But the district attorney's office has downplayed employer fraud and repeatedly ignored evidence of possible crimes by insurance companies. At the same time, it has cracked down hard and sometimes unjustly on the workers whom insurance companies and employers accuse of lying about on-the-job injuries. A case in point is that of Indravadan Jayaswal. The district attorney's office had the middle-aged clerk handcuffed at work and taken to jail after he filed a workers' compensation claim for his aching back, arm and neck.
Jayaswal was experiencing classic symptoms, one of his doctors said, of a "clerical workers' sickness" caused by the repetitive stress of spending all workday, every workday, typing on a computer. He was, therefore, his doctor said, entitled to workers' compensation benefits. But Jayaswal had not at first claimed that his ailments were work- related. He said he was afraid he would be fired if he claimed to have been injured on the job. So, when pressed, he said he told his doctors initially that he had experienced pain lifting his garage door. An insurance adjuster seized on the garage door statement as evidence that Jayaswal was lying when he later attributed his injuries to work.

Without asking him to explain, prosecutors charged him with the felony of lying to collect benefits. Compare that to the way prosecutors handled what they regarded as lies under oath by some of their benefactors. District attorney officials said they collected evidence that seven insurance company executives had perjured themselves in reports to state regulators. The executives overstated the extent to which their companies were financing their own legally required efforts to ferret out fraud. The district attorney's office was almost wholly dependent on these efforts as the source of its workers' compensation fraud cases.
Although the head of the D.A.'s anti-fraud effort routinely prosecuted workers for lying under oath, he said it did not occur to him to apply the same standard to the insurance executives. He did not see them as his targets. Nor did his office. The extent to which prosecutors had abandoned even the possibility of going after insurers was made clear in a 1998 job advertisement for the workers' compensation anti-fraud unit. "The suspects we investigate," said the ad, issued by Chief Deputy Dist. Atty. Robert P. Heflin, "include workers, employers, doctors and lawyers."
The ad did not even mention the possibility that insurance companies could be charged with crimes. The unit's priorities are evident at a glance:

• In 8 years, it has spent $38 million in private funds.
• It has prosecuted more than 250, mostly low-paid workers, fewer than 20 lawyers, doctors or other medical personnel and about two dozen employers, all of them small or medium-sized.
• It has prosecuted exactly zero insurance companies.

Employers organized and got the attention of state legislators by screaming that they couldn't afford to pay these higher premiums and threatening to leave California if something wasn't done. Then-state Sen. Robert Presley (D- Riverside) took the lead in writing legislation aimed at putting the unscrupulous doctors and lawyers out of business and behind bars. Workers were never the target, said James Morris, an aide to Presley. "Everyone realized that the workers in this context were kind of the sheep in this whole thing," he said.
Presley's legislation, which passed in 1991, was unusual in that it required employers, rather than taxpayers in general, to pay for investigations & prosecutions through a surcharge collected on their insurance premiums. There were two reasons Presley took the private money approach. The state was in the red and Presley said any general fund appropriation would not pass. County prosecutors were unwilling to use tax money already assigned to them. They had higher priorities: violent crimes.

Morris, the Presley aide, recalled speaking to several county prosecutors, including representatives of the Los Angeles County district attorney's office who told him: "Unless we see any money, we're not going to be prosecuting this type of case." Employers are now assessed a statewide total of $30 million a year. In the Legislature's scheme, the money is divided between the state Dept of Insurance for investigations and the various county district attorney's offices. Prosecutors apply for the money annually to the insurance commissioner, who doles it out with the consent of the state's Fraud Assessment Commission, which consists of two insurers, two self- insured employers and one otherwise insured employer. The Los Angeles County district attorney's office has historically gotten the lion's share of the funds.
The private dollars paid for a slew of prosecutions, proving, said Stanley Zax, chief executive of Zenith Insurance Co., that district attorneys are like anybody else: "When they are incentivized to go after something, they go after it."

In the early days of the program, Los Angeles County Dist. Atty. Gil Garcetti announced that he was going to focus on the doctors and lawyers involved in the medical mills. "Our goal has to be to put some of these people in prison," he said in 1993. But the medical mill prosecutions turned out to be quite difficult. (Garcetti, locked in a reelection battle with one of his deputies, declined to discuss such cases or any aspect of the workers' compensation anti-fraud fight for this story.)
The district attorney's office won only one of its big mill cases, against a psychiatrist named Mark Kaplan, whose frauds were also documented by television news people operating undercover. The office lost the other three such cases it pressed to conclusion. Part of this was because prosecutors ineffectively presented evidence, jurors and defense lawyers said. Part was because jurors had trouble distinguishing between fraudulent actions and actions that were lawful, just greedy.
The operators of a large chain of clinics who were accused of systematically overcharging insurers and performing unnecessary tests offered lawful greed as their defense. "They charged the absolute maximum that was available under the law," said defense lawyer Michael Chaney. "Charging too much isn't fraud. It's just excessive." Jurors agreed.

The second in command of the district attorney's workers' compensation unit also agreed. Deputy Dist. Atty. Richard Rosenthal advocated abandoning his own prosecution of another large string of clinics called Primedex. He concluded that its alleged insurance company victims were not really victims; they were more like accomplices in that they had willingly paid Primedex's bills and passed the costs along to employers.
"It is obvious that Primedex exploited the workers' compensation system," Rosenthal wrote to his superiors in a confidential memo. "It is obvious that Primedex ordered medically unnecessary procedures. But it is also obvious that the insurance companies and [state workers' compensation judges] allowed the acts to occur." They all participated in what amounted to "a giant quasi-legal Ponzi scheme with citizens of this state on the losing end," he said. Rosenthal declined to comment for this story.
Although he repeatedly recommended giving up on Primedex, his superiors would not allow it. The district attorney's office had spent millions in private funds on the mammoth prosecution and had repeatedly promised the Fraud Assessment Commission that arrests were imminent. Five years after Rosenthal recommended dumping the case, former Primedex executives are still awaiting trial.

