Auditor addsteacher

pensions to‘high-risk’ list

ASSOCIATED PRESS

SACRAMENTO — The stateauditor’s office is adding teacherpensions to the list of high-riskissues facing California govern-ment.

A report released Thursdayadded the pension fund because itcan’t pay retirement benefitsbeyond the next 30 years. Thepension problem was added to alist of risks that also includes Cal-ifornia’s chronic budget deficit,retiree health costs and prisoncrowding.

The California State Teachers’Retirement System reported inMarch that it had only 71 percent ofthe assets needed to cover retire-ment costs for its 852,000 membersand family members. The esti-mated shortfall is $56 billion.

School districts and educatorspay for pensions, but the amounthas not changed for decades. Boththe pension board and Gov. JerryBrown have called for fundingchanges, which the legislaturemust approve.

Another big down day for the Dow JonesBy STAN CHOEASSOCIATED PRESS

NEW YORK — Just when Wall Streetseemed to have settled down, a barrage ofbad economic reports collided with freshworries about European banks Thursdayand triggered a global sell-off in stocks.

The Dow Jones industrial average fell419 points — a return to the wild swings thatgripped the stock market last week.

Stocks were only part of a dramatic dayacross the financial markets. The price ofoil fell more than $5, gold set anotherrecord, the government’s 10-year Treasurynote hit its lowest yield, and the averagemortgage rate fell to its lowest in at least 40

years.The selling began in Asia, where Japa-

nese exports fell for a fifth straight month,and continued in Europe, where bankstocks were hammered because of worriesabout debt problems there, which haveproved hard to contain.

On Wall Street, the losses wiped out muchof the roughly 700 points that the Dow hadgained over five days. Some investors whobought in the middle of last week decided tosell after they were confronted with a raft ofbad news about the economy:

— More people joined the unemploy-ment line last week than at any time in thepast month. The number of people filingclaims for unemployment benefits rose to

408,000, or 9,000 more than the week before.— Inflation at the consumer level in July

was the highest since March. More expen-sive gas, food, clothes and other necessitiesare squeezing household budgets at a timewhen most people aren’t getting raises.

— Sales of previously occupied homesfell in July for the third time in four months— more trouble for a housing market thatcan’t seem to turn itself around. This yearis on pace to be the worst since 1997 forhome sales.

— Manufacturing has sharply weakenedin the mid-Atlantic states, according to areport from the Federal Reserve. Manu-facturing has been one of the strongestparts of the economy since the recession

ended in 2009, but its growth has slowed thisyear.

The manufacturing news was especiallybleak on an already bad day, said DanGreenhaus, chief global strategist at bro-kerage BTIG. He called the Fed report ‘‘anatrocious set of numbers.’’

‘‘That really set the market on its head,’’he said.

Wall Street and other financial marketshave wrestled for several weeks with fearsthat a new recession might be in the offing.Morgan Stanley economists said in a reportThursday that the U.S. and Europe are‘‘dangerously close to recession.’’

Please see DOW on A6

A Los Angeles man was arrested Wednesday eveningon suspicion of child annoying, according to the SantaBarbara County Sheriff’s Department.

Mario Rios Bibiano was arrested just after 6:21 p.m.Wednesday after Sheriff’s deputies received a call aboutan incident that took place nearSan Marcos High School.

As reported in yesterday’sNews-Press, a 15-year-old boy tolddeputies he was walking near thehigh school when a man in a pickuptruck pulled up alongside him andheld a cell phone up, telling him theperson on the phone wanted to talkto him.

The boy continued walking andreported the incident immediate-ly, according to the Sheriff’sdepartment.

Shortly after the call, a Sheriff’ssergeant stopped a man driving pickup truck whomatched the description provided by the boy.

Mr. Bibiano, who was also driving without a licenseand did not have registration for the truck, was bookedinto the Santa Barbara County Jail on a no bail immi-gration hold.

— Michal Elseth

Bibiano

Child annoyingsuspect identified

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CouncilmanFrancisco kicksoff campaign

ROBBY BARTHELMESS / NEWS-PRESS

Dale Francisco

By KATHRYN WATSONNEWS-PRESS STAFF WRITER

With the fountain of the CentralLibrary courtyard in the back-ground, incumbent City Councilcandidate Dale Francisco focusedon what he deemed the basics ofthe council’s civic responsibilitiesin his official campaign kick-offspeech late Thursday afternoon. “Public safety, municipal financeand infrastructure may not beglamorous, but that’s what thepeople who vote for us want us totake care of,” he told supporters ina seven-minute speech that was

Please see FRANCISCO on A4

MIKE ELIASON / NEWS-PRESS

Retired Lompoc Police agent Milt Baldwin reflects on the life of former Lompoc mayorand Police Chief Jimmy Dean “J.D.” Smith.

‘Cop’s cop’ and former Lompoc mayor rememberedBy NORA K. WALLACENEWS-PRESS STAFF WRITER

Longtime Lompoc Police Chief andone-time mayor Jimmy Dean “J.D.”Smith was remembered Thursday byfriends and family as a “cop’s cop,” atough law enforcer who “liked to putbad guys in jail” and valued his familyabove all else.

