Ethics Roundup

The Good, the Bad and the Ugly 2009

Ethics Watch

INTRODUCTION This is Colorado Ethics Watchs second annual Ethics Roundup, a report that highlights both the ethical transgressions and new this year the good deeds of state and local public officials and agencies. Now more than ever, as the nation struggles to recover from a crippling recession and the ethical transgressions of corporate America are bringing down entire industries, there is no room for compromise in the area of government ethics. Citizens expect and deserve government representation that puts the public interest above all else and that operates with transparency and integrity. Through public scrutiny and accountability, Ethics Watch works to advance these goals. This years report chronicles not only the ethical transgressions, but also the good deeds of state and local public officials. Specifically, the report highlights three categories of public officials: the Good, the Bad, and the Ugly. In our Good section, we give accolades to those officials who have taken their own initiative to raise the bar for ethics by implementing new, stricter measures and cracking down on corruption. In contrast, our Bad section highlights the lamentable conduct of officials who have abused the public trust, grossly mishandled taxpayer resources, unapologetically shirked disclosure requirements or otherwise breached ethical standards of conduct. Finally, the Ugly section features conduct that demonstrated a lapse of ethical judgment by public officials who violated the trust of the citizens they serve. Ethics Roundup 2009 is by no means exhaustive. Colorado Ethics Watch is mindful that countless other public officials may have committed similar and perhaps more egregious or virtuous acts. In addition, Ethics Roundup 2009 only names public officials who are currently in office; therefore, officials whose conduct has incited ethics scrutiny in the past are not included in this report. The purpose of this report is not just to bring attention to the conduct of those named, but also to increase public awareness about the subject of government ethics generally. It is our hope that greater awareness will encourage The Good to forge ahead, The Bad to change course, and The Ugly to shape up. METHODOLOGY To create this report, Ethics Watch reviewed Colorado Secretary of State campaign finance reports, state audits, emails, news articles and personal financial and travel disclosure forms. Ethics Watch then analyzed that information to determine whether the information discovered suggested that a public officials conduct violated any state laws, regulations or ethics rules. In many cases, Ethics Watch has filed at least one legal action. The public officials and departments identified in the report are listed according to the level in federal, state or local government. For example, U.S. Secretary of Interior Ken Salazar is listed first in his category followed by state Representatives Cindy Acree and Mike May, who are followed by state employee Erin Toll and then two city council members.

THE GOOD KEN SALAZAR, U.S. INTERIOR SECRETARY Ken Salazar, previously a United States Senator from Colorado, was confirmed as the United States Secretary of the Interior in January 2009. As his first order of business, Sec. Salazar initiated efforts to clean up the Minerals Management Service (MMS) division by implementing sweeping ethics reform and by disciplining or removing MMS employees tied to past misconduct. Cleaning Up Minerals Management Service In September 2008, the U.S. Interior Department released a report that charged several employees of the departments Minerals Management Service division with ethics violations, which included accepting gifts from energy-industry executives and partaking in promiscuity and substance abuse with those executives.1 These gifts and relationships constituted an unethical conflict of interest, since the MMS is tasked with managing our nations natural gas, oil and other mineral resources, including calculating and collecting fees from energy companies who lease mineral rights from the U.S. government.2 Since the release of the report, many employees have been dismissed or punished.3 Sec. Salazar has now pledged to review the scandal with MMS employees and to decide what other steps need to be taken, including a possible restructuring of the royalty program overseen by MMS.4 In January 2009, Sec. Salazar ordered a review of the MMS royalty collection program and is working with the U.S. Department of Justice to consider re-opening investigations of possible criminal conduct by MMS employees.5 The review will include an overhaul of the Interior Departments ethics rules; an effort spearheaded by Sec. Salazars chief of staff, Tom Strickland.6 As a first step, Sec. Salazar updated the Interior Departments ethics guidelines to mirror President Obamas executive order banning executive personnel from accepting gifts from lobbyists and to comply with enhanced bans against revolving door conflicts of interest.7 Sec. Salazar has further pledged to investigate why Bush administration prosecutors in the public integrity unit did not pursue criminal charges against certain
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Memorandum Re: OIG Investigations of MMS Employees, from Earl E. Devaney, Inspector General, to Secretary Kempthorne, Sept. 9, 2009, at pp. 2-3, attaching Office of Inspector General, Investigative Report MMS Oil Marketing Group Lakewood, August 19, 2008 (Exhibit 1). 2 Investigative Report, id. note 1 at pp. 1, 5-7. 3 Ernest Luning, Salazar Travels to Lakewood Thursday to announce strict ethics policy reform, The Colorado Independent, January 28, 2009 (Exhibit 2). 4 Id.; Gargi Chakrabarty, Salazar cites Lakewood scandal in launching ethics review at Interior, Rocky Mountain News, January 30, 2009 (Exhibit 3). 5 Chakrabarty, Salazar cites Lakewood scandal in launching ethics review at Interior, id. note 4 (Exhibit 3). 6 Staff Reporter, Salazar vows to clean up Minerals Management Service, Interior Department, Denver Business Journal, January 29, 2009 (Exhibit 4). 7 Press Release, Department of the Interior, Secretary Salazar Outlines High Ethical Standards for Interior Department in Memo to All Employees, January 26, 2009 (Exhibit 5).