Records belie Simon on fraud case ¹
He insists his role in ill-fated partnership was limited, but court papers show he was involved in every phase.
8.7.02   M.Finnegan & J.L. Rabin L.A. Times

•   Simon, then family firm exec. dir., met Hindelang after the Pacific Coin founder chose Wm E. Simon & Sons from a group of suitors competing to invest in his pay-phone co.
•   Simon was Wm E. Simon & Sons committee co-chair that reviewed & signed off on the Pacific Coin investment Feb. 1998.
•   As Pacific Coin sank into financial trouble, Simon detailed his concerns in writing. When executives at Wm E. Simon & Sons told him Pacific Coin needed $2.5 million to meet debt payments, Simon wrote: "How about we make some money first."
•   Simon commissioned a private investigation of Hindelang in Dec. 1998, after Wall St Journal reported that Hindelang had agreed to forfeit $50 million in illegal drug profits. Simon picked a firm led by a former colleague at the Manhattan U.S. atty's office. It found Hindelang had pleaded guilty in 1981 to charges of smuggling 500,000 pounds of marijuana into U.S. Simon said he had been unaware of Hindelang's criminal record.
•   Months later, Simon personally assured a Pacific Coin creditor, Bank of America, that Wm E. Simon & Sons still strongly supported the co. despite a sharp drop in pay-phone revenue. The bank & other lenders ultimately seized Pacific Coin for failure to pay its debts.

Given timing of the Pacific Coin verdict 14 weeks before the election, it has become a central focus of the governor's race, complicating Simon's effort to impugn the integrity of his Democratic rival, Gov. Gray Davis. Simon already was facing a tough challenge, as an investment banker seeking public office for the first time in a political climate dominated by corporate scandals. For Simon, a conservative who trumpets his background as a prosecutor, the Pacific Coin case is esp. harmful because it shows he did business with a former drug trafficker who served 30 months in prison. Since the verdict, Simon has struggled to contain the damage.

"When I was a federal prosecutor, I fought to keep drug kingpins off our streets through asset forfeiture and enforcement of our criminal laws," he said in a statement, "and I certainly am intent on keeping them out of any businesses that I am involved in." He said his firm "engaged a number of independent consultants to conduct due diligence" on Pacific Coin, but the background check on Hindelang only "went back 10 years." "His conviction went back a little bit longer than that," Simon told reporters.
At a Superior Court hearing Monday, Wm E. Simon & Sons atty Wm H. Lancaster urged Judge James C. Chalfant to set aside the verdict. The case affects "the politics of the state," he said. "At this stage," the judge responded, "I really don't think I should be concerned about that."

Bill Simon Jr. met Ed Hindelang for the first time in late 1997 at the Wm E. Simon & Sons office in Westwood, and the two would later play tennis in La Quinta, according to Hindelang's lawyer, Geoffrey Thomas. 12 years after his release from the federal prison camp in Lompoc, Hindelang was a wealthy Santa Barbara entrepreneur who kept quiet about his criminal past. He owned & ran Pacific Coin of Van Nuys, one of the biggest independent pay- phone companies in the West. He started with 14 pay phones in 1986, but now had 8,000 spread across S.Calif.
The decision to put money into Pacific Coin was up to the Simon firm's investment committee. Simon was its co- chair. When the committee debated Pacific Coin, Simon raised questions about growing competition from cellular phones, according to executive at Simon's firm Henry Brandon III. "It was a big concern to him," Brandon testified. Simon and the rest of the committee approved the deal anyway. In Feb. 1998, an investment group led by Wm E. Simon & Sons took control of Pacific Coin. The new owners kept Hindelang, who retained an interest in Pacific Coin, as CEO.

In the fraud case he later filed, Hindelang argued that the Simon investors concealed from him, until the last minute, their plan to charge Pacific Coin several million dollars in investment banking fees. The Pacific Coin acquisition produced more than $1 million in fees for Wm E. Simon & Sons, but the firm denied hiding its intent to charge them. Also hidden from Hindelang, fraudulently, the jury found, was the Simon group's high-risk plan to borrow tens of millions of dollars to expand Pacific Coin, then take it public a few months later in a stock offering. Had it worked, the plan could have made the Simon investors a fortune.
2 months after the Simon group took control, Pacific Coin borrowed $42 million to buy Golden Tel, a co. with 5,000 pay phones, mainly in Las Vegas. The deal produced $390,000 in fees for Wm E. Simon & Sons. But flaws in the strategy quickly emerged. A slowdown in pay-phone revenue made a stock offering less & less likely. Somehow, Pacific Coin needed to keep its lenders at bay. A request for money landed on the desk of Bill Simon Jr.
The internal Wm E. Simon & Sons memo dated 9.15.98 was the clearest record of Simon's personal engagement in the Pacific Coin mess.The confidential memo, written by 2 of the firm's investment managers, chronicled Pacific Coin's growing financial troubles. It recommended that Wm E. Simon & Sons put another $2.5 million into the co. for debt payments. Simon is the first of 9 executives named on the cover page as recipients of the memo.