Mr. Smith died Aug. 12 at the age of80.

Mourners entering the LompocFoursquare Church were greeted by acadre of police Explorers in theirtrademark light blue shirts standingwatch over his badge — the group is alegacy of Mr. Smith’s tenure as thecity’s sixth police chief.

“He served faithfully, valiantly,aggressively for 16 years,” said PastorBernie Federmann.

The pews of Foursquare were filledwith uniformed officers — including anumber of retirees hired long ago bythe former chief — as well as three pastchiefs, three former mayors, currentand long-ago council members andcommunity members.

The audience was representative of

Please see SMITH on A10

Search forthe truth or

for a way out?The opening, closing and

reopening of a probe into theshoulder injury Kasi Beutelsays she sustained in 2009

By PETER LANCESPECIAL TO THE NEWS-PRESS

In what has now become a nearly eight-month inves-tigation into the Santa Barbara Police Department andits award winning “Top DUI Officer” Kasi Beutel, thestory of how the city of Santa Barbara has reacted to thecriminal fraud investigation by the California Depart-ment of Insurance underscores the perceptions by manyof just how far city officials have been willing to go toprotect the 39-year-old officer from possible criminalcharges in the face of a growing scandal suggesting thatduring her time in uniform she falsified evidence, wit-nessed forged blood test waivers and withheld excul-patory evidence from defendants, while earlier com-mitting perjury in state and federal court proceedingsand acting to suborn perjury in 2005.

The effort by the city attorney to affirmatively clearOfficer Beutel in that Department of Insurance fraudprobe potentially runs counter to the pledge made byMayor Helene Schneider and City Administrator JimArmstrong on Aug. 2 that under the City Charter it was“the duty of the city administrator, city attorney and chiefof police to review those allegations (in the News-Pressseries) and, if necessary, take appropriate action to ini-tiate discipline, outside investigations etc.”

In fact, the latest evidence uncovered in this investi-gation shows that City Attorney Stephen Wiley went tolengths to influence an investigator from the Departmentof Insurance Fraud Division to close out the initial probe.

The workers compensation claim Officer Beutel filedNov. 14, 2009 stems from the incident described in PartTwo of this series in which she stopped commercialfisherman Michael Kenny on suspicion of DUI andended up shooting him with a Taser at point blank rangewith a charge of 50,000 volts. After Mr. Kenny pulled theTaser probes from his chest and ran, he was appre-hended a few blocks away and later charged with drivingunder the influence, battery on a peace officer andresisting arrest.

When a blood test later proved that his blood alcoholcontent was .07 — under the legal limit — and after thepolice report showed that Officer Beutel was “notinjured,” the District Attorney’s Office dropped thedriving under the influence and battery charges and Mr.Kenny pled guilty to resisting arrest.

His case wound its way through Superior Court for thenext 22 months until June of this year, when his formerlawyer Robert Goodman was presented with a letterdated June 3, from Julia Alcocer of the city’s Risk Man-agement Division. The letter sent to the district attorneyasked that Mr. Kenny face additional criminal charges so

Please see DUI on A5

New way in, out of Santa Barbara

STEVE MALONE / NEWS-PRESS

Travelers carry their baggage into the new terminal at Santa Barbara Airport on its first full day of operation.

Airport terminal convenient, confusing to first-timers By MICHAL ELSETHNEWS-PRESS STAFF WRITER

It’s no LAX, but the new Santa BarbaraAirport terminal offered amenities muchmore akin to those found in its bigger coun-terparts when it welcomed its first departingpassengers on a brilliant Thursday morning.

A scarlet banner draped from the SpanishColonial Revival style building and the words“grand opening” scrolling across the check-in counter screens informed passengers andvisitors they were some of the first to use thenew facility.

Passengers coming off the first flights of themorning found their way to the new baggage

claim, now located inside the terminal nearthe escalator that carries arriving passen-gers downstairs from their gates.

“The baggage claims are going to be a lotbetter,” Aline Faucett, a 43-year Santa Bar-bara resident, told the News-Press.

Please see TERMINAL on A7

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SA N T A BARBARA N EWS-PRESS NEWS FRI D AY, A U G UST 19, 2011 A5

SOUTH COASTFilm Screening: 5:30 p.m. Santa

Barbara Museum of Art, Mary CraigAuditorium, 1130 State St. “FloatingWeeds.” An aging actor returns to a smalltown and reunites with his former loverand illegitimate son. Michael Berry,Contemporary Chinese Culture Studiesprofessor at UCSB will introduce the filmand lead a Q-and-A. Part of “Friday NightFilms”: Artist’s Pick” series. Free.963-4364.

Sings Like Hell Series: 8 p.m. LoberoTheatre, 33 E. Canon Perdido St.Featuring Calexico, a diverse collectivebased around the duo of guitarist-vocalistJoey Burns and drummer JohnConvertino. $35 reserved seating.