employees.8 Sec. Salazar is working to ensure that reforms at the MMS will eliminate conflicts of interest that have troubled the agency for years and to protect employees who blow the whistle on misconduct.9 Sec. Salazar has stated that he will demand a higher level of scrutiny of oil companies that do business with the Interior Department to ensure that all relationships are transparent and any kickbacks are eliminated.10 During a White House briefing, Sec. Salazar said: Those who work for the government should be proud of their service to the American people. We will work to reform the Department of the Interior, restore the publics trust and restore the high levels of ethics and accountability that the American people deserve.11

Miles Moffeit, New scrutiny for Interior unit, The Denver Post, January 30, 2009 (Exhibit 6). Gregg Carlstrom, Salazar takes quick action, but tough decisions lie ahead, FederalTimes.com, May 5, 2009 (Exhibit 7). 10 Id. 11 Luning, Salazar Travels to Lakewood Thursday to announce strict ethics policy reform, supra note 3 (Exhibit 2).
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CINDY ACREE, COLORADO STATE REPRESENTATIVE MIKE MAY, COLORADO STATE REPRESENTATIVE Cindy Acree (RAurora) was elected in November 2008 to the Colorado House of Representatives representing House District 40. Mike May (RParker) has served in the Colorado House of Representatives since 2003 serving House District 44 and is currently the House Minority Leader. Reps. Acree and May are commended for taking a stand against unethical lobbying activities at the capitol. Reporting Unethical Lobbying Activities On Friday, December 12, 2008, Rep. May announced he would resign his state House seat, which opened up Rep. Mays position as House Minority Leader. Representative David Balmer (R-Centennial) subsequently announced he would seek to win this leadership position.12 According to public records, the following Monday morning Rep. Acree was contacted by Erik Groves, a lobbyist for the Colorado Chiropractic Association (CCA), who asked her to support Rep. Balmers bid for minority leader. Mr. Groves contacted Rep. Acree in person and by phone to talk about supporting Rep. Balmers race for minority leader and, in the same phone conversation, mentioned that he had a check for her from the CCAs political committee.13 Legislative rules prohibit lobbyists from becoming active participants in leadership races, and it was clear to Rep. Acree that this action crossed the line into active participation.14 Rep. Acree immediately wrote a letter to Rep. May detailing what happened and her concerns about it.15 Rep. May then filed an ethics complaint against Rep. Balmer and Rep. Acree filed an ethics complaint against Mr. Groves.16 After filing the complaint, Rep. May withdrew his resignation from the House, offering to stay on as Minority Leader for at least another session to prevent a tainted race to fill his vacated leadership position.17 A three-member joint House and Senate committee was appointed by legislative members to review the complaint.18 In March 2009, the committee unanimously voted to recommend that legislative leaders formally admonish Mr. Groves in a private meeting.19

Steven Paulson, Ethics charges dropped against Colorado lawmaker, Aurora Sentinel, Jan. 29, 2009 (Exhibit 8). 13 Lynn Bartels, Lobbyist contrite about pitch to lawmaker, Rocky Mountain News, Jan. 16 2009 (Exhibit 9). 14 Colorado House and Senate Joint Rule 36(b)(4). 15 Colleen Slevin, Rep. denies working with lobbyist for leader job, Examiner.com, Jan. 10, 2009 (Exhibit 10). 16 Paulson, Ethics charges dropped against Colorado lawmaker, supra note 12 (Exhibit 8). 17 Id. 18 Bartels, Lobbyist contrite about pitch to lawmaker, supra note 13 (Exhibit 9). 19 Report of Committee of Legislators on Complaint Against Lobbyist, March 4, 2009 (Exhibit 11).