"I would like to spend some time understanding this situation," Simon wrote at the top of the memo, later introduced in court. "When it rains, it pours." Simon underlined 13 passages in the 10-page memo. "This is interesting," he jotted in the margin next to a section that reported a $3-million shortfall in pay-phone revenue. On the following page, the authors said the use of pay phones had dropped sharply when the price per call rose from 20¢ to 35¢. "Interesting," Simon scribbled again. "I wonder how much of this is due to mobile phones."
The memo projected a future revenue loss of up to $6.9 million. "This is big," Simon wrote. It reported a plan to sell the co.'s Texas pay phones for $3 million. "Was this disposition part of the original game plan?" Simon wrote. Simon also learned from the memo that the cost of installing new Golden Tel phones at the Bellagio and other Las Vegas casinos was straining Pacific Coin's ability to pay its debt. Money from the phones, it turned out, would not come in for months. "Didn't we know about this?" Simon scrawled in the margin.
Simon raised doubts about a plan to persuade banks to restructure Pacific Coin's loans. "They will probably say no," he wrote. The memo reported that Pacific Coin had to make a $2-million debt payment within 2 weeks. "Wow!" Simon wrote. On the page outlining how much Pacific Coin needed immediately from Wm E. Simon & Sons, he jotted, "How about we make some money first." Simon also inquired about fellow Pacific Coin investors: "Did Tom & Bill put up? How much?"

Despite his interest in such details, Simon, whose firm ultimately agreed to put up the requested money, testified under oath in May 2002 that he recalled nothing about the memo and the things he wrote on it. Hindelang lawyer Anthony C. Duffy asked Simon if his notes reflected his concerns about Pacific Coin. "You know, I just can't say, because I don't really remember reading the memo," Simon testified in the videotaped deposition. Simon read each of his handwritten notes aloud, but said the document "doesn't refresh my memory."
Was Simon concerned that the Pacific Coin investment was not going well? "You know, I just don't remember," he testified. What did he mean by "when it rains, it pours"? "I don't know." Why did he find the $3-million shortfall "interesting"? "I just don't remember what I was thinking." Did he recall learning that the use of pay phones was dropping? "I don't remember reading the document, so I can't be quizzed on the contents of the document."
Simon was not entirely forgetful. Asked whether he recalled that he "wanted to see some money being made out of this co. before you put any more capital in," he responded: "I think that's a fair statement." Simon said he could not recall talking to other executives at his firm about Pacific Coin's troubles, nor whether anyone answered his handwritten questions. Simon said he would normally keep asking such questions until he received a satisfactory response, but added: "I'm a nice fellow. I might go away at some point."

A week before Christmas 1998, Wall St Journal brought disturbing news: Hindelang had been part of a Colombian marijuana smuggling ring in the late 1970s, and 2 decades later he had agreed to forfeit $50-million in drug profits to the U.S. atty's office in Miami. Simon commissioned an urgent background check on Hindelang. "I wonder about the truth of things that appear in the press," Simon recalled in his deposition. "And so I thought it was useful to try to figure out what exactly was happening and whether or not, you know, what they said in the article was accurate."
At Simon's behest, Wm E. Simon & Sons hired NY investigation firm, Decision Strategies/Fairfax Intl, where Phil Stern, a former colleague from the Manhattan U.S. atty's office, was sr managing director. Stern faxed his confidential report on Hindelang to Simon's Pacific Palisades home. NYTimes, AP and UPI had reported the news in stories now rolling through Simon's fax machine: Hindelang was indeed a convicted drug trafficker. He had been indicted in Louisiana for importing 500,000 pounds of marijuana and conspiring to import another 150,000 pounds. The dope arrived in freighters off the Florida coast, then shipments were transferred to smaller fishing & recreational boats for the final journey to the U.S. shore.

When Hindelang pleaded guilty in 1981, he agreed to forfeit $640,000 in drug proceeds. But he had hidden millions more, some of it in Swiss bank accounts. By the late 1990s federal agents had tracked it down. So in Dec. 1997 at the same time the Simon partnership in Pacific Coin was taking shape, Hindelang had flown to Miami to meet with federal prosecutors and negotiate the deal to forfeit $50 million. In the midst of those secret talks, the Simon group had approved a 5 year employment agreement for Hindelang to remain as chief executive at Pacific Coin. Upon word of the forfeiture, he was suspended, then fired months later.
Hindelang's criminal lawyer, Harlan Braun, said no one from the Simon firm had asked the Pacific Coin founder whether he had any felony convictions, and it was not information he was required to volunteer nearly 2 decades later. In Hindelang's absence, Pacific Coin deteriorated. Debt problems worsened. Simon told one lender, Bank of America, that Pacific Coin's investors still strongly supported the co., according to a bank document. But the lenders not only tightened credit on Pacific Coin, they also blocked the Simon firm from further depleting the co. by collecting investment-banking fees.

Finally, in Dec. 2000, lenders seized Pacific Coin, wiping out the investments of Simon, Hindelang and their partners. By Hindelang's account, the Simon group abandoned the co. to "take advantage of the tax deductions from the resulting losses." Simon's personal income tax returns show he wrote off $1.2 million in Pacific Coin losses in 1999 & 2000, but a spokesman denied that he neglected the co.
For the Simon campaign, Hindelang's lawsuit was fraught with political danger. In Oct., Hindelang's lawyers subpoenaed Simon for a deposition. 6 months later, after his surprise victory in the Republican primary, Simon's lawyers tried to quash the subpoena, saying Hindelang was trying to embarrass & harass a candidate who was "at best peripherally involved" in Pacific Coin. Simon's time was "extremely limited in pursuit of the state's highest public office," his lawyer, Brent M. Finch, wrote in court papers.