Butterflies Alive!: 10 a.m.-5 p.m. dailythrough Sept. 11. Santa Barbara Museumof Natural History, 2559 Puesta del SolRoad. More than 1,000 free-flyingbutterflies in a garden setting. Bringcamera. Free with museum admission:$10 adults; $7 seniors 65 and older, teens13-17; $6 children 2-12; free to membersand children younger than 2. 682-4711.

Let It Go Yoga: 10:30 a.m.-noon.Bronfman Family Jewish CommunityCenter, 524 Chapala St. Bring own

workout mat, blanket and long scarf or tiefor use as yoga belt. Free. 957-1115 orwww.jewishsantabarbara.org.

Laughter Yoga: 8:45 a.m. Luis OasisSenior Center, 420 Soares Ave., Orcutt.Free. 937-9750 or 868-8021.

Guided Meditation: 12:30- 1:45 p.m.Sansum Clinic, 317 W. Pueblo St.Instructor is Roger Ford, co-founder ofHealing in America. Free. 681-8976,press 3.

Santa Barbara County CourthouseTours: 2 p.m. daily; 10:30 a.m. Mondays,Tuesdays, Wednesdays and Fridays.1100 Anacapa St. Tours begin in MuralRoom on second floor. Also: 10:30 a.m.first and third Saturday of month,courthouse gardens tour. Meet underlarge arch on Anacapa Street. Free.962-6464.

Pilates Mat: 9-10 a.m. Goleta ValleyCommunity Center, Room 4, 5679Hollister Ave., Goleta. All ages and levels.Small classes. $75 for six sessions; $15per class for drop-ins; $10 per class forage 62 and older. 692-4906.

Sierra Club Friday Night Hike: 6 p.m.meet at Santa Barbara Mission; 6:15 p.m.hike starts. Easy-to-moderate two- tofour-mile round-trip. Bring flashlight. Free.

For more information, call Al at 685-2145.

NORTH COUNTYQuick Draw Art Festival: Various

times and locations today and Saturday inLos Olivos. Quick draw will be held11 a.m. Saturday at Lavinia CampbellPark, Grand Avenue and Alamo PintadoRoad. Festival includes artdemonstrations, art auction, food booths,music and children’s activities; quick drawinvolves artists racing to complete theirwork in 60 minutes. All proceeds go tosupport Los Olivos’ beautification efforts.Free admission. 688-1082 orwww.losolivosca.com.

“Wine & Fire” Weekend: Varioustimes and locations today through Sundayin North County. Includes wine tasting,seminar, barrel tastings and open houses.Presented by Sta. Rita Hills WinegrowersAssociation. For ticket packages andmore information, email info@staritahills.com or go towww.staritahills.com/events.html.

PCPA Theaterfest Production: 7 p.m.today, Saturday and Aug. 26, previews.Marian Theatre, Allen Hancock CollegeCampus, 800 S. College Drive, SantaMaria. American premiere of a musical

about Hans Christian Andersen, directedby Scott Schwartz. $23 general, $20.70seniors, $15 students and children.922-8313 or go to pcpa.org.

Olde Town Market: 5-7 p.m. Fridaysthrough Aug. 26. 100 block of South HStreet in Lompoc. Theme is “InternationalNight” and features entertainment andactivities related to theme. Sponsored byLompoc Valley Chamber of Commerceand Visitors Bureau. Free admission.736-4567.

VENTURA COUNTYChumash Garden: Noon-4 p.m.

Sundays, 1-4 p.m. Thursdays-Fridays,10 a.m.-4 p.m. Saturdays. Ojai ValleyMuseum, 130 W. Ojai Ave., Ojai. Livingbotanical garden that explains use ofnative plants by the Chumash for food,medicine, baskets and other crafts. Freewith museum admission: $4 general, $1youth 6-18, free to members and children5 and younger. 640-1390 orwww.ojaivalleymuseum.org.

MEETINGSSanta Barbara city offices closed –

furlough day.Santa Maria city offices closed –

furlough day.

EVENTS

that the city might collect restitutionfrom him of $7,762.89 in medical costsand temporary disability paymentsresulting from what Ms. Alcocerclaimed was a “shoulder injury” sus-tained by Office Beutel “while takingMr. Kenny into custody.”

WHAT THE KENNY POLICE REPORT SHOWED

As detailed in Part Two, PoliceDepartment dispatch logs show thatOffice Beutel pulled Mr. Kenny overon Marina drive at 9:15 p.m. Aug. 22,2009, on Marina Drive even though shestated in her arrest narrative that thestop occurred 10 minutes later at 9:25p.m. After first ordering Mr. Kenny toexit the truck, the police report doc-uments that Officer Beutel laterinsisted that he remain inside.

By Mr. Kenny’s account, after he gotout on the driver’s side, she fired TaserX26 at him at a range of two feetstriking him in the chest.

Despite Officer Beutel’s claim inher arrest narrative that Mr. Kenny“kicked (her) in the right hip with hisright foot (and) forcibly shoved (her)backwards as he exited the vehicle,” there was no evidence elsewhere inthe report to support the batterycharges.

None of the other seven officers whoresponded to the Kenny incidentoffered any corroborating evidence ofan injury sustained by Officer Beutel;and on page nine of the police reportnext to the designation Type of injuryit says “none.” Below that, next to thedesignation Injury Sustained byOfficer, it says not injured.