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In January 2009, the Colorado House Ethics Committee found that Rep. Balmer was not involved with Mr. Groves lobbying of Rep. Acree and dismissed the complaint against him.20 Thanks to Reps. Acree and May coming forward, illegal influences in a leadership election were exposed and thwarted.

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Paulson, Ethics charges dropped against Colorado lawmaker, supra note 12 (Exhibit 8).

ERIN TOLL, DIVISION DIRECTOR COLORADO DIVISION OF REAL ESTATE Erin Toll was appointed as the Director of the Colorado Division of Real Estate in September 2006. Prior to her appointment, Ms. Toll served as the Deputy Commissioner of Compliance and Market Regulation for the Colorado Division of Insurance. Ms. Toll has cracked down on mortgage fraud and other abuses of government resources by initiating a full investigation of Colorados conservation easement program and by working to close legal loopholes exploited by landowners, appraisers, land trusts, and mortgage brokers. Conservation Easement Program Colorados conservation easement program allows landowners to obtain tax deductions and transferable tax credits that they can sell when they grant permanent easements restricting development on their property.21 Ms. Toll suspected that excessively high appraisals were given to properties involved in the program.22 Inflated appraisals allow landowners to claim higher tax deductions and obtain more tax credits than were warranted, thus reducing state tax receipts by as much as $38.2 million.23 To combat the problem, Ms. Toll directed the Department of Regulatory Agencies Division of Real Estate to issue 30 subpoenas as it launched a statewide investigation into possible conservation easement abuse in Colorado.24 Concerns raised by Ms. Tolls investigation spurred Colorado lawmakers to create the Colorado Conservation Easement Oversight Commission.25 In January 2009, the Commission began reviewing nonprofit land trusts to make sure that they were qualified to monitor lands and have the financial resources to defend the easements against development or misuse in order to prevent future abuses like those uncovered by Ms. Toll.26 If the Commission finds the trust is qualified, it then becomes state certified. The Division of Real Estate conducts the certification process and any trust not certified by the end of 2009 will no longer be able to accept easements beginning in 2010.27 Mortgage Fraud Probe In the last year Ms. Toll has also launched aggressive investigations into mortgage fraud. In one example, she investigated a real estate kickback scheme involving five houses in Colorado Springs purchased within 48 hours of each other by

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Margaret Jackson, Unease over easements, The Denver Post, March 2, 2008 (Exhibit 12). Id. 23 Id. 24 Margaret Jackson, Subpoenas issued over easements, The Denver Post, November 21, 2007 (Exhibit 13). 25 Jerd Smith, Land trusts must pass state muster under new easement rules, Rocky Mountain News, October 27, 2008 (Exhibit 14). 26 Id. 27 Id.

one owner, all of which ended up in foreclosure.28 As part of the investigation, records were subpoenaed from a title company, a real estate agency, and two banks.29 Ms. Toll marked the investigation as a high priority for her staff to determine whether any wrongdoing led to the foreclosures.30 The real estate agent involved in the transactions was presented to the Colorado Real Estate Commission in January 2009.31 The Commission determined that the agent violated several state statutes governing real estate brokers and Commission rules, fined the agent $20,000 and revoked his license.32 In another mortgage fraud case, Ms. Tolls division imposed sanctions on at least 12 real estate agents, ranging from revocation of their real estate license to small fines.33 The real estate agents were involved in a mortgage fraud scheme in 2006 that resulted in 88 foreclosures out of 105 home sales when the buyers allegedly walked away from the homes after receiving kickbacks from sales at inflated prices.34 The investigation found that of the 105 homes, 98 of the transactions involved a single broker; Broker One Real Estate Professionals of Denver.35 As a result of Ms. Tolls investigation, more than 20 real estate agents received sanctions such as fines and revocation of their licenses in order to deter future abuses.36 After sanctions were imposed, Ms. Toll submitted information from the investigation to federal authorities, including the FBI, IRS, U.S. Postal Service and Secret Service.37 Ms. Tolls efforts not only held accountable those people abusing government resources, but also sent a compelling message to others that such conduct will not be tolerated.

