Corrupt City Official Ordered to Repay $3.4 Million

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Convicted of felony misappropriation of public funds in 2011, former Vernon City Administrator Bruce Malkenhorst Sr. was ordered to repay over $3.4 million in overinflated pension payments. According to California Public Employees’ Retirement System (CalPERS), Malkenhorst was not only being paid to serve as full-time City Administrator and City Clerk, but was also secretly receiving compensation to serve as Treasurer, CEO of the city’s power department, and several other positions not listed on the city’s pay schedules.

After retiring in 2005, Malkenhorst came under investigation for misappropriating $60,000 in public funds to pay for golf, massages, meals, a personal trainer, and political contributions. The federal investigation also discovered that Malkenhorst had been receiving more than $550,000 per year in benefits. With Malkenhorst convicted in 2011, the CalPERS Board of Administration decided to cut his pension to roughly $115,000.

Instead of accepting the terms or agreeing to pay restitution for stealing millions in pension payments, Malkenhorst filed a series of lawsuits against the city for cutting his benefits. While hearing Malkenhorst’s appeal earlier this year, a judge agreed with the CalPERS Board’s decision to cut his pension. The judge determined that Malkenhorst had been receiving a pension based on compensation for several positions that were not publicly disclosed.

“As the judge specifically found, Malkenhorst and other Vernon officials intentionally obscured Malkenhorst’s pay increases, making it impossible for the public to figure out how much the city was paying for what services, and subverting the law’s transparency requirements,” said Matthew Jacobs, CalPERS’ General Counsel. “CalPERS will not tolerate these kinds of abuse. We remain on the lookout for all forms of pension spiking and encourage the public to help us root it out.”

In 2013, state Senate leader Kevin de León introduced a bill inspired by Malkenhorst to bar lawsuits against cities by local government officials convicted of committing felonies while in office. On Wednesday, the CalPERS Board approved the decision to begin the process of recovering more than $3.4 million in overpayments to Malkenhorst. On Friday, de León and Vernon officials publicly supported the Board’s decision.

“Mr. Malkenhorst spent decades shamelessly scamming the taxpayers with his illegal pension scheme,” De León stated. “I applaud CalPERS for ordering him to repay $3.4 million in overpayments, and I hope CalPERS will withhold any scheduled pension payments until Mr. Malkenhorst makes full restitution for ripping off California’s taxpayers.”

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