Santa Clara County’s District Attorney has accused the Mexican American Community Services Agency’s former chief executive officer and former chief financial officer of cleaning out their employees’ retirement accounts to the tune of $1 million. The third C-level MACSA employee at the time, former MACSA chief operating officer and current San Jose City Councilmember Xavier Campos, escaped criminal responsibility for the pension fund misappropriation. Campos is the brother of state assemblywoman Nora Campos, who preceded him as District 5 representative.
Former MACSA CEO Olivia Soza-Mendiola and former CFO Benjamin Tan were both charged with felony grand theft for illegally diverting retirement funds of teachers and employees of two schools the organization operated during the span of 2004 to 2009.
San Jose Councilmember Xavier Campos, held the role of Chief Operations Officer at the nonprofit organization during the time of the theft. Campos was elected to public office in 2010.
The arrest warrant and complaint notes that while “Campos was almost certainly aware that MACSA had failed to make at least some pension payments,” there was a lack of evidence that he had a direct role in stopping retirement payments.
“Our charging decisions are based on facts and evidence, not rumors and speculation,” District Attorney Jeff Rosen said during a press conference Thursday. “Mere knowledge of criminal activity” is not enough.
According to the complaint, MACSA stopped making nearly all employer payments to its pension plan provider (VALIC) in early 2004, began skipping payments to the provider for employee pension contributions in 2007 and stopped all payments completely in January 2008. Somewhere between 50-100 employees of the nonprofit were affected by the embezzlement, according to Deputy DA John Chase.
A DA investigation that began in 2009, after a Gilroy Dispatch story exposed the embezzlement, shows that Soza-Mendiola and Tan illegally directed pension contributions to avoid layoffs, support their high salaries and maintain day-to-day costs that included “sports, food, computers and office supplies,” according to the complaint.
But even though payments weren’t made into the pension plan on behalf of employees, their pay stubs showed otherwise.
If convicted, Soza-Mendiola and Tan face up to three years in jail and a $10,000 fine. The DA’s office also said the pair will be required to pay full restitution to the victims.
According to the complaint, Tan—who worked on a contractual basis and did not personally pay into the pension plan— often told one of his assistants, Arasselli Vassallo, which bills to pay and which to hold off from sending out. In 2004, Vassallo told investigators, Tan told her to stop making employee contribution payments to VALIC. The organization did keep photocopy records of those bills, although it’s difficult to determine how serious MACSA leadership considered the accumulating backlog. The complaint says that even when MACSA had the money to make retirement payments it chose not to in some cases.
Notes from board meeting packets in 2004 and 2007 show that MACSA’s top officials should have been aware of the lack of retirement payments being made. An email as early as Feb. 20, 2004, from Soza-Mendiola to Tan, included the note: “The agency’s portion of the retirement funds is not being paid as well.”
In June 2007, Soza-Mendiola reduced her personal contribution from $1,666 per month to $0. The DA believes that her action was motivated by her knowledge that the funds were being used for operations, including executive salaries, rather than being deposited to employee retirement accounts. The report says that more troubling than the fact that Soza-Mediola stopped her own contributions is that she failed to alert her employees to do the same. She also received 3-percent pay raises in mid-July 2007 and again a year later. Four months later, MACSA management, under pressure from employees and their union, took a 25 percent pay cut.
By that time, however, Soza-Mendiola “had already received at least $20,000 in extra take-home pay” since June 2007, the complaint notes.
MACSA’s office manager, Aurora Cespeda, was not charged Thursday, because she did not control the money in the organization’s bank accounts and there was no proof that she had a role in stopping retirement payments. Cespeda did, however, know about the retirement payment diversion and she stopped her personal pension contributions Nov. 30, 2007, well before most others—aside from Soza-Mendiola.
Campos regularly attended MACSA board meetings, which often discussed the pension obligations, leaving many to wonder if he was involved in the diversion of funds. The complaint notes that Campos “took a lead role in the effort to sell real property owned by MACSA in part to satisfy past due pension obligations.”
But Campos’ lack of control over MACSA’s money, as well as his decision to continue making contributions to the pension fund—when he should have known they were worthless—seems to have kept him out of the DA’s crosshairs.
Campos and most other MACSA employees handling the organization’s money stopped making pension contributions in August 2008. The complaint concludes: “Thus, the timing of Mr. Campos’ termination of his pension contributions suggest that he became aware of the seriousness of the problem at about the same time as the union and these other MACSA employees, which in turn suggest that Mr. Campos did not participate in the initial decision, made a year earlier, to stop the required pension payments.”