Bill Vogrin, 2 banks drawn into mortgage fraud probe, The Colorado Springs Gazette, October 6, 2008 (Exhibit 15). 29 Id. 30 Id. 31 Complaint Matters: Minutes, Colorado Real Estate Commission Meeting, January 6, 2009 (Exhibit 16). 32 Id. 33 John Rebchook, Colorado mortgage fraud probe uncovers kickback, Rocky Mountain News, October 28, 2008 (Exhibit 17). 34 Tom Hacker, Erin Tolls war on mortgage fraud rolls on, Northern Colorado Business Report, November 20, 2008 (Exhibit 18). 35 Rebchook, Colorado mortgage fraud probe uncovers kickback, supra note 33 (Exhibit 17). 36 Id. 37 Id.

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GABE SANTOS, LONGMONT CITY COUNCIL MEMBER SARAH LEVISON, LONGMONT CITY COUNCIL MEMBER Gabe Santos was elected in a special election in 2008 to the Longmont City Council. Sara Levison was elected to the Longmont City Council in November 2007. Council members Santos and Levison lead the effort to strengthen Longmonts campaign finance laws by establishing a municipal Election Task Force. Under their direction, the Task Force recommended dramatic improvements to the regulations and created an official Election Committee to ensure the regulations are enforced. Election Task Force Recommends Election Reform Longmont was one of the first cities in Colorado to adopt its own campaign finance regulations.38 Nonetheless, several campaign finance problems arose in the November 2008 election that suggested those rules were in need of an overhaul. This inspired council members Santos and Levison to create an Election Task Force to examine campaign finance issues and make recommendations for improvements.39 The Task Force was composed of nine Longmont residents from various political affiliations and met from May through November of 2008.40 The Task Forces Final Report to the City Council in 2008 contained 27 recommended changes to Longmonts campaign finance regulations.41 The City Council supported virtually all of the changes, including setting a $1,000 cap on campaign contributions from individuals, organizations and committees, establishing specific sanctions for election violations and increasing reporting of campaign contributions and expenditures.42 Most notably, the City Council approved and implemented the Task Forces recommendation to create an Election Committee. The functions of the Election Committee are to advise the City Clerk and city council on election and campaign finance issues, review campaign reports and alleged violations and hold hearings on violations, consultation and oversight of municipal elections not coordinated with the county.43 Thanks to the initiative and leadership of Council members Santos and Levison, Longmonts campaign finance regulations are stronger, city officials are better advised on campaign finance issues and an enforcement mechanism now exists to hold political actors accountable for skirting the law.
Rachel Carter, Campaign finance laws may change, Longmont Times-Call, December 2, 2008 (Exhibit 19). 39 Id. 40 Longmont Fair Campaign Act, Election Task Force Final Report, 2008 (Exhibit 20). 41 Id. 42 City of Longmont, Minutes of Longmont City Council Meeting, March 10, 2009, http://www.ci.longmont.co.us/city_council/minutes/documents/031009rs.pdf (Exhibit 21); Rachel Carter, Election prospects boost call for campaign finance rules, Longmont Times-Call, February 24, 2009 (Exhibit 22). 43 Longmont Fair Campaign Act, Election Task Force Final Report, supra note 40 (Exhibit 20).
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THE BAD REPRESENTATIVE JACK POMMER Colorado Representative Jack Pommer (D-Boulder) was elected in 2002 in House District 11 and is currently serving his fourth term in the state House of Representatives. Rep. Pommer sits on the Joint Budget Committee and chairs the House Appropriations Committee. Rep. Pommer demonstrated an egregious pattern of ignoring Colorado campaign finance disclosure laws resulting in the imposition of more than $23,000 in fines and penalties. Delinquent Filing of Campaign Finance Reports Rep. Pommer was a candidate for Colorado House of Representatives in the 2008 general election. On April 7, 2009, the Colorado secretary of state fined Rep. Pommer $4,050 for late filing of a campaign finance disclosure report. Rep. Pommers campaign committee did not file that report until after an online media outlet reported on that delinquency and a number of other unpaid penalties from previous campaigns.44 The day before that penalty was imposed, Rep. Pommers candidate committee paid $15,000 in fines and penalties to the secretary of states office for six other delinquent filings.45 His candidate committee was subsequently notified that it still owed the state $8,320.00, for a total of $23,320 in penalties.46 As an explanation for his pattern of delinquencies, Rep. Pommer was unrepentant and merely explained that he is not good at paperwork.47 Colorados Fair Campaign Practices Act requires all candidate committees to file contribution and expenditure reports according to a statutory schedule, including filings thirty days after a major election and fifteen days after the end of the quarter in offelection years.48 Under the state constitution, the penalty for a late filing is $50 per day, subject to waiver upon a showing of good cause to the secretary of states office.49 Rep. Pommers pattern of late filing, coupled with his dismissal of campaign finance filing requirements as mere paperwork, shows a disregard for transparency in campaign and political finance activities.

