Today’s meeting of the Legislative Audit Commission drew a crowd to hear a report on the state of Minnesota’s charter schools, but it was the second agenda item that drew keen interest from some hangers-on: the first appearance by Legislative Auditor Jim Nobles since he issued a report on allegations of misconduct in the state attorney general’s office under former head Mike Hatch and current office holder Lori Swanson.
Although the “preliminary assessment,” released June 3 by Nobles’ office, concluded there was no basis for further action by the auditor, it does not appear that matters are fully settled.
In fact, during the course of “assessing” Hatch’s second term as attorney general, from 2002-06, and Swanson’s first year, 2007, Nobles and his staffers found two allegations that may well be within his jurisdiction as a fiscal agent for the state. Nobles, who was more stern in his testimony today, alluded to both in his one hour of remarks and Q-and-A with lawmakers.
More sleuthing to come
The first is a Feb. 13, 2006, settlement of a complaint filed by Hatch against Capital One. The matter is discussed in an exchange of letters (PDF) with the two attorneys general.
In a May 12, 2008, letter to Swanson, Nobles writes:
“The judgment was signed by you, as Solicitor General … [and] provided for the distribution of money to the Legal Aid Society ($250,000), the Minnesota Association of Community Organizations for Reform Now — ACORN — ($249,999) and the state of Minnesota.”
What caught Nobles’ interest here is that the complaint was settled for $749,999, perhaps in coincidence with a state statute that says any settlements of $750,000 or more go to individuals or the state. Anything less can be divvied up in other ways — in this case, the money going to those three entities. But Nobles further notes:
“It is alleged that the distribution of money to Minnesota ACORN was connected to ACORN’s endorsement of Mike Hatch for governor on March 8, 2006. Please address the allegation and explain the basis of distribution of $249,999 to ACORN, a political advocacy organization.”
Swanson punts, and turns the matter over to Hatch, who writes back on May 16, 2008, in a five-page missive that he was worried about setting bad precedent that the state might be violating constitutional laws involving prior restraint.
“ACORN was proposed as a distributee by Capital One. … I was told that … Capital One conferred with ACORN on several matters. Indeed, Capital One has made other contributions to ACORN, at least one of which was over $500,000.”
Later, Hatch notes:
“It is my understanding that, as a non-profit organization, ACORN may not endorse political candidates.” He then makes a distinction of an ACORN PAC: “There is no linkage to ACORN PAC’s endorsement of me and the … distribution to ACORN. I think most political commentators would tell you that the last organization that could be influenced by money is ACORN. If somebody truly believed such an allegation, they would not have waited 27 months to make the claim.”
At the hearing today, Nobles told the commission that in the letters “Attorney General Hatch and Attorney General Swanson provide a defense of the settlement.” But he made it clear that the matter was on his radar.
Nobles indicated that Swanson was invited to the hearing to tell her side of things, but she declined, instead replying by letter. The letter was circulated only to commission members.
Reached on his cell phone by MinnPost this afternoon, Hatch audibly chortled and said, “I’m not talking to you. Thank you,” before hanging up. A voicemail message seeking specific comment on the matter was not returned.
Another red flag
Nobles also acknowledged that in his assessment and interviews with the seven witnesses, another matter had surfaced.
There are now allegations that money for Medicaid fraud investigations was used somewhere else. “Another one in the hopper,” is how Rep. Steve Simon, DFL-St. Louis Park, put it. Simon, who worked in the AG’s office from 1996 to 2001, has been the most vocal about allegations that have come to him through sources in his old workplace.
He’s also been the most cautious, being careful not to come across as a zealot. Still, Simon noted today that he’s hearing — and Nobles acknowledged this — that the state attorney general’s office gets federal money to investigate Medicaid fraud. Sources in the office, according to Simon, say that money for that fund was used elsewhere.
This caught the attention of at least one lawmaker who previously was willing to accept the preliminary assessment.
Rep. Sondra Erickson, R-Princeton, wondered if Nobles had a way to contact the U.S. attorney general’s office. Nobles assured her that he did, but he stressed that allegations were merely just that at this point.
Even so, Nobles said that both matters are noteworthy, and that the Capital One settlement “looks somewhat suspicious.”
In the original Hatch/Swanson assessment, Nobles decided that the accusations were out of his purview, which covers financial matters of constitutional offices.
Those allegations, which had been bubbling under around the Capitol for nearly 18 months, included “that some attorneys in the Attorney General’s Office felt pressured to …
• Sign and issue a civil investigative demand without sufficient merit
• Insert unsubstantiated information in an affidavit
• Give advice that was not in the best interest of the client
• Find defendants to help the Attorney General’s Office bring certain types of lawsuits
• Post comments favorable to the office and Attorney General Swanson on an internet blog and record the time used for blogging as annual leave even though state time was used.”
Today, Nobles noted, “People with first-hand knowledge corroborated the pressure to do things,” but made a crucial distinction between the culture of coercion and direct threats to employment. “We were impressed by the credibility and sincerity of these people. Frankly, some of them had quite strong condemnations.”
But because OLA deals only with financial improprieties, and the Legislative Audit Commission was reluctant to push for further investigation at a meeting on March 28, this chapter is closed.
It appears Nobles now has more to look at, though he gave no indication of when he might proceed, or how he might investigate.
“It’s a matter of record within our office,” he said. It would come to the fore, he added, “once we are aware of possible misuses of federal money for Medicaid.”
The commission’s chair, Rep. Rick Hansen, DFL-South St. Paul, said, “You can do that by memo or email — we don’t need a meeting?”
“Mr. Chair,” Nobles said, “that depends on what we find.”
Eric Black contributed to this report.
G.R. Anderson Jr., a former reporter and senior editor for City Pages, covers politics, the state Capitol and issues related to public safety.