Further, while the official policereport showed pictures of the injuriesthat Mr. Kenny sustained in theTasering, there were no pictures ofany injuries to Officer Beutel.

And as reported in this series,approximately six minutes and 48seconds of audio recorded by OfficerBeutel during the stop and arrest weremissing from a CD turned over to Mr.Goodman, Mr. Kenny’s lawyer at thetime.

Meanwhile, an analysis of the policereport, including admissions made byOfficer Beutel in her arrest narrativeand a comparison of the audio againstthe dispatch log, suggests that themissing minutes from the recordingcovered a period during the stop inwhich Officer Beutel reached throughthe driver’s side window and touchedthe Taser to Mr. Kenny’s body. In herreport she says that she touched himon the shoulder.

But in a separate written statementmade shortly after his arrest, Mr.Kenny wrote that Office Beutel had“pulled her Taser and put it to mytemple and then to my shoulder andchest demanding that I exit the truck.”

After receiving the claim letter fromthe city, Mr. Kenny fired Mr. Goodmanand hired Darryl Genis, the DUIdefense attorney who is representingme in a DUI case the District Attor-ney’s Office is prosecuting against mefollowing my arrest by Kasi Beutel inthe early hours of New Year’s Day.

A SIMILAR PATTERN OF MISSING EVIDENCE

In my case, Officer Beutel reportedthat a breath test I took showed a BAC

of .09 (one hundred of once percentover the legal limit) a figure I contendwas the result of her manipulation ofthe Alcotest 7410 Plus breathalyzer.Further, inserted into my police filecompiled by Officer Beutel was a so-called “Trombetta” advisement thatshe claims she witnessed me signing,waiving my right to a blood test. Icontend that my signature on thewaiver was a forgery and JamesBlanco, a nationally ranked hand-writing expert used by the CaliforniaSecretary of State for voter fraudcases, has agreed.

In addition to my waiver, as docu-mented in Part Three and Part 10 ofthe series, I uncovered another sixTrombetta advisements witnessed byeither Officer Beutel or her fiancéOfficer Mark Corbett who precededher on the Santa Barbara PoliceDepartment’s Drinking Driver Teamwhich Mr. Blanco has sworn underpenalty of perjury were forged.

From as early as Feb. 2, Mr. Genissought the original of my Trombettawaiver from the Police Department sothat it might be tested for fingerprints.On May 31, in a sworn declaration, Mr.Blanco made a similar request for theoriginals in three other cases andreiterated his request for all seven ina declaration filed on July 21. In threeseparate orders from the bench, SantaBarbara Superior Court Judge BrianHill, presiding in my case, orderedDeputy District Attorney SanfordHorowitz to turn over all of therequested Trombetta originals.

But on Aug. 3, Lt. David Whitham ofthe Police Department’s RecordsSection sent a letter to Mr. Genisadmitting that six of the seven waivers(including mine) had been destroyed.

CITY ADMITS ‘SUBSTANTIAL MISTAKE’ IN THE BEUTEL WORKERS’ COMP CLAIM

That very same day, on the eve of ahearing at which Mr. Genis sought todiscover the details behind KasiBeutel’s workers comp claim, hereceived a series of letters from thedistrict attorney, Mr. Wiley and MarkHoward, Santa Barbara’s risk man-ager which now claimed that a “sub-stantial mistake” had been made by“an employee of the Risk Manage-ment Division” and that the amount ofmoney the city sought to collect fromMr. Kenny pursuant to the Beutelclaim was being reduced from$7,762.80 to $833.72.

Further, an attached memo fromMr. Howard to Mr. Wiley dated Aug. 2,now claimed that the ($7,762.89) costsdescribed in the June 3rd letter fromthe Risk Analyst “correspond to aninjury sustained by Officer Beutel onNovember 9th, 2007" when (she)“tripped and fell while responding toa traffic collision.”

The sudden, precipitous reductionin the claim by the city had theimmediate effect of dropping thepossible penalty of insurance fraudfrom two to five years in state prisonand a fine of up to $50,000 to six monthsin jail and a $1,000 fine.

At the same time, Deputy DistrictAttorney Gary Gemberling sent Mr.Genis a letter declaring that the cityattorney had “withdrawn its requestfor a restitution hearing” versus Mr.Kenny. The next day, Aug. 4, at the scheduledSuperior Court hearing before JudgeJean Dandona, she dismissed the

restitution hearing against Mr. Kennyon her own motion, effectively deny-ing Mr. Genis any further opportunityto discover the hidden details behindeither workers compensation claim byKasi Beutel.

DEPARTMENT OF INSURANCE CLOSES FRAUD PROBE

On Aug. 10 — 15 days into theDepartment of Insurance’s criminalinvestigation — Capt. Randall Rich-ardson of the Insurance Fraud Divi-sion called me with the news that thefraud investigation had been closed.

