The Los Angeles County Employees Retirement Association, an $81 billion public pension fund which provides retirement benefits to Los Angeles County employees, is filing a lawsuit against its former interim security officer, alleging the individual used his position to grant contracts to companies he owned.
The complaint, Los Angeles County Employees Retirement Association v. Carmelo Marquez, SafeSec LLC, filed in California Superior Court for the county of Los Angeles, alleges that Carmelo Marquez paid his own company $120,000 in contracts from LACERA.
“LACERA will not tolerate this egregious, unlawful violation of duty against LACERA and its members by those who are entrusted to work for the retirement system and its members,” said Luis Lugo, LACERA’s deputy CEO, in a statement. “LACERA is determined to safeguard the interests of its members and vigorously pursue all necessary actions to remedy breaches of trust.”
Marquez joined LACERA in March 2021 in a contractor role of information security architect before being elevated to interim information security officer. In this position, the complaint states Marquez was in charge of the pension fund’s technology procurement processes, including awarding contracts to vendors and value-added resellers—companies that resell products from other firms to LACERA.
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In September 2022, Marquez founded SafeSec LLC using the alias Carlos Rodriguez. Marquez approached cybersecurity firm Tenable Inc. the following month to become a reseller of its products. Around this time, Marquez onboarded SafeSec as a reseller that could enter contracts with LACERA.
Under LACERA policy, a minimum of three vendors or resellers must compete for contracts worth more than $5,000. LACERA typically picks vendors with the lowest bid for the best available service suited to the pension fund’s needs. The complaint alleges that Marquez used his insider knowledge of the procurement process to enable SafeSec to make the lowest bid.
SafeSec invoiced LACERA $78,447 for the purchase of products and services from Tenable, as well as an add-on purchase for $12,798.73. SafeSec also invoiced LACERA for an additional $32,400 for the purchase of products from security software firm Banyan Security.
To conceal his financial interest in SafeSec, Marquez did not disclose his ownership of the company on the required forms, according to the complaint. Marquez left LACERA on May 19, 2023, but continued to use his alias to communicate with LACERA as a representative of SafeSec.
LACERA is seeking $360,000 in damages and declaratory relief, equitable relief and civil penalties against Marquez, who is accused of violating conflict-of-interest law, violating the political reform act on two counts, and breaching his fiduciary duty by aiding and abetting a fraud.
“The case underscores LACERA’s dedication to ethical governance. It is imperative that LACERA employees, executives and contractors maintain the highest standards of ethics and integrity to protect the interests of LACERA members,” said Ashley K. Dunning, a partner in Nossaman LLP, the lead outside counsel for LACERA in the litigation, in a statement. “LACERA is pursuing every remedy available under the law to protect its members.”
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Tags: LACERA, Litigation, Los Angeles, Los Angeles County Employees’ Retirement Association
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