ego could be at play and that he feel he wants to finish the job he began in 2019 and run a good police department.

It’s expensive running the small police department.

A January study by the San Mateo County Local Agency Formation Committee found that Broadmoor receives 750 calls a year from residents and businesses.

Given its $2.7 million budget, the commission found that each call costs approximately $3,591, four times the cost of Daly City, which has approximately 100 officers for its population of 100,000.

The commission suggested Broadmoor conduct its own study to assess whether the cost is worth it.

Connolly said he is doing just that. He said ultimately the Broadmoor Police Department should be judged on how effective it is in serving the public and keeping crime rates low.

Even without the the study, Connolly said it’s clear the crime rate is low in Broadmoor, particularly compared to Daly City and surrounding communities. He said the community had only one violent crime in the last year, despite the fact that it is off busy Interstate 280.

Even with its proximity to San Francisco, the area covered by the police department feels like a small town. At the Brooadmoor Police District’s monthly commission meeting on Feb. 14, only three Broadmoor residents came to watch the 10-minute meeting.

The talk in the audience was not about crime but the upcoming spaghetti dinner and bingo fundraiser that is sponsored by the Broadmoor Property Owners Association.

Its president, Christine Talivaa Aguerre, told The Bee she has had only one encounter with the police department in her more than 20 years living in the community and it was a positive one.

A neighbor was going through her recycling bin on different days, checking up on whether she was complying with recycling rules. She told the neighbor it was none of her business.

Talivaa Aguerre said the police came right away, talked to the neighbor and the woman never bothered her again..

“She never went into my recycling bin again,” the president said. “That kind of police service is amazing.”

Talivaa Aguerre said almost all of the 270 members of the association want the police department to continue.

Ultimately, whether the Broadmoor Police Department survives or not, the CalPERS pension bill still will have to be paid.

The police department paid $571,490 in pension payments in fiscal 2021, and it would still be required to pay the costs for retirees, who once worked for the department.

The police department also has an unfunded liability of more than $3.3 million, money it must pay to CalPERS, because the pension system hasn’t made its investment returns long-term.

“We will have to pay CalPERS no matter what,” Connolly said, “so maybe it’s better to also provide police services.”

Police chief with turbulent history

Connolly resigned in June 2021, two months before agreeing to a plea agreement with the San Mateo County District Attorney’s Office.

He was one of three unpaid commissioners that oversaw the police department. He also didn’t recuse himself when the commission discussed his hiring back in 2019.

The San Mateo County District Attorney’s Office charged him with conflict of interest for influencing a government decision, which was his appointment to lead the Broadmoor police department.

Connolly served one year of probation, paid a $235 fine and was prohibited from holding an elected office or acting as a lobbyist for four years until the beginning of August 2025.

But nothing prohibited him from being hired as Broadmoor Police Chief again. The three-member citizen committee overseeing Broadmoor hired Connolly as interim chief on Jan. 12. The decision came one month after the San Mateo County Superior Court expunged his conflict-of-interest conviction.

“He’s the most qualified person for the job,” commission chairman James Kucharszky said, noting Connolly’s long tenure in the San Francisco Police Department and his long-time roots in Broadmoor.

“I do believe I bring experience and a certain passion to the job,” Connolly said, “but I’m also driven by the fact that I’m a resident here.”

Connolly said he is trying to convince the police department’s insurance broker that the lawsuits will stop and that he will bring stability to Broadmoor. He said conversations are ongoing.

Connolly first had those talks back in 2019 in his first stint as police chief when insurance costs were two-thirds of what they are today. But the talks stopped because Connolly was forced to step down.

Connolly had worked for the San Francisco Police Department for three decades, rising to the Deputy Chief’s position, third highest in the department.

He decided to retire from San Francisco in 2019 after the offer to become Broadmoor’s police chief.

San Mateo County District Attorney Steve Wagstaffe said Connolly is “a good guy” who made a mistake and had a distinguished police career in San Francisco. Wagstaffe said he doesn’t believe Connolly was aware that he was breaking the law when he participated in the decision back in 2019 to make himself police chief.

Because Connolly is the interim chief there will have to be a vote on a permanent chief within a year.

Commission members have said that Connolly is the right person for the job but haven’t gone into detail.

Connolly would likely be a contender for the permanent appointed spot, assuming Broadmoor still exists financially. In the meantime, he is making $160,000 a year.

This story was originally published February 23, 2023 at 6:00 AM.