44

Staff Reporter, Pommer Owes State Nearly $20K For Delinquent Filings, Face the State.com, April 6, 2009 (Exhibit 23). 45 Letter from Kristine Reynolds, Elections Division, Colorado Department of State, to Rep. Jack Pommer, April 8, 2009 (Exhibit 24). 46 Id. 47 Jessica Fender, File this under embarrassing, The Denver Post, April 9, 2009 (Exhibit 25). 48 C.R.S. 1-45-108. 49 Colo. Const., art. XXVIII, 10(2)(a).

COLORADO DEPARTMENT OF HEALTH CARE POLICY AND FINANCING

The Colorado Department of Health Care Policy and Financing (HCPF) exists to improve access to cost-effective, quality, health care services for Coloradans. Last year, HCPF management violated the state whistleblower act by retaliating against an employee for reporting wrongdoing in the department and then subsequently implemented an employee policy designed to thwart future whistleblowers. Firing whistleblower In April 2008, HCPF accountant Annmarie Maynard secretly recorded a meeting in which co-workers instructed her to help cover up accounting errors within the HCPF that resulted in the state owing up to $8 million to the federal government for overdrawing Medicaid and Childrens Basic Health Plan Plus funds.50 Ms. Maynard publicly exposed the attempted cover-up by providing a copy of the recording to a reporter at 9 News.51 Shortly after Ms. Maynard spoke to the reporter, HCPF management terminated her employment.52 Ms. Maynard challenged her termination in an appeal to the State Personnel Board. After a seven-day hearing on the appeal, it was found that HCPF wrongly harassed, demoted, and fired Ms. Maynard after she discovered accounting errors, and that the retaliation violated the Colorado Whistleblower Act.53 Implementation of no-recording policy Immediately after Ms. Maynard filed her appeal to the Personnel Board, HCPF unveiled a new policy that prohibited employees from using hidden recording devices.54 Under Colorado statute, it is legal to record a conversation without permission as long as the recording party is part of the conversation.55 After critics pointed out that the policy would prevent other whistleblowers from tape-recording possible fraud, waste or abuse, Governor Ritter directed HCPF to cancel the new anti-taping policy.56 Most notably, HCPF chose to try and squelch future whistleblowers rather than reprimand the employees who attempted to cover up wrongdoing.
50 51

Deborah Sherman, State employee fired after blowing whistle, 9News.com, July 2, 2008 (Exhibit 26). Todd Hartman, State says nothing to hide in no taping rule, Rocky Mountain News, December 31, 2008 (Exhibit 27). 52 Sherman, State employee fired after blowing whistle, supra note 50 (Exhibit 26). 53 Initial Decision of the Administrative Law Judge, Maynard vs. Dept. of Health Care Policy and Financing, State Personnel Board Case No. 2007B073(C), Dec. 8, 2008 (Exhibit 28). 54 Id. 55 C.R.S. 18-9-304 56 Deborah Sherman, Governor reconsiders no-taping policy, 9News.com, January 6, 2009 (Exhibit 29); Chuck Plunkett, Governor canceled anti-taping policy, DenverPost.com, January 9, 2009 (Exhibit 30).

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KEN BUCK, WELD COUNTY DISTRICT ATTORNEY Ken Buck (R) was elected as Weld Countys District Attorney in November 2004. Prior to being elected he worked with the U.S. Attorneys Office in Denver. Mr. Buck has blatantly targeted immigrants, allegedly for identity theft, using unlawful means to gather evidence. Identity Theft Investigation Targeting Immigrants On October 17, 2008, Weld County law enforcement officials launched Operation Number Games by searching Amalias Translation and Tax Service, a Greeley business.57 The stated purpose of the operation was to investigate possible identity theft by undocumented immigrants.58 In that investigation, deputies with the Weld County Sheriffs office searched Amalias business records dating back to 2000.59 In January 2009, the American Civil Liberties Union (ACLU), on behalf of Amalias owner and several of its clients, filed suit against Mr. Buck and Weld County Sheriff John Cooke.60 The suit alleged that the search and seizure of tax records at Amalias violated the state constitutional right of privacy, the Colorado Rules of Criminal Procedure and the Fourth Amendment of the U.S. Constitution.61 After a one and a half day hearing, District Court Judge James Hiatt ruled against Mr. Buck and entered an injunction requiring Mr. Buck, Mr. Cooke and their offices to return all information obtained in the search.62 Among other things, Judge Hiatt ruled that the search was unreasonably overbroad and went far beyond what was established, either authorized in the warrant or for which there might have been probable cause in the affidavit.63 Judge Hiatt also found that the search provided little of public benefit compared to the private harm to [the business owner], to her business, to her clients, to her clients privacy in terms of fear, in terms of invasion of confidential private material.64 In a subsequent criminal case filed by Mr. Bucks office, District Court Judge James Hartmann ruled that evidence obtained from the search of Amalias had to be