In an interview with me that after-noon, he admitted that he had traveledto Santa Barbara the previous day,where he met with City Attorney Mr.Wiley and interviewed several offic-ers who had failed to comment in theinitial Michael Kenny police reportbut were now apparently backingOfficer Beutel’s injury claim.

Capt. Richardson insisted that itwas not necessary for him to interviewMr. Kenny (the alleged source of theinjury) and admitted that he had noknowledge of the previous workers’compensation claim apparently filedby Officer Beutel in November 2007.

“So in a matter of a few days” saysMr. Genis, “the city attorney and riskmanager come up with this newexplanation for the alleged Beutelshoulder injury then convenientlyreduce the funds involved from$7,762.89 to $833.72, eliminating therisk to Kasi Beutel of doing time inprison.”

“Then a Superior Court judge,apparently acting on her own, withoutthe D.A. requesting it, dismisses mymotion so that we’re now estoppedfrom discovery, meaning we can’tlearn the truth behind either Beutelworkers’ comp claim. And while allthis is going on, the city attorney, SteveWiley, meets with the Department ofInsurance’s chief investigator. Afterthat meeting, any criminal investiga-tion appears to be dead against SBPDOfficer Kasi Beutel. These actions byMr. Wiley, Mr. Howard and the D.A.give the appearance of a ‘cover up.’ “

DEPARTMENT OF INSURANCE REOPENS THE CASE

On Aug. 11, after I presented adeputy insurance commissioner withthe evidence that Capt. Richardsonhad limited his investigation to thecity’s allegations about the Beutelclaim story and failed to interview Mr.Kenny, the investigation was formallyreopened.

By Aug. 15, after reviewing addi-tional evidence which I furnished,Deputy Commissioner Byron Tuckerdeclared in a statement to the News-Press that “the case remains openpending further investigation,” add-ing in reference to Mr. Kenny, that “wereserve the right to interview any andall individuals we think will be mate-rial to the investigation. The investi-gation is ongoing and any individualwe deem relevant will be contacted.”

CITY ATTORNEY’S EFFORT TO CLEAR KASI BEUTEL

On Aug. 3, the day before the hearingin front of Judge Dandona, in whichMr. Genis sought additional discoveryon what was then a $7,762.89 claim forrestitution against Mr. Kenny, CityAttorney Mr. Wiley sent a two-pageletter to District Attorney Joyce Dud-ley which stated the city’s new position

on Officer Beutel’s workers’ compclaim.

Because the letter offers extraor-dinary details into the lengths Mr.Wiley went to intervene with theDepartment of Insurance fraudinvestigation, it is reproduced here inits entirety.

City of Santa Barbara Office of the City Attorney

August 3, 2011

Reports make no mention of injury! DUIContinued from Page A1

Please see DUI on A6

Bike auction benefits Police Explorer PostBicycles as cheap as $7 will be avail-able at a Lompoc Police Explorerbicycle auction later this month.

The auction, from 9 a.m. to noon onAug. 27, will be held at the LompocPolice Department, 107 Civic CenterPlaza.

The auction items are ones deemedby the department to be lost or stolen

within the city limits. Bikes are heldfor 90 days while police employees tryto locate the rightful owner. If the bikeis unclaimed for 90 days, it may be soldor given away.

The Police Explorer Post is auc-tioning the bikes and funds will beused to buy uniforms, equipment andpay for travel for post members.

More than 30 bicycles will be avail-able on the auction day. Some scootersand skateboards may also be up forauction.

Written bids are taken, with theminimum acceptable bid at $7. Thebid price includes a bicycle license,which is provided by the department.

Bidders will complete a bid card

with their proposed auction amount.Bids will be opened following theauction and the highest bidder oneach bicycle will be notified bytelephone.

Bikes will be available for pick upthe week of Aug. 29 at the department,upon cash or check payment. — Nora K. Wallace

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‘‘It won’t take much in the form ofadditional shocks to tip the balance,’’they wrote.

Worries about European debt alsohang over the market. A default by anycountry would hurt the Europeanbanks that hold its bonds, plus Amer-ican banks that have lent to theirEuropean counterparts.

Renewing the fears, The Wall StreetJournal reported Thursday that U.S.regulators are looking at the U.S. armsof big European banks to make surethey have enough money for day-to-day operations.

‘‘I don’t want to pretend that themarket knows what it’s thinking abouttoo much,’’ said David Kelly, chiefmarket strategist at JPMorgan Funds.‘‘We live in an environment of sell nowand ask questions later.’’

Asian markets started Thursday’sdrop. Japan’s Nikkei 225 index fell 1.3percent. The main stock indexes inSouth Korea and India each droppeda little more, then Europe more thanthat — 4.5 percent in Britain and 5.8percent in Germany.

In the United States, the Dow fell419.63 points, or 3.7 percent, to10,990.58. The Standard & Poor’s 500index fell 53.24, or 4.5 percent, to1,140.65. The Nasdaq composite fell131.05, or 5.2 percent, to 2,380.43.

The Dow is down 13.6 percent sincestocks began falling July 21 — fourweeks that have rattled Americanswatching their retirement savings andother investment accounts shrivel.

