Ryan Hagen, Staff Writer
Posted: 06/04/2013 08:07:46 PM PDT

SAN BERNARDINO — The city’s largest creditor is again questioning the city’s good faith — and therefore its eligibility for bankruptcy protection — as the California Public Employee Retirement System and the city head into bankruptcy court Wednesday.

A deposition of Michael Busch, the city’s chief financial adviser, raised troubling new facts, including that the former finance director believed crimes were committed, CalPERS’ attorneys wrote.

“Former Finance Director Jason Simpson expressed to Mr. Busch his concern that crimes had occurred with respect to the city’s use of certain funds,” CalPERS wrote, based on a deposition held May 10 that is not yet in the court’s record.

Busch also said the city is paying some debts from before its bankruptcy filing while holding off on other costs accrued after the bankruptcy — including those to CalPERS — among other statements.

CalPERS doesn’t provide further information on the suspected crimes, but City Attorney James F. Penman said he did — in July.

“When I held that huge press conference right after the city said it was filing for bankruptcy protection, I stated that financial records had been altered and evidence of suspected wrongdoing had been passed on to the appropriate authorities,” Penman said Tuesday. “That’s what Jason (Simpson) was referring to.”

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