Mike Peters, 13-year-old case led to new probe, Greeley Tribune, November 14, 2008 (Exhibit 31). Sharon Dunn, ACLU sues Weld DA Ken Buck and Weld sheriff John Cooke, Greeley Tribune, January 28, 2009 (Exhibit 32). 59 Id. 60 Complaint, In re Search of Amalias Translation and Tax Service, 2009-CV-100, District Court, Nineteenth Judicial District (Exhibit 33); Tom McGee, Seizure of tax files leads to ACLU suit, The Denver Post, January 28, 2009 (Exhibit 34). 61 Id. 62 Reporters Transcript, In re Search of Amalias Translation and Tax Service, District Court, Weld County, Colorado, April 13, 2009, p. 21 (Exhibit 35); Monte Whaley, Weld ID-theft case put on hold, The Denver Post, March 11, 2009 (Exhibit 36). 63 Reporters Transcript, supra note 62 at p. 15-16 (Exhibit 35). 64 Id. at p. 19.
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suppressed because the search violated the Fourth Amendment of the U.S. Constitution.65 Mr. Bucks office voluntarily dismissed 30 additional cases in response to the ruling.66 In response to the ACLU suit, Mr. Bucks office set up a Legal Defense Fund on the county website, selling t-shirts with the slogan Weld County Standing Up For Americans allegedly to offset taxpayer money used to defend the suit.67 As of May 2009, the Legal Defense Fund had reportedly raised $2,010, while Weld County paid more than $97,000 in legal fees just in the ACLU case.68 Mr. Bucks office is appealing both the decision in the ACLU case and the suppression order in the criminal case.69 Mr. Bucks grandstanding and reckless spending of taxpayer resources in defense of a search deemed illegal by the court suggests that he is putting his political agenda above the best interests of the citizens of Weld County.

Order re: Defendants Motions to Suppress Evidence, People v. Gutierrez, Weld County District Court Case No. 08CR2087 March 7, 2009 (Exhibit 37). 66 Sharon Dunn, Bills from ACLU suit adding up to nearly $100,000, Greeley Tribune, May 28, 2009 (Exhibit 38). 67 Weld County District Attorneys Office Legal Defense Fund, http://www.co.weld.co.us/departments/da/da_LEGAL%20DEFENSE%20FUND.html (Exhibit 39). 68 Dunn, Bills from ACLU suit adding up to nearly $100,000, supra note 66 (Exhibit 38). 69 Id.

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DAVID SPELLMAN, MAYOR OF BLACK HAWK

David Spellman (U) was appointed by the Black Hawk City Council to fill the vacant mayoral seat in Black Hawk in 2006 and was elected Mayor in April 2008. Mayor Spellman was listed in the 2008 Ethics Roundup because of a felony menacing and thirddegree assault conviction. This year, he has created a reputation and culture of corruption through the misuse of state historical funds. Questionable Use of State Historical Funds In 1991, Colorado voters approved a tax on limited-stakes gaming, deeming 28 percent of the tax to a newly created state historical fund.70 The law directs that 20 percent of the historical fund be used for the preservation and restoration of three towns where gambling is legal in the state: Black Hawk, Cripple Creek and Central City.71 Each town has full control of the funds, which are distributed according to the proportion of the gaming revenue generated in each area.72 The City of Black Hawk, with about 118 residents, receives more than $4 million annually for the historical fund.73 In April 2008, a CALL7 investigation revealed that nearly $3 million of historical fund money went to past and present elected officials or their relatives.74 The Colorado Bureau of Investigation found that from 2003 through spring 2008, Mayor Spellman received more than $1 million in historical preservation grants; Alderwoman Kathleen Doles received $492,000 for work on her personal residence; and Alderwoman Diane Cales received $56,884.75 Further, with Mayor Spellman at the helm, funds were also used to buy such things as granite countertops, entertainment centers and a dog door,76 renovations that clearly please the owner but have no historical restoration value. Both the Colorado Bureau of Investigation and Jefferson County District Attorneys Office have launched inquiries into how the City of Black Hawk is spending city money, particularly the state historical funds.77