Hindelang's lawyers, Duffy & Ronald M. Oster, argued that Simon was "directly involved in all stages of the Pacific Coin investment." Simon's effort failed and he was forced to testify May 28 and 29 in a videotaped deposition. His testimony was condensed into a short videotape for the jury. Had he ever met Hindelang? "I have," Simon testified. Did Simon participate in the decision to invest in Pacific Coin? "I don't remember." Did anyone tell him whether the Simon firm had lost its investment in Pacific Coin? "No. Not to the best of my recollection." In the end, because of a tight trial schedule, Hindelang's lawyers let the case go to the jury without playing the Simon video. The jury ordered Simon's firm to pay $13.3 million in compensatory damages and $65 million in punitive damages to Pacific Coin Management, a co. owned almost entirely by Hindelang.
The jury rejected a claim by the Simon investors that Hindelang had defrauded them by concealing his criminal record. After the trial, Simon called the verdict "fundamentally flawed" and vowed to appeal. He told reporters that the trial boiled down to whether jurors took the word of a former drug trafficker over that of Wm E. Simon & Sons. "The jury believed Hindelang," Simon concluded. "I think that's it in a nutshell."

stadium
juicing the dole 10th Ave marine terminal N.Calavita housing GNEP border rpt Maclovio Rojas development



City, county teaming up in ballpark push
1.24.02   Don Bauder & Tom Stinson SD UT

In response to my query, Murphy did not say why the city has not pinned down the Padres on paper to a commitment to complete their end of the project or arrange for ancillary development that would pay for debt service on the ballpark bonds. The Padres had been pinned down in the first agreement of 1998, but now the city is largely relying on hopes that the team can sell a bond and arrange housing development that would replace the hotels & office complex that have not been financed. Yesterday, Roberts said the board will meet today in a hastily arranged session to see what the county can do to help the city.
Indeed, the agenda item, on Roberts' letterhead, states: "It appears the City of San Diego has limited options for the completion of the ballpark." There may be an opportunity for the county to render assistance, "and the taxpayers of our region can finally complete the ballpark." That last statement, of course, goes right to the heart of a lawsuit pending against the city. Back in 1998, when the ballpark went before city voters, "most of the debt-service costs over the 30-year life of the bonds was to be borne by out-of-towners, filling 2,300 hotel rooms," says retired Univ. of San Diego law prof. Robt Simmons, plaintiff in the suit. He was referring to the transient occupancy taxes that were to be generated by new hotels. "It was not going to cost city taxpayers anything," says Simmons. "The Padres had originally committed to build 850 hotel rooms, 600,000 sq ft of office space, high tax-generating development. That has gone by the board."

Says Simmons, "They gave us the bait in '98 and switched it to our back in Nov. 2001," when the City Council approved a new proposal that generally would shift the real estate mix to lofts & townhomes, and relieve the Padres of most of their obligations. Financially, this makes the whole project very shaky, says Simmons. If the city has such financial problems over the ballpark, I asked Murphy yesterday why it doesn't have a mechanism, such as a double escrow, on the bonds the Padres propose to sell. If that were to occur, the city wouldn't be able to use the money from its bond sale until the Padres have sold their bonds.
Also, I asked the mayor why the city didn't require the Padres to put up a letter of credit to guarantee that the ancillary development will be completed or the funds delivered. Murphy replied that Major League Baseball has guaranteed the Padres' funding contribution up to $47.8 million, and "we could sue" the Padres for non- performance. "That is a lot of window-dressing and smoke-screening," says Simmons. "Can you see the city, with the mayor so long in bed with the Padres, turning and suing? It would be like me suing my son."

And the ballpark, which will have been financed by the taxpayers, by that time would be either complete or well along. Because Murphy & Roberts gave no details yesterday, Simmons does not know whether the county's possible entering into the financing would violate the memorandum of understanding that is the base of the ballpark agreement. It's possible there could be lawsuits over any city/county deal, said Murphy. City Atty Casey Gwinn told a colleague of mine, "I have no doubt that whatever we do, we will get sued." That is an interesting statement, because the city has already said that if it does not get a judgment in its favor in the Simmons suit by 1.30.02, the ballpark financing will fail and Major League Baseball could well depart San Diego.

Downtown ballpark suffering,
nearing need for life support
12.16.01   Neil Morgan SD UT

The battle has been allowed to divide and distract San Diegans who instead should be seeking alternative ways to make this city work better. A mature city is the goal, not this one. At this holiday, we are talking home and family. But like a tourist looking for the light at the end of a tunnel, we have accepted a single-track view of the real stuff: How to rehabilitate downtown's impoverished and embarrassing east side. CCDC chairman Peter Q. Davis reluctantly concedes that even without a ballpark, redevelopment could pay its way in East Village, though "it would take longer." Many cities have managed this through libraries, convention centers, concert halls, parks, homeowner incentives and trendy housing renewal. San Diego has done it in the other half of downtown. It's usually less a tax burden than a stadium. But to their boosters, stadiums remain a city's best shot at fame and fortune. The record is nowhere near that certain.
In this city, the ballpark never won a fair test. There's been pettifoggery from the start, when Mayor Golding insisted on representing the city alone in negotiations with Moores and Larry Lucchino. Now, with a tough-minded ex-judge as our mayor, City Hall is incomprehensibly talking down to taxpayers, failing to address core ballpark issues that voters have every right and need to understand. Foul air rises from the albatross. For the deal to succeed now would require Mayor Murphy to give forthright answers to questions that come faster. If it's a good deal for taxpayers, Murphy will need to come out fighting to win us. We need fewer cheerleaders and more truth. Yet, one recent muddling traces directly to Murphy, raising the image of rubes at the mercy of Manhattan sharpies: What was happening inside the mayor's office on Nov. 7 when he announced that Merrill Lynch would market ballpark bonds taxable to investors at a sky-high 8.83 percent? (The tax-free market presently yields investors about 4.4 percent. You know you're buying risk when you go higher.)