City of San Jose Retirement Services, at the direction of Mayor and council, also illegally failed to make contributions to city employee pension funds and instead diverted monies elsewhere resulting in losses of millions to city of San Jose employees and tax payers. Haven’t all the NBC11 news stories made it obvious enough to proceed with a criminal investigation? We say investigate and indict.
Josh,
Kinda buried the lead in this post…
But Campos’ lack of control over MACSA’s money, as well as his decision to continue making contributions to the pension fund—when he should have known they were worthless—seems to have kept him out of the DA’s crosshairs.
Campos and most other MACSA employees handling the organization’s money stopped making pension contributions in August 2008. The complaint concludes: “Thus, the timing of Mr. Campos’ termination of his pension contributions suggest that he became aware of the seriousness of the problem at about the same time as the union and these other MACSA employees, which in turn suggest that Mr. Campos did not participate in the initial decision, made a year earlier, to stop the required pension payments.”
I wonder what Magdalena Carrasco has to say now? Is she still living in District 5?
DA Rosen states “Mere knowledge of criminal activity isn’t enough”
Slimy Campos knew about the diversion. He did nothing to alert the authorities or the champion for the community (who are the true victims in this MACSA scandal). He’s an incompetent fool and this is just further proof.
Funny that you ask about his election opponent when he’s been completely ineffectual as a council person. Is any one surprised? He’s managed to accomplish what he did at MACSA which is absolutely nothing. Oh wait he got the union flag to fly over city hall for a week. Wow what a great leader D5 has!
DA Rosen normally having knowledge of criminal activity isn’t enough to charge but why isn’t it when he was an officer of that organization who shared fiduciary responsibility for tax payer funds that were stolen?
Campos is an incompetent lazy and ineffective leader. No trial needed for that conclusion.
If you are admitted to the state bar, you are obligated as an agent of the court to report criminal wrong-doing. I don’t believe Mr. Campos is an attorney, so he get’s a pass on being the chump in charge while people looted the non-profit he was supposed to be watching.
Blair,
Do you really think that Campos could graduate from law school or pass the State Bar exam?
Mr. Howe-
With respect, I’d offer that I’ve met many folks over the years who come from challenging backgrounds and risen to the challenges and exceeded all expectations. If Mr. Campos wanted a law degree and to pass the bar exam, I’d bet he could do it if he set himself to the task.
In terms of the current political climate, while there is a lot of in-fighting and feuding over political spoils and such, I think this might be a good year for healing and rebuilding, There’s still a lot of work that needs to be done to build healthy communities and renew our city/state/nation.
There is a lot of work that needs to be done to build healthy communities and renew our city/state/nation and the chances that it will be enhanced in San Jose with a coucil member like Xavier Campos who sheepishly looked the other way when a million dollars was being stolen from employees, and then actively participated in the cover up (by being the lead in the sale of the property to cover the theft) with no reporting to authorities shows he is absolutely lacking of any and all personal and professional integrity.
Campos will do nothing to help San Jose out of its pension problems. Who could trust him at this point? He’s an incompetent fool with big connections. Coincidentally, many people achieve academic and professional success who come from low income backgrounds but Mr Campos is not one of them. He does not even have a bachelors degree or any other college degree. He’s a loser who is well connected. The city deserves more and at this point we cannot afford incompetence of his level on our council.
Conclusion: dimmer than a small appliance light bulb.
Too stupid and incompetent to be corrupt.
The taxpayers of San Jose should feel better now.
Lou, Don’t let the stupid smile fool you! He’s had years of practice. Mendiola was put there for a reason! Manny Diaz was also a product of that nonprophet. Would be nice to do a cleansing at that site as well.
Ester Median and Blanca Alvarado were the force of the Eastside at MACSA& The Mexican Heritage Plaza. Why has the Mercury News not had Joe Rodriguez do a series of the heighborhood political folks of that Hood. Follow the money!
Mandiola and Tan might have a lot to say if given a deal!
But of course you have already thought of that!
Felix Alvarez might have some insigths of the internal workings of this non prophit.
50’s politics sucks, right Tom Mc.
The Village Black Smith
That would be a great story to follow up on. How about it San Jose Inside? Do some real digging and hound Mr Campos until he gives a statement. His refusal to even address the issue shows how little he thinks of the eastside he says he loves. He has no intention of ever helping to recover that money and make amends to the community that was robbed of service from MACSA and the staff that was robbed of pension money. He hasn’t even had the decency to apologize for being incompetent and letting it happen under his nose. He did the search and hired all those teachers yet he feels no responsibility or obligation at all? Tells me all I need to know about his character (or lack thereof)