Colo. Const. art. XVIII, 9(5)(B)(II). Colo. Const. art. XVIII, 9(5)(B)(III). 72 Id. 73 Ann Schrader, Historic heritage left behind as Black Hawk grows, The Denver Post, January 18, 2009 (Exhibit 40). 74 Arthur Kane and Tony Kovaleski, Millions go to fix up Mayor, Council Members homes, The Denver Channel.com, April 30, 2009 (Exhibit 41). 75 Schrader, Historic heritage left behind as Black Hawk grows, supra note 73 (Exhibit 40). 76 Tom Burke and Tony Kovaleski, Money Earmarked for Preservation Now Directed To City Agencies, The Denver Channel.com, October 14, 2008 (Exhibit 42). 77 Id.
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THE UGLY

COLORADO STATE UNIVERSITY BOARD OF GOVERNORS AND BOARD VICE PRESIDENT JOE BLAKE
The Colorado State University (CSU) Board of Governors recently selected Board Vice President Joe Blake as the sole finalist for the newly created Chancellor position, which until January of this year was conjoined with the President position. In apparently illegal closed door meetings, the Board made the decision to name Mr. Blake as the sole finalist despite Mr. Blakes inherent conflicts of interest, which has caused outcry from students and other CSU stakeholders. Colorado State University Chancellor Search In a controversial decision made in December 2008, the Board voted to split the university chancellorship and Fort Collins presidency positions.78 As vice president of the Board, Mr. Blake participated in the decision to create a new, stand alone university chancellor, including the formulation of position details like salary and other benefits. Shortly thereafter, the Board convened a search committee. Although Mr. Blake did not participate in the search committee, its members were made up almost entirely of Mr. Blakes CSU board colleagues and his peers from executive ranks of corporate Colorado.79 Mr. Blake formally submitted his application for the chancellor position on April 29, the same day he attended a closed meeting with the head of the Board.80 Less than a week later on May 4, the search committee recommended just two candidates to the Board for its consideration, one of which was Mr. Blake.81 The Board abruptly convened a special meeting the next day and spent over four hours in executive session discussing the two candidates.82 The Board came out of executive session only to publicly vote on its decision to name Mr. Blake and announced that decision publicly on May 6.83 Concerns over the stealth and rushed search inspired state lawmakers to introduce a transparency bill, HB 1369, just one week before the end of the legislative session and before Mr. Blake was named as the lone finalist.84 The bill established uniform processes

John Tomasic, Blake skirted formal CSU chancellor search process, selected 6 days later, The Colorado Independent, May 14, 2009 (Exhibit 43). 79 John Tomasic, CSU board member Blake selected chancellor, The Colorado Independent, May 6, 2009 (Exhibit 44). 80 Tomasic, Blake skirted formal CSU chancellor search process, selected 6 days later, supra note 78 (Exhibit 43). 81 Gayle Perez, Consensus: Blake OK, process not, The Pueblo Chieftain, May 07, 2009 (Exhibit 45). 82 Id. 83 Official Notice Board of Governors: Board of Governors of the Colorado State University System May 5, 2009 (Exhibit 46). 84 Tomasic, Blake skirted formal CSU chancellor search process, selected 6 days later, supra note 78 (Exhibit 43).

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for public colleges and universities to follow when hiring a president or chancellor.85 The Boards convening in a special meeting on the eve of the bills consideration by the Senate adds further suspicion that the decision to select Mr. Blake was predetermined and deliberately rushed through to avoid outside interference.86 Weeks later, the Board agreed to release an audio tape recording of its May 5 closed-door meeting during which the members discussed the two chancellor candidates.87 The recording suggests that board members violated the states open meetings law by voting to move forward on the recommendation of Mr. Blake as the only finalist for the chancellor position.88 By state law, a vote may only be taken at a meeting that is open to the public.89 A Larimer County District Court judge ruled on June 19 that the May 5 executive session did violate state law and ordered portions of the recording of that session to be made public.90 The Boards lack of strict adherence to open meetings requirements incited a public call for reconsideration from a coalition of nonprofit, good-government groups Colorado Ethics Watch, Colorado Common Cause and New Era Colorado. The coalition asked the CSU Board of Governors to restart the chancellor search to create more transparency in the process.91 Promptly thereafter, the Board convened a special session during which the members re-designated Mr. Blake as the sole finalist for the chancellor position.92 The re-designation of Mr. Blake was clearly a public relations maneuver by the Board to give the appearance that this was an open and transparent search that included public input.

