Ryan Hagen
Posted: 07/12/2012 06:05:50 PM PDT

SAN BERNARDINO – Three law enforcement agencies are reviewing allegations of wrongdoing related to city finances, a San Bernardino County Sheriff’s Department spokeswoman said Thursday, just two days after city leaders announced they would file for bankruptcy protection.

The San Bernardino County Sheriff’s Department, District Attorney’s Office and the San Bernardino Police Department are collaborating on the investigation, authorities said Thursday.

“Several months ago at the request of San Bernardino City officials, the San Bernardino County Sheriff’s Department, along with the San Bernardino Police Department and the District Attorney’s Office began an investigation related to allegations of possible criminal activity within departments of the San Bernardino city government,” sheriff’s spokeswoman Cynthia Bachman said in a statement Thursday.

City Attorney James F. Penman said earlier this week that he reported evidence that city officials may have falsified 13 of 16 years of budgets – claiming there was a surplus when there was a deficit – to “the appropriate government agencies.” He did not say who those agencies were.

In annoucning their intent to file for Chapter 9 bankruptcy protection, city leaders said San Bernardino has a $45million deficit and faces the potential of not paying employees by an Aug. 15 payroll deadline.

Penman, like representatives of each of the investigating agencies, declined to elaborate on what was being probed Thursday.

Instead, the frequent critic of Mayor Pat Morris’ policies said now was the time to get behind Morris.

“It’s a time that we need to come together if we’re going to deal with this fiscal crisis,” he said. “The mayor is the leader of the city of San Bernardino, and we all need to unite behind him, and we need to give him our support.”

Penman said all groups – the mayor, City Council, police, fire, other employees – shared a strong sense of community and desire to serve San Bernardino.

“We are going to get through this,” he said.

The mayor was at a town-hall meeting late Thursday, after Penman made his remarks, and was unable to respond, said Jim Morris, his son and chief of staff.

About $25million of the city’s $45million deficit comes from deferred funding to internal service funds, according to a June 26 budget document recommending the city prepare for bankruptcy.

Those funds, which have cash deficits in the millions of dollars, include retiree health, workers’ compensation and general liability, according to the document.

The remainder of the deficit comes from flat revenues, the expiration of employee contracts that included 10percent salary concessions, increased benefit costs and the state’s abolition of redevelopment agencies, said the document, written by Acting City Manager Andrea Travis-Miller and Finance Director Jason Simpson.

The looming bankruptcy prompted the bond-rating agency Standard & Poor’s this week to lower its rating on San Bernardino’s lease-revenue bonds from BBB+ to CC.

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