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SAN DIEGO — Here’s the joke going around San Diego’s City Hall these days: “Hi. I’m Mike Aguirre. As city attorney I represent you, and I just wanted to let you know: You have the right to remain silent.” But the joke doesn’t seem funny to many city officials, already under investigation by the Securities and Exchange Commission and U.S. attorney’s office for the Southern District of California over allegations of fraud involving a $1.4 billion deficit in the San Diego City Employees Retirement Fund. A city audit of fiscal year 2003 stalled over the release of financial and pension fund records, prompting Wall Street to downgrade the city’s credit rating. Aguirre, a political outsider and securities fraud attorney, won the city attorney job in November by a 1 percent margin, and promised to clean house at San Diego City Hall. Since he began his four-year term in January, Aguirre has seized pension fund records and turned them over to the San Diego U.S. attorney and the SEC. He has advised a dozen elected officials and staff members to get their own legal representation. In addition, Aguirre recently released a searing report that found the mayor, Dick Murphy — a former Superior Court judge — and most of the council allegedly complicit in misrepresenting the city’s financial stability to bond buyers. He’s made public memos that suggest officials knew as far back as 2002 that the pension fund was sinking into a deficit. City officials have vehemently denied the allegations. “Mr. Aguirre’s allegations are untrue, irresponsible and defamatory,” Murphy said in a statement. “The [securities law] experts and the city attorney’s office advised us that everything that needed to be disclosed was disclosed.” City officials have begun to insist that Aguirre’s actions aren’t those of an attorney who represents them, and that his activities may violate the professional code of conduct. “The city attorney’s office has serious conflicts of interest in conducting this investigation,” Murphy charged. Nonsense, Aguirre said. His clients are the electorate and the city — not its officials. “Under the city charter, the city attorney is chosen by the electorate,” he said. “I’m not chosen by the City Council and I don’t answer to them. “There is a school of well-developed thought that the city attorney represents the shareholders and the entity much like a corporate lawyer,” Aguirre added. “I cannot represent individuals in their personal interests, especially if they are in violation of the law.” Patricia Salkin, the associate dean and director of the Government Law Center at the Albany School of Law, wrote the book on the subject, Ethical Standards in the Public Sector, published by the American Bar Association. She that said Aguirre’s actions are worrisome. “It shouldn’t happen that the city attorney is in conflict with city officials,” she said. “That’s the city attorney acting as independent counsel.” Aguirre’s controversial role is subject to interpretation and debate, much of which starts with the unusual notion of an elected city attorney, experts say. Only a few cities — including Los Angeles, San Francisco and Oakland — elect their city attorney. Mathias Delort, who is active on the Municipal Lawyers Association’s ethics committee, noted that the concept of an elected attorney is “fraught with peril.” “Who is the client then?” asked Delort of Robbins, Schwartz, Nicholas, Lifton & Taylor in Chicago. “As an attorney, your client is the government body, not the council. In Illinois, the ethics rule is that you represent the entity which works through its officials. When two agencies have a conflict, you usually advise them both to get outside counsel and you stay out of it or it becomes difficult to represent the entity.” Some San Diego city council members, including Scott Peters, have retained their own attorneys — on the city’s dime. Peters, an environmental attorney before he was elected, has retained Los Angeles-based Sheppard, Mullin, Hampton & Richter. “Aguirre has a real ethical problem since he’s turned on people his office previously represented,” Peters said. “It’s his job to defend us and to represent city officials who will be witnesses down the line.” Instead, Peters said, Aguirre released privileged documents and released a report accusing council members of violating securities law. “I’m encouraging [city officials] to share counsel, since we are similarly situated, to keep the costs down,” he said. “But I can’t see a good ending to this — it’s a tremendous waste of time and money.” Marty Graham is a reporter with The National Law Journal, a Recorder affiliate based in New York City.

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