Lee Applegate, a retired sales

executive from Cincinnati, watchedthe latest market plunge uneasily butsaid he was planning to stay the coursewith his investments. He and his wifehave several retirement accounts.

He remembers the mistake he madein pulling his money out of stocks inearly 2009, just before the marketstarted its two-year surge. SinceMarch 9 of that year, the S&P 500 is up68.6 percent.

‘‘I think things are going to get worsebefore they get better,’’ Applegatesaid. ‘‘But I’m still going to ride it out.’’

The selling Thursday was immedi-ate. The Dow plunged from theopening bell and was down 528 pointsabout a half-hour into trading. Itessentially moved sideways for thenext six hours.

New York Stock Exchange volumewas 6.2 billion shares — busy for asummer day, but not as busy as duringthe worst of the selling earlier thismonth, when volume sometimes hit 9billion.

Last week was one of the wildest inWall Street history. The Dow movedmore than 400 points on four straightdays for the first time. But stocks hadbeen relatively stable this weekbecause investors were calmed bystrong earnings reports.

The Dow fell 76 points Tuesday androse four points Wednesday — the firsttime in nearly three weeks that theaverage rose or fell by less than 100points on two straight days.

That ended Thursday. And withstocks down big, money flooded intoU.S. Treasurys and gold, both consid-ered safer investments.

The yield on the 10-year Treasurynote briefly fell below 2 percent for the

first time. It hit 1.98 percent beforerising to 2.07 percent. Investors arewilling to accept a lower return ontheir money in exchange for safety.

The price of gold reached yetanother high — $1,829.70 per ounce.Gold keeps setting records bcausesome investors are looking for stabilityand others are simply looking to cashin.

The price of oil fell $5.20 to $82.38per barrel after the economic reportsraised concern among traders thatdemand for gasoline would fall. Onesurvey this week found Americanshave already cut back on gas 21 weeksin a row.

And the average rate on a 30-yearfixed mortgage fell to its lowest onrecord. The rate on the most popularmortgage hit 4.15 percent — just belowthe 4.17 percent reached last Novem-ber. The last time long-term rates werelower was in the 1950s, when 30-yearloans weren’t widely available.

Nicole Sherrod, a managing direc-tor at broker T.D. Ameritrade, said themarket volatility has led more clientsto put automatic protections in placeto sell a stock or an investment fundonce it falls below a certain value.

‘‘Our clients are saying that this isnot a buy and hold market,’’ she said.‘‘This is a buy and protect market.’’

In addition, computer systems thatare programmed to analyze charts,capitalize on tiny changes in price andexecute trades with no human inter-vention are making the marketrougher.

High-frequency trading programsmake up about half of the tradingvolume in a normal market day but 70percent or more on a volatile one.

Fears about European debt hang over market! DOWContinued from Page A1

A default by any country would hurt the European banks that hold itsbonds, plus American banks that have lent to their European counterparts.

SA N T A BARBARA N EWS-PRESS NEWS FRI D AY, A U G UST 19, 2011 A6

By MICHAL ELSETHNEWS-PRESS STAFF WRITER

Transient occupancy tax collec-tions for the city of Santa Barbaracame in at $1.7 million for the monthof July, growing 12.1 percent overJuly 2010, the city’s finance depart-ment said Thursday.

That made July the third month ofthe past four to see double-digitgrowth, and was the strongest per-formance since July 2010, when TOTrevenues grew 12.8 percent over theprevious year.

TOT, also known as bed tax, comesfrom hotel stays and short-termrentals, and typically sees strongestrevenues in the summer monthsbecause of tourism.

Summer months generally bringin well over $1 million each month,with July and August traditionallythe highest months for revenuecollection.

This year a royal visit from Wil-liam and Kate, the Duke and Duch-ess of Cambridge, boosted usuallysolid revenues even higher — thelast time one month drew more than$1.7 million was July of 2009.

Kathy Janega-Dykes, president ofthe Santa Barbara Conference andVisitors Bureau, said hotels weresold out during the royal couple’svisit, and occupancy was up5.6 percent over the previous July.

“Santa Barbara was in the inter-national spotlight with the arrival ofthe royal couple in mid-July, andwe’re certain this visit led to expo-sure for our area as well,” she told theNews-Press.

“We certainly were in the news

both nationally and internationally,and that of course led to moreinterest.”

With schools starting later thisyear, many families are vacationinglonger, she said.

More small groups of familymembers or friends are travelingtogether this summer than in thepast, and often don’t have advancereservations, leading to a lot of last-minute short hotel stays.

International visitors make up alarge percentage of tourism businessas well, with international exposurebringing visitors from Sweden,France, Italy and Norway in addi-tion to the usual showing of touristsfrom the United Kingdom and Ger-many, Ms. Janega-Dykes said.

The meeting and conference sec-tor is also continuing to recover, shesaid, particularly with mid-weekbusiness stays.

July’s revenues started the 2012fiscal year, which runs July 1through June 30, with $1.7 million ofits $12.8 million budget projectionsfor FY 2012 TOT revenues.

And despite July’s strong revenuecollections, Ms. Janega-Dykes saidshe’s hearing from hotels that basedon their advanced reservations,August will be an even better monththan July.

