The former CEO of the Mexican American Community Services Agency who is accused of skimming money from employees’ retirement savings will argue she was doing “everything she could to keep things afloat” while working for the nonprofit organization which once ran a charter school in Gilroy.
Olivia Soza-Mendiola, 53, of San Jose, and former CFO Benjamin Tan, 61, of South San Francisco, face grand theft charges filed by Santa Clara County District Attorney Jeff Rosen.
The two defendants allegedly skimmed more than $1 million from employee retirement savings to pay for a salary raise, school supplies, a YMCA membership, food from local supermarkets, computers, office supplies and other general operating costs, according to the DA’s office.
Standing outside Dept. 23 of the Hall of Justice in San Jose Wednesday, Soza-Mendiola declined to comment on the charges filed against her April 17 by Rosen.
San Jose lawyer Guerin Provini, who represented Soza-Mendiola Wednesday morning during her court appearance, said the former CEO was “very transparent” with MACSA’s board of directors regarding the nonprofit’s modest income, which “didn’t meet the obligations” of its operating expenses or the “demand” of its employee retirement contributions.
“In terms of making decisions about what to pay and what not to pay, (Soza-Mendiola) was relying on somebody to tell her ‘what we can and cannot defer,’” said Provini, referring to Tan. “She isn’t a financial person. She isn’t a tax person. I think she relied on (Tan’s) direction in terms of handling it.”
The “theme” of Soza-Mendiola’s defense will be that she “did everything she could to keep things afloat” while presenting (MACSA’s) problems to the board of directors, according to Provini.
Forensic analysis, however, shows MACSA “had more than enough money” in its bank account at the end of each month to have made the required contributions to pension and retirement accounts, according to a “statement of probable cause” in support of arrest warrants for Soza-Mendiola and Tan.
When asked to comment on the money Soza-Mendiola and Tan allegedly skimmed from the pension and 403(b) retirement accounts of employees who worked for MACSA, the San Jose-based organization that once operated the now defunct El Portal Leadership Academy charter school in Gilroy before it shut down in 2009, Provini responded “I think that in fact it did happen, but in terms of the history of how it happened, that is very complex.”
Soza-Mendiola’s plea hearing has been moved to 9:30 a.m. May 14 in the same location.
As for former MACSA CFO Ben Tan, 61, of South San Francisco, who told the Dispatch in February 2009, “technically, it’s not legal” when queried about using employee retirement savings to cover operating costs between 2004 and 2009, his hearing is scheduled for 2 p.m. June 8 in Dept. 23 inside the Hall of Justice.
No indictment for former MACSA COO Xavier Campos?
The absence of one person from the DA’s charges continues to raise eyebrows.
Following a two-and-a-half year investigation by the DA’s office and U.S. Department of Labor, MACSA’s former Chief Operating Officer Xavier Campos, who currently serves on the San Jose City Council after being elected in 2010, was not charged.
Campos – who blamed the issues on administrative errors when confronted with surmounting employee grievances in 2009 according to a court affidavit – was “almost certainly aware that MACSA had failed to make at least some of the pension payments,” according to the DA office’s “statement of probable cause” supporting the arrest warrants.
Campos also “took a lead role in the effort to sell real property owned by MACSA in part to satisfy past due pension obligations,” according to the statement.
When pressed during an April 19 press conference to elaborate on why Campos would not face charges, Rosen maintained his decisions are “based on facts and evidence,” not “rumors and speculation.”
“We want to try our cases in courts of law,” he continued, “not newspapers and the Internet.”
In a subsequent interview, the DA’s office said Campos’ actions did not fit the legal definition of a criminal “conspiracy.”
“Someone who merely accompanies or associates with members of a conspiracy, but who does not intend to commit the crime, is not a member of the conspiracy,” according to an email sent from the DA’s office.
Furthermore, “evidence that a person did an act, made a statement that helped accomplish the goal of the conspiracy …or knew about a crime and did nothing to prevent it, is not enough by itself to prove that the person was a member of the conspiracy,” the email states.
As for the 50 to 100 “dedicated, hard-working” victims caught up in the financial debacle of the agency, the DA’s office is unaware of any attempts to pay back the stolen retirement money.
If convicted, Soza-Mendiola and Tan, who turned themselves in April 18 and 20 and were immediately released on $10,000 bail each, could spend up to three years in jail, get slapped with a $10,000 fine each and be ordered to pay full restitution to the employees who never received retirement funds.
At least some of those diverted retirement funds contributed to $20,000 in extra take-home pay for Soza-Mendiola, according to the DA’s “statement of probable cause.”
The fact Soza-Mendiola “suddenly stopped” her own personal retirement plan contributions just months before MACSA ceased to make required contribution payments for employee pensions “suggests (she) knew this in advance,” according to the statement.
“That has nothing to do with any of this,” said Provini. “Although I can understand how someone would draw an inference about that.”
Since leaving MACSA in 2009, Soza-Mendiola has worked part-time in the admissions and recruitment office of the nonprofit Center for Employment Training in San Jose, where she earned $27 an hour according to CET President and CEO Hermelinda Sapien.
Soza-Mendiola is no longer a CET employee as of April 20 according to Sapien, who said she could not specify whether Soza-Mendiola resigned or was let go.
“We believe that over time, the DA will change his view of this case. I think there’s some mis-information out there,” said Provini. “Ultimately she’s responsible, because she was the CEO … but a lot of people were involved in the process beyond her.”
The Dispatch broke the story of MACSA’s questionable financial practices in early 2009, when MACSA workers discovered their pension system had not been properly credited with money deducted from their paycheck. Around this time, allegations of MACSA’s crippling mismanagement and “self-protective measures” ignited a financial scandal at the agency’s two charter schools: Academia Calmecac in San Jose and the now defunct El Portal Leadership Academy on IOOF Avenue in Gilroy.
Extensive review regarding whether Olivia Soza-Mendiola and Ben Tan knowingly diverted money into operational expenses that was supposed to go into their employees’ retirement accounts ensued and a lengthy subsequent investigation by the Santa Clara County District Attorney’s office resulted in charges being filed.