Accountant found guilty of job-related offense involving unauthorized computer access
Retirement benefits are subject to forfeiture upon a no-contest plea to a felony relating to a job or arising out of the performance of official duties even if the conviction is later reduced to a misdemeanor and dismissed, a recent ruling said.
This was consistent with the language and purpose of section 7522.72 of California’s Government Code, which provided that, if a public employee was convicted of a felony for conduct arising out of or in the performance of their official duties, the employee would forfeit certain accrued retirement benefits. These benefits would remain forfeited despite a reduction in the sentence or an expungement of the conviction.
In this case, the plaintiff worked as an accountant and payroll administrator for the City of La Habra Heights from November 2005 to August 2012. She was eligible for retirement benefits as a member of the California Public Employees’ Retirement System (CalPERS).
The plaintiff was charged with misappropriation of public funds under section 424(a) of the Penal Code and with embezzlement by a public officer under section 504 of the Penal Code.
The complaint alleged that the plaintiff, who was responsible for the payroll and timekeeping of all the city’s employees, removed payroll deductions. As a result, she allegedly did not pay the required employee share for dependents covered on her plan between April 2007 and July 2009, as the city discovered during a 2012 audit.
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The plaintiff pled no contest to a felony arising out of the performance of her official duties, specifically unauthorized computer access under section 502 of the Penal Code. The terms of her plea agreement later reduced the conviction to a misdemeanor then dismissed it.
The CalPERS notified the plaintiff that she was no longer eligible to return to CalPERS-covered employment or to accrue further CalPERS benefits and that a part of her accrued benefits was subject to forfeiture under section 7522.72 due to her felony conviction.
Benefits forfeited
An administrative law judge denied the plaintiff’s administrative appeal. The judge found that the plaintiff forfeited her right to retirement benefits from Sept. 1, 2007, the earliest date of the commission of the felony, until June 28, 2017, the date of her conviction.
The plaintiff asked the Los Angeles County Superior Court to set aside the forfeiture decision and to reinstate her retirement benefits. She argued that she was entitled to the forfeited benefits because she was convicted of a misdemeanor and because the criminal case was dismissed.
The trial court disagreed with this argument, which prompted the plaintiff to appeal. In the case of Estrada v. Public Employees’ Retirement System, the California Court of Appeal for the Second District affirmed the decision of the trial court.
First, the appellate court ruled that the plaintiff’s retirement benefits became subject to forfeiture when she pled no contest to the felony.
Section 7522.72 aims to protect the public employee pension system from abusive practices and to preserve public trust in the government by discouraging serious criminal activity that abuses the public trust, the appellate court noted.
Allowing the plaintiff to avoid the partial forfeiture when she admitted felonious conduct in connection with her public employment would go against the purpose of section 7522.72, the court said.
Next, the appellate court held that the retirement benefits remained forfeited despite the reduction of the felony to a misdemeanor and the dismissal of the criminal case. On June 28, 2017, the partial forfeiture requirement of section 7522.72 was triggered when the plaintiff pled no contest to the felony and when the court found her guilty, the appellate court found.