TOT, along with sales and prop-erty tax, make up a major portion ofthe city’s general fund revenues.Sales tax for the quarter ended June30, 2011, will be reported inSeptember.

email: melseth@newspress.com

Bed Tax revenueup 12.1 percent

in July

Transient occupancy tax revenues came in at $1.7 million for themonth of July, 12.1 percent growth over July 2010. July marked thethird of four months to post double-digit growth.

T O T, also known as bed tax, comes fromhotel stays and short-term rentals, andtypically sees strongest revenues in thesummer months because of tourism.

Joyce E. Dudley, District Attorney_Office of the District Attorney, County of Santa Barbara 1112 Santa Barbara Street Santa Barbara, California 93101

Re: City Restitution Request — Peo-ple v. Michael Kenney

(Santa Barbara Superior CourtCase No. 1327059)

Dear Ms. Dudley:

This letter is to follow-up on our con-versation of August 2, 2011 and yourAugust 1, 2011 conversation with CityRisk Manger, Mark Howard, regard-ing the City’s June 3, 2011 letter to youroffice (copy enclosed) asking that theDistrict Attorney’s office seek to haveMichael Kenny ordered to pay (as acondition of any court-ordered pro-bation) restitution to the City for theworkers’ compensation expensesincurred by the City when Mr. Kennywas arrested for resisting arrest(among other things) in August 2009.As you know, it is standard procedurefor the City (and other public entities)to ask that expenses and damagesrelated to making a criminal arrest bepart of any court-ordered restitution.

Unfortunately, the City’s June 3, 2011letter to your office contained a sub-stantial mistake when it indicated thatthe City had incurred $7,762.80 inworkers’ compensation expenses inmaking the Kenny arrest. Asexplained in the enclosed memo to mefrom Mark Howard, the correctamount of the City’s expenses was only$833.72. As we discussed, as soon asthis mistake was realized by City RiskManagement staff, Mr. Howardadvised your office of the correctamount by letter dated July 7, 2011 —copy enclosed.

Under the circumstances, I would liketo emphasize the following:

The mistake made in the June 3, 2011City letter was solely a mistake madeby an employee in the City Risk Man-agement division and no one else.

Not only did SBPD Officer Beutel havenothing to do with this mistake, shewas not even aware that restitutionhad been requested by City — muchless aware that Risk Management hadprovided the District Attorney’s officewith the incorrect amount.

Under the circumstances [and havingproperly and thoroughly reviewedOfficer Beutel’s minor workers’ com-pensation claim resulting from theAugust 2009 arrest of Kenny at the timethe claim was filed (i.e., November2009)], there is nothing excessive,inappropriate, or at all suspicious tome or to Mr. Howard about this veryminor workers’ compensation claim.

As she readily explained when shefiled the claim, Officer Beutelreported her injury about two monthsafter the Kenney arrest only because,after assuming that her shoulder pain

was minor and would go away on itsown but finding that it continued tobother her and impact her mobility,she was advised by management per-sonnel at the SBPD that she shouldreport it as a possible work-relatedinjury to the staff at the City’s RiskManagement division.

Finally, as you know, this unfortunatemistake on the City’s part has appar-ently resulted in a report to the stateDepartment of Insurance allegingworkers’ compensation fraud in con-nection with this claim.

The City and the City Attorney’s officewill take full responsibility forexplaining all of this to the Depart-ment of Insurance and for convincingthem there was nothing inappropriateor excessive in what appears to us to bea very minor and fully appropriateworkers’ compensation claim over ajob-related shoulder injury.

However, under the circumstances,and at least while the Department ofInsurance review is pending, the Citywould like to withdraw its request ofthe District Attorney’s office to ask forpossible court-ordered restitutionuntil the State’s review has beencompleted. Further, it is likely, at thatpoint, that the City will elect to pursuerestitution from Mr. Kenney (sic) usingappropriate civil remedies, if need be.

Please do not to hesitate to contact meif you or your office has any questionsconcerning this matter or if you needadditional information.

Very truly yours

Stephen P. Wiley City Attorney

cc: James L. Armstrong, City Admin-istrator; Camerino Sanchez, Chief ofPolice; Officer Kasi Beutel, SBPD;Mark Howard, Risk Manager.

DID THE CITY HAVE LEGAL AUTHORITY TO SEEK RESITUTION AGAINST MICHAEL KENNY?

“That letter makes it clear beyondany doubt,” says Mr. Genis, “thatrather than participating in a fair andunbiased investigation of the allega-tions against Kasi Beutel in theNews-Press series, which MayorSchneider and City AdministratorArmstrong had promised the very daybefore on Aug. 2, Steve Wiley, in hisAug. 3 letter is not only bending overbackwards to explain a different sce-nario — reducing the claim nine timesfrom $7,600 to $833, but he is asking tointerfere with the Department ofInsurance fraud investigation which,we now know from Capt. Richardsonis precisely what he did. I’m trying tofigure out how that isn’t the crime ofobstruction of justice? And here’s thekicker, according to a leading decisionby the Court of Appeals, the city lackedthe legal authority to even go afterMichael Kenny for that restitutionclaim.”