Worse, these bonds might have been in violation of the Proposition C mandate for tax-free financing and were certain to be challenged. Did Murphy, who knows the process well, consider taking the deal before a court for legal affirmation before announcing it? Why is there suddenly such a hurry? And what was happening 2 days later when Murphy reversed himself and announced that Merrill Lynch would instead make a private bond offering (7.84% tax-free)? Even that rate was so far above market that investors across the U.S. hounded brokers to buy. They learned that because of unmitigated risks and SEC regulations, Merrill would sell these bonds only to institutional gamblers like Merrill, J.P. Morgan Chase, Citicorp and hedge funds. This farce at City Hall occurred because Murphy entrusted negotiations with Wall Street to finance people at City Hall. Worse still, they appear to have negotiated with only one brokerage firm. Cities customarily seek competitive bids. Wall Street people were winking at each other.
My (moon-eyed) prediction for 2002: The city will turn to Sol Price, who has leveraged his own tough love and philanthropy with public funds in City Heights to achieve the most successful American neighborhood rehabilitation in decades. The city of San Diego will contract with Price to do it again in East Village. Price wouldn't build a ballpark. In City Heights, he builds schools, libraries, playgrounds and affordable housing. No one would get rich, but San Diegans with some social conscience could share the elusive joys of civitas: Doing the right thing for their city and its people. That might be enough even to entice Price to do it.

Economic boost from influx of baseball fans predicted   3.29.04   Ronald W. Powell SD UT

San Diego Unified Port District officials expect Petco Park to boost their agency & tenant revenues. The big question is just how much attendance at the new park will mean to the cash registers of waterfront businesses. The Port District is landlord to hotels, restaurants, retail stores, tour boats and other businesses on the San Diego Bay tidelands. They include the Marriott Hotel and Marina, the Manchester Grand Hyatt Hotel, Seaport Village and businesses, including San Diego Harbor Excursion, along the North Embarcadero.
The agency receives a flat rent from some tenants, but a percentage of beverage & food sales from others. The Port District also hopes to benefit from its investment in Tailgate Park, Petco's primary parking lot. Many merchants in the Gaslamp Quarter, 2 blocks west of the ballpark, expect an economic bounce from the influx of baseball fans. For port businesses that either are hidden behind the San Diego Convention Ctr or located a few blocks farther away from the ballpark, predictions are trickier.

Some waterfront businesses are cautiously expecting an increase in customer volume, and therefore a jump in port revenues. But, like the Padres' season, it is hard to know the outcome before the games are played. "We don't have an idea about that yet," said Port District's Petco-associated revenues spokeswoman Irene McCormack . "I don't know how we would know that without a year's operation at Petco."
Port Tenants Assn exec. dir. Sharon Cloward said business owners are hoping for the best. The association represents more than 200 port tenants, including some near Petco Park. "Our members don't know what to expect," Cloward said. "They're taking a wait & see attitude." Rick Ghio, co-owner of Anthony's and 2 other restaurants in the same building on the North Embarcadero, said the eateries registered an increase in business during a 4 day college tournament at Petco that began 3.11.04. San Diego State University played the Univ. of Houston at the first-ever game in the park before 40,100 fans, largest crowd to watch a college baseball game.

"We did see a blip in business, and that was encouraging," Ghio said. "But check back with me 30 days after the season begins and I'll have a better idea." George Palermo came away from the SDSU game with optimism for his water taxi & ferry service to Padres games. SD Harbor Excursion pres. Palermo had 110 riders on water taxis, or swift small boats, from Coronado to San Diego. He is limiting water-taxi ridership to 180 for each game.
"I think it's a good idea," said Palermo, who also will have a ferry boat running from Shelter Island to a dock behind the San Diego Convention Ctr on game days. "We'll do it until we start losing money, and I can't imagine that."

For the Port District, a windfall from Petco Park-related business would be a return on an investment. The port is paying $21 million into the ballpark project for 4 blocks that were converted to Tailgate Park, Petco's primary parking lot a block to the east. The 1,048-space lot is bounded by 12th Ave on the west, 14th St on the east, Imperial Ave on the south, and K St on the north.
Port & city officials agreed to the deal in 1998, and the city exercised its powers of eminent domain to obtain the property. The city has graded, paved, striped and illuminated the property. Parking for games is $17, and $3 a day on nongame days. The Port District gave the city a check for $11 million Feb. 2002, first installment on the purchase. It has paid the city $300,000 a month since then, and should pay off the balance by the end of the year. The Port District is paying for the property from a $3 surcharge on car rentals at companies serving Lindbergh Field airport travelers.

When the agreement was struck, the port administered Lindbergh Field. That changed 1.1.03, after state legislation shifted the airport's operations to the newly created San Diego County Regional Airport Authority. The Port District's surcharge has remained in place. "I think this is a good deal for the port," said Port Commission Chairman Peter Q. Davis. "Because of the car-rental fee, it didn't cost us anything, there was no money out of pocket. It means $150,000 in hard cash to the port each year, plus it helped put the ballpark down there."
Moreover, Davis said, Tailgate Park will appreciate in value, giving the port an increasingly valuable asset. McCormack said the port will gain title to Tailgate Park 4.8.04, opening day for the Padres home season. The Padres will have the right to park cars at Tailgate for 81 regular-season games, exhibitions, playoffs and all-star games, plus 10 additional days for Padres events. In exchange, the baseball team has to pay the port $150,000 a year or a percentage of parking, whichever is higher, during a 30-year lease.