Id. Tomasic, CSU board member Blake selected chancellor, supra note 79 (Exhibit 44). 87 Gayle Perez, Tape shows board violated open meeting law, The Pueblo Chieftain, May 21, 2009 (Exhibit 47). 88 Id. 89 Id. 90 Order, Multimedia Holdings Corp., et al. v. Board of Governors of the Colorado State University System, Larimer County District Court Case No. 09CV473, June 19, 2009 (Exhibit 48). 91 John Tomasic, Watchdog coalition demands CSU halt chancellor hire, wants search restarted, The Colorado Independent, May 22, 2009 (Exhibit 49). 92 Designation of Mr. Joseph L. Blake as the finalist for consideration as the Chancellor of the Colorado State University System: Board of Governors of the Colorado State University System, May 26, 2009 (Exhibit 50).
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LIONEL RIVERA, COLORADO SPRINGS MAYOR

Lionel Rivera (R) was first elected in Colorado Springs to an at-large city council seat in April 1997 and re-elected again in April 1999. In April 2001, he was elected to serve as vice mayor for a two-year term. In April 2003, he was elected mayor and was subsequently re-elected as mayor in 2007. Mr. Riveras ethics issues stem from a possible conflict of interest with his position at UBS Financial Services and his dealings with the U.S. Olympic Committee on behalf of the city of Colorado Springs. U.S. Olympic Committee Conflict of Interest Ron Johnson, an investment adviser with ties to a developer that lost out on the $53 million deal to keep the U.S. Olympic Committee (USOC) in Colorado Springs filed an ethics complaint against Mr. Rivera with the Colorado Springs Independent Ethics Commission (CSIEC).93 The complaint alleges that Mr. Rivera, who is employed by UBS Financial Services, committed an ethics breach in March 2008 because he is, or was, an investment adviser to LandCo Equity Partners and its chairman Ray Marshall, the developer selected for a $53 million deal involving the city and the USOC last year.94 The complaint cited the Colorado Springs Code of Ethics, which prohibits city officials from "engag[ing] in any actions that may create, or does create, the appearance of impropriety" and defines a "conflict of interest" to include "any personal or financial relationship that could influence or be perceived to influence the representation or conduct of business for, or on behalf of the City."95 The CSIEC met on Monday, May 18, to consider the complaint and told Mr. Johnson that it needed more specificity about the allegations, including dates, and any evidence to support them, before it could determine whether it has jurisdiction. 96 The Commission can only hear complaints regarding facts that occurred within the past 12 months. The original deal between the city, LandCo and the USOC closed on March 31, 2008.97 On June 12, the CSIEC heard arguments from the complainants counsel and others, including an attorney for LandCo's chairman who acknowledged that in 2007, before the USOC contract was signed, Mr. Rivera handled three brokerage accounts tied

93

Daniel Chacn, Mayor faces complaint over USOC, Colorado Springs Gazette, May 7, 2009 (Exhibit 51). 94 Daniel Chacn, Panel wants specificity on ethics complaint against mayor, Colorado Springs Gazette, May 18, 2009 (Exhibit 52). 95 The City of Colorado Springs Code of Ethics, 1.3.106. 96 Chacn, Panel wants specificity on ethics complaint against mayor, supra note 94 (Exhibit 52). 97 Marshall Zelinger, Ethics panel to consider complaint against Mayor Rivera, KRDO.com, May 14, 2009 (Exhibit 53).

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to its chairman, Ray Marshall.98 It concluded that the complaint was not frivolous, that it did have jurisdiction over the allegations and that further proceedings are necessary.99 The case is still pending. Based on the evidence presented thus far, it appears that Mr. Riveras conduct fits squarely within the definition of conflicts of interest set forth in Colorado Springs Code of Conduct.

98

Daniel Chacn, Business ties disclosed; Rivera denies conflict, Colorado Springs Gazette, June 12, 2009 (Exhibit 54). 99 Id.

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Due to the voluminous nature of the exhibits, all exhibits are posted for public view at: www.ColoradoforEthics.org