In People vs. Dennis RandolphSilva, a 2004 case originally filed inSanta Barbara County SuperiorCourt, Mr. Silva was convicted ofaggravated assault on Officer John

Weninger. In the incident OfficerWeninger sustained a torn rotatorcuff, neck and knee injuries, a doublehernia and torn tendons and liga-ments; injuries described as substan-tial. Mr. Silva was ordered to pay$72,884.69 in victim restitution to theinjured officer and the city of SantaBarbara.

In filing an appeal, Mr. Silva, whowas sentenced to 12 years in stateprison, argued that the city was not a“direct victim” under the restitutionstatute and the Court of Appealsagreed.

Citing the case of People vs. Birkett,a 1999 Supreme Court decision hold-ing that a defendant may not beordered to pay restitution to aninsurer who indemnifies a victim forinjuries caused by the defendant, thethree-judge panel went on to citePeople vs. Franco, a 1993 decisionwhich effectively held that self-insured cities like Santa Barbara can’tcollect workers’ compensation bene-fits from a defendant like MichaelKenny “where a city acts as aninsurer.”

“So, apparently,” says Mr. Genis,“not only was the city’s claim againstMichael Kenny for any amount —$7,762.89 or $833.32 — potentiallyimproper if the city is not considereda direct victim, but who knows howmany other claims for restitution thecity may have successfully collectedon? These are answers that beg for anoutside independent investigation —not just of this Kasi Beutel workers’comp claim but of all the chargesraised in the News-Press series.”

ASKING ATTORNEY GENERAL TO INTERVENE

In light of the actions by City Attor-ney Mr. Wiley in the intervening withthe Department of Insurance probeand following the revelation that theSanta Barbara Police Departmenthad destroyed key evidence in theKasi Beutel investigation as detailedin Part Ten of this series, I sent afive-page letter to California AttorneyGeneral Kamala Harris on Aug. 9,asking that she appoint a specialprosecutor to investigate all of theallegations reported in this series.

“There are fewer crimes morerepugnant that driving drunk,” Iwrote, “but in the face of the extraor-dinary evidence uncovered in thisinvestigation that a police officersworn to serve and protect has framedinnocent motorists and that heractions have effectively beenendorsed by the Police Departmentand the District Attorney’s Office aswell as the city attorney, I don’t knowhow you can possibly look away.”

NO RESPONSE FROM CITY ATTORNEY, MAYOR OR COUNCIL

As for Mr. Wiley, I sent him adetailed email that same day, with aseries of questions relating to the KasiBeutel workers compensation claim:

“Given the law as enunciated by theCourt of Appeals, why would you andthe city of Santa Barbara. . .be a partyto what appears to be an illegalattempt by the city to collectrestitution. . .when, in fact, the city isself-insured?

“I understand that you spent timewith Capt. Randall Richardson of the

Dept. of Insurance’s Fraud Divisionlast Tuesday and that you presentedhim with several officers from theSBPD who spoke to him about theirrecollections in the Kenny Taseringincident, even though none of theseofficers confirmed any injury to KasiBeutel in their reports or arrest nar-ratives at the time of the August 22nd,2009 incident. In your attached August3rd, 2011 letter to D.A. Dudley you goout of your way to exonerate OfficerBeutel. . . How isthat. . .not. . .interference with acriminal investigation?”

“And how does it sync with thepledge by Mayor Helene Schneiderand City Administrator Jim Armstrongin a press release on August 2nd, 2011,that ‘. . .it is the duty of the cityadministrator, city attorney and chiefof police to review these allegationsand, if necessary, take appropriateaction?’ “

“After that pledge by the mayor andcity administrator to ‘review the alle-gations’ stemming from my News-Press series how can you, the cityattorney, be at all objective in anyinquiry the city may be undertakingwhen you are effectively acting as anadvocate — some might say cheer-leader — for Kasi Beutel?”

As of the time this article went topress, Mr. Wiley had not responded.Nor had Mayor Schneider, Mr. Arm-strong or members of the City Councilwhom I copied on that email andquestioned in a second email on Aug.17 with the exception of councilmember Michael Self.

Late yesterday afternoon she issuedthis statement:“I believe that this has risen to thepoint of concern for the communitythat there should be an outside inde-pendent investigator to thoroughlyevaluate all of the allegations involv-ing Officer Beutel.”

email: news@newspress.com

Letter requests investigation by state attorney general! DUIContinued from Page A5

O n the morning of NewYear’s Day, OfficerKasi Beutel of theSanta Barbara PoliceDepartment arrested

investigative journalist PeterLance on suspicion of drivingunder the influence. The case ispending. After finding a number ofmisstatements of fact in the reportof the incident, Mr. Lance startedlooking into other arrests involvingthe officer. The investigation,including interviews with others,resulted in this series, which beganwith five parts June 22-26. Withtoday’s installment, there havebeen 10 altogether — and more arein the works.

For updates, seenewspress.com. For more on Mr.Lance, go to peterlance.com.

Behindthe Series