If the Padres pay the flat rate, the port would receive $4.5 million over the life of the lease. Former Port Commissioner Harvey Furgatch filed a lawsuit in 2000 to stop the transaction, alleging that the port was paying too much for the property. The lawsuit is on appeal. "This was a sham transaction that was nothing but a gift to the city," said Furgatch atty Stanley Zubel. "Can you imagine paying $21 million and getting that kind of yield (payment)? That's even more evidence of a gift."
Port officials say Tailgate Park has additional value to the San Diego bay front. When not in use by the Padres, the lots can be used for auto parking for downtown visitors and as a bus & truck staging area for the San Diego Convention Ctr. Better management of truck & bus traffic connected to the waterfront benefits port tenants, port officials have said.

The port's plan to contribute $21 million to the ballpark project was announced at an Oct. 1998 news conference held by former SD mayor Susan Golding and former Port Commission chair David Malcolm [ since indicted for abuses while in that office ]. The news conference was held minutes before a Padres World Series game, and Malcolm said the contribution was being made to fill a gap in the city's ballpark financing plan.
2 weeks later, city voters approved a ballot proposition authorizing the city to spend taxpayer money to pay up to $225 million of the ballpark's construction costs, then estimated at $411 million.

Primedex itself went out of business long ago, as did many of the clinics specializing in workers' compensation cases. They folded, in some cases, because they were spooked when the district attorney's office obtained search warrants to seize their files and, in other cases, because the Legislature clamped down on the billing excesses that had made the clinics so profitable. The Legislature imposed a schedule that limited fees for the first time in 1993. The medical mill prosecutions saved insurance companies millions of dollars. Primedex alone claimed that it was owed $159 million for medical services when it shut down. Under ordinary circumstances, the company's internal memos say, it could have expected to collect $135 million. Once the district attorney's office alleged fraud, however, insurance companies were able to settle for less than $10 million.

While prosecutors aligned themselves with insurers in going after doctors, they elected not to investigate complaints by doctors that dozens of insurers committed fraud against them. The doctors charged in civil lawsuits that insurers illegally conspired to tar them as fraud mill operators and drive them out of business without bothering to assemble any evidence that they were in fact committing fraud. As proof of a conspiracy, the doctors cited an account by a former executive for Golden Eagle Insurance who said insurers decided to engage in a little vigilantism to control costs.
In a letter to lawyers for some of the doctors, the executive, Hy Bates, said he attended a secret meeting in 1991 with representatives from three dozen other insurers active in the Los Angeles area. "The gist of the strategy," he said, "was to target the [medical] facilities with the highest dollar volumes … and then utilize any technical or legal argument available to them to deny or delay payment."
Deputy Dist. Atty. Edward Feldman, who headed the workers' compensation fraud unit from its inception in 1992 until the end of 1996, said he was skeptical about the lawsuits because he suspected that some of the doctors were crooks. He said he had never heard about the secret meeting Bates described. The district attorney's office also did not investigate the finding of a civil jury in L.A. Superior Court, which concluded that the state's largest workers' compensation insurer defrauded an employer of hundreds of thousands of dollars.

The insurer, the quasi-public State Compensation Insurance Fund, tricked its prospective customers, jurors concluded. Its sales force told employers that their premiums would be based on a realistic assessment of what claims by injured workers would cost, jurors found, but instead the premiums were based on the highest possible cost. Court of Appeal justices upheld the jury verdict of civil fraud and ordered the insurer to pay a $5-million punitive damage award, asserting: "There was substantial evidence that senior management personnel at SCIF … intentionally misled prospective insureds."
For the district attorney's office, prosecuting the State Compensation Insurance Fund would have meant biting the hand that fed it--in more ways than one. The fund's president is a permanent member of the Fraud Assessment Commission, which decides how big a chunk of the anti-fraud funds the Los Angeles County district attorney's office gets each year. The fund, prosecutors say, is also the most cooperative insurance co. in providing information that leads to cases. Feldman said that had nothing to do with the decision not to go ahead with a criminal probe. He said that the fund's misconduct was called to his attention but that he had higher priorities, particularly since his efforts would be duplicative: A civil jury had already punished the insurer. That, Feldman suggested, seemed punishment enough.

The district attorney's office has never prosecuted an insurance co. for defrauding injured workers by not paying them benefits. It's not that the unpaid benefits involve insignificant sums, said Casey Young, the former head of the state Division of Workers' Compensation. Year after year, insurers on average shortchange one of six injured workers by $900 apiece, according to random audits performed by the division. Young told a legislative panel in 1998 that this rate of shortchanging translates statewide to $84 million per year. "This is not money that's disputed, I want to underline," he said. It's money that insurers acknowledged that they owed but were caught keeping for themselves.
Young's estimate did not include additional sums that insurers saved by not notifying workers when they were eligible for vocational rehabilitation benefits, as required by law. The same audits showed that, year after year, insurers failed to inform nearly half of all injured workers who had been out of work for 90 days that they were eligible for job retraining. Cora Lee, who is in charge of the audits for Southern California, once testified in a deposition that up to 80% of the files checked at some insurance companies have showed money owed. "We've had some really nasty companies," she said.

Officials in the Los Angeles County district attorney's office, including Feldman and the current head of the workers' compensation fraud unit, Deputy Dist. Atty. Philip Wynn, acknowledged that a criminal investigation might be appropriate to determine whether these patterns of shortchanging workers were intentional. But these same officials and their supervisor, Director of Special Operations Allen Field, said they had never launched one because they had never heard of the audits, which were mandated by the Legislature in 1989 and have been the subject of legislative hearings, news releases and trade press reports. Summaries of the 150 audits conducted to date are available on the Internet at http://www.dir.ca.gov/dwc/audit.html.
Not everyone in the office was in the dark. Kristie Hutchinson, then and now the unit's special assistant, said she knew about the state auditors, though not about the audit results. David Guthman, who headed the unit for one year in 1997, said he learned about the audits when the Division of Workers' Compensation approached him for help during one particular audit, of the Fremont Compensation Insurance Group of Glendale. Fremont marketed itself as a company that could save employers money by rooting out worker and doctor fraud. It advertised on more than 600 billboards around the state that showed cheating workers behind bars. Its slogan was "Fraud Doesn't Work Here." It was wrong about that.
Auditors alleged that Fremont employees, spread among all three of its California claims-adjusting locations, Glendale, Fresno and San Francisco, backdated about 10,000 documents between 1990 and 1996. Auditors alleged that the backdating, which sometimes saved Fremont late-payment fees to workers and doctors, was sufficiently widespread as to constitute a general business practice. To settle an administrative case that could have cost it its license, Fremont agreed to pay $525,000 without admitting wrongdoing and promised to spend an additional $200,000 to train employees to play by the rules. It also agreed to change its computer system to make backdating impossible. Fremont said settling the case was cheaper than fighting it.

Fremont reported six of its employees to prosecutors. Two from its Fresno office were convicted of fraud-related charges. Four from its San Francisco office were never charged. Jacqueline Schauer, the lawyer for the auditors, ridiculed the extent of Fremont's housecleaning, saying that apparently more than 150 Fremont employees in the San Francisco office alone were involved. Fremont did not refer any of its Glendale headquarters employees to the Los Angeles County district attorney's office.

While investigating the backdating allegations in Glendale, however, auditors had approached the district attorney's office for help. The auditors said through a spokesman that they wanted the district attorney's office to grant immunity to some Glendale employees so they could question them. But they said the district attorney's office declined. Deputy Dist. Atty. Adalbert Botello, the supervisor who was the primary person dealing with the auditors, said he thought they merely wanted legal advice on immunity procedures, which he gave. He said he did not see their inquiry as a reason to assign his unit's investigators to probe for possible criminal acts by Fremont or its employees.

The district attorney's office has prosecuted few employers, explaining that cases of employer fraud are rarely called to its attention. Yet fraud committed by employers is probably more costly than that committed by workers, according to assessments by prosecutors in Los Angeles and elsewhere. Some employers save money by lying to their insurers about the nature of work their employees perform. Insurance premiums for dangerous jobs such as roofing can run one-third of payroll or more. If a roofing contractor falsely claims that his work force is clerical, identical coverage runs only about 1% of payroll.
But the district attorney's office says that, with a few exceptions, insurers don't want the reputation of nailing their own customers. Deputy Dist. Atty. Barry Gale--the only one of the unit's 16 prosecutors who handles employer fraud--said he has been frustrated because he has been unable to get insurance companies or others to refer him cases. Only eight of the state's approximately 300 workers' compensation insurers have done so, he said. Gale said he tried to open an investigation into employers who illegally operate without insurance. Taxpayers pay more than $20 million a year in benefits to injured workers whose employers don't have insurance.

But the state Insurance Department blocked him with a legal opinion. Its conclusion: Private industry pays his salary to prosecute insurance fraud, and people who do not have insurance, by definition, cannot commit that crime. Some of the state's large employers qualify to insure themselves. They have the same responsibility to handle claims fairly as insurance companies, and the same auditors who check insurance companies also review their practices and sometimes find them wanting.
Ralphs Grocery Co. of Los Angeles set a new record in 1998 for "amount in penalties in one audit." The total: $217,530. Ralphs had shortchanged about half of 154 injured workers whose claim files were checked--by a total of $106,000. Auditors also found that Ralphs failed to investigate some claims and denied benefits in others without saying why. Ralphs did not respond to an invitation to comment. District attorney officials never looked into these allegations to determine whether the short-changing was intentional. They said they learned of the Ralphs audit for the first time while being interviewed for this article.

Workers are the defendants in four out of five of the cases handled by the district attorney's special unit. This mirrors statewide and national trends. Cases against workers are easy. The overwhelming majority of workers who are charged plead guilty, are placed on probation and are ordered to pay restitution. Prosecuting them is known in the trade as picking the "low-hanging fruit."
In its most recent grant application, the Los Angeles County district attorney's office said the workers it goes after commit outrageous fraud: "supposedly bed- ridden claimants [who are] playing tackle football." It produced records of two cases it said were typical. One involved a $5-an-hour temporary laborer who hurt his heel but exaggerated his injury and was caught on videotape rehearsing a limp with a cane in a doctor's parking lot. The other involved a bartender who said he hurt his back on the job; he was collecting disability while secretly working as a bartender elsewhere. Those records did not provide a full picture.
The district attorney's office also picks off people such as:

• George Solis. At age 56, Solis was run over by a hit-and-run driver as he crossed a street carrying a crate of jalapeno peppers for the family restaurant he managed. He suffered brain damage, said he couldn't work and was paid $126 per week in workers' compensation benefits. But after several years, the Fremont insurance firm, which was looking at paying a potentially much larger settlement for permanent disability, decided to see for itself just how well Solis' brain worked. The insurer hired a private detective who videotaped Solis playing flag football, race-walking and driving a car. Solis had told an insurance co. doctor that he could not live independently and could not drive. The doctor looked at the videotape and said it proved that Solis was a malingerer. The district attorney's office had Solis arrested. Agents carted him off during an early morning raid on his Huntington Park house as his 80-year-old mother screamed: "You can't take my son. My son is no thief!" Deputy Dist. Atty. Eleanor Daniels did not dispute that Solis had been injured. She told Los Angeles Municipal Judge Elva Soper that he was arrested for exaggerating: "The impairment is not as extensive as 100% disabled."
  Soper made her own observations and took an unusual step early in the case. She appointed a specialist on the mental effects of brain injuries to examine Solis for the defense at public expense. Dr. Robert Brook looked at the secretly recorded videotapes and concluded that they proved Solis was gravely disabled. An average adult takes far less than a minute to tie his shoelaces, he said. A videotape showed that Solis took three minutes. Another tape showed that when Solis was playing flag football, he seemed to be playing by himself, Brook said. Neither his teammates nor his opponents paid him any mind. Still another tape showed that in a race-walk, he couldn't master the fundamental stride, the doctor said. He was disqualified. "It was a rather sad vignette," Dr. Brook testified. He said the only kind of work Solis could do would involve "simple, concrete, repetitive activities under constant supervision."
  Over the D.A.'s objections, Soper dismissed the case. She also dismissed a companion case against Solis' brother Austin, who had been accused of fraud for allegedly lying to doctors about his brother's limitations.
  

• Edgar Huaz. Huaz, a 35-year-old father of four from Guatemala, was working the graveyard shift as a chicken deboner at a food plant in Vernon when an industrial-size soap dispenser fell on his head in the men's room while he was washing up, he said.
  Huaz wound up in a hospital complaining of headaches. Within a month, a neurosurgeon, Dr. Harley Deere, operated to relieve pressure from a bruise on his brain. But the food plant's insurer, Fremont again, fought Huaz's claim about the work injury. It uncovered evidence that Huaz had been in a fistfight with a co-worker off the job site shortly before he had had brain surgery.
  

  Fremont inferred that the fight, not the incident with the soap dispenser, was the real cause of the injury and that therefore the insurer and Huaz's employer should be let off the hook. The D.A.'s office agreed and charged Huaz with insurance fraud. But its case fell apart when Dr. Deere testified that it would have been a physical impossibility for the fight to cause the injury he saw when he opened Huaz's head. The district attorney's office dismissed the case.
  

• Indravadan Jayaswal. Jayaswal, a data entry clerk for Blue Cross, had first visited a doctor for what he said was work-related neck, back and shoulder pain in 1991. He said in an interview that he did not file a claim at that time because a co-worker warned him that people who filed such claims were fired. His pain remained manageable until early 1995, he said, when production quotas were increased and he had to spend more time at the computer. He visited his own doctor, who referred him to two specialists. He told the specialists, according to their notes, that he had experienced a pulling sensation lifting a garage door. He did not mention that he thought his pains were work-related, although one of the doctors told him he should take a break from working. This doctor and Jayaswal signed a state disability form, checking off a box that said explicitly that the ailment was not work-related.
  

  When Jayaswal returned to work with restrictions on using a computer, records show, a supervisor referred him to Blue Cross' health and safety department. He then filled out a workers' compensation claim, stating that his pains were work- related. A claims examiner for Blue Cross' workers' compensation insurance carrier, a Kemper co., became suspicious. When an insurance co.-hired doctor told the claims examiner that she was on to something, Kemper referred the case for investigation and prosecution to the state Department of Insurance and to the district attorney's office.
  In doing so, Kemper officials said Jayaswal was known to file false claims, an assertion they later admitted they could not support, according to court records. They also suggested that he fraudulently filed for workers' compensation benefits to pay for his medical care because he had no group health insurance. In fact, he had used his group health plan to pay for his treatments. The Department of Insurance investigation into whether Jayaswal's injuries were related to his job was woefully incomplete.
  

  "What is his job?" the case investigator was asked at a preliminary hearing. "I really don't know," he said. He told a judge, however, that he had spoken to the specialists who had treated Jayaswal initially and that both had told him that Jayaswal's ailments could have been caused by his job.
  At Jayaswal's trial one of the same doctors went further. He testified that, not only could Jayaswal's problems have been work-related, they probably were. The prosecutor said this did not matter. Deputy D.A. Robert Wallace argued that fraud hinges on a state of mind. He contended in court that whether Jayaswal was entitled to benefits or not was irrelevant. If he merely tried to collect benefits while believing that he was not entitled to them, that would be enough for a conviction.
  

  Superior Court Judge Michael Tynan did not need to hear any more. He acquitted Jayaswal before the defense put on any witnesses. Jayaswal sued the insurance co. for malicious prosecution and settled with Kemper for an undisclosed sum. But he could not get his old job back. He said he could not even get a job in the same industry. "They destroyed all my life," said Jayaswal, now 61. "I was just interested in why I had pain. I had a good job. My company was paying a lot of overtime … Why should I go to workers' compensation? I wasn't going to get [much money]. I only wanted the pain to go away."
  

Trial & appellate courts have reviewed these funding arrangements and have agreed with the district attorney's office that no conflict of interest exists. District atty officials added that they would gladly look into allegations that insurers were ripping off workers if someone would just bring them the evidence. The officials said they have repeatedly asked, in vain, that lawyers who represent injured workers seeking benefits bring them cases of suspected criminal wrongdoing by insurers or employers. Prosecutors said their appeals for cooperation have been made at functions put by on by these workers' lawyers, who are known as applicants' attorneys.

There are 3 applicants' attorney groups in L.A. County. A member of one said he had a client who contacted the district attorney's office and found officials receptive to looking into a complaint about possible insurer fraud. No action has been taken in that case.