Judge tosses Ben Stevens' fine

$5,000: APOC erred in penalizing former state Senate president.

May 17, 2008 

A Superior Court judge has ruled the Alaska Public Offices Commission erred when it found that former Senate President Ben Steven violated state law by failing to disclose the clients of one of this consulting firms, Advance North.

In a decision handed down May 5 in Anchorage, Judge Sen Tan threw out the $5,000 fine assessed by APOC against Stevens on March 30, 2007.

Stevens, a Republican, represented the Sand Lake area until his term ran out in 2006. He's been under investigation in the broad FBI probe of corruption in Alaska.

Former state legislator Ray Metcalfe began filing a series of complaints with the public offices commission in 2005 alleging that Stevens failed to properly disclose his private business clients and the work he did for them. The case involving Advance North grew out of the resulting APOC investigation.

Metcalfe is now running in the Democratic primary for U.S. Senate, seeking the seat held by Ben Stevens' father, Ted, a Republican.

From 2002 to October 2005, Ben Stevens owned 50 percent of Advance North LLC. Anchorage fisheries lobbyist Trevor McCabe owned the other half. McCabe is a former legislative aide to Sen. Ted Stevens. McCabe is also under federal investigation over his sale of land to the Alaska SeaLife Center in Seward through an earmark introduced by Ted Stevens.

In his annual disclosures as a legislator, Ben Stevens acknowledged receiving income from Advance North but didn't list his clients nor the amount they paid. He said the law made no such requirement.

The issue was complicated by the nature of a limited liability company, a hybrid business structure that didn't exist in state law when APOC's disclosure laws were enacted, Tan noted. Stevens and McCabe founded Advance North in 2002, a year after Stevens was appointed to a vacant Senate seat by Gov. Tony Knowles.

In its investigation, the APOC staff discovered that Advance North received $392,500 between 2003 and 2005 from fishing industry clients with business before the state.

Under rules in effect at the time, if Advance North was a partnership or if Stevens collected the money as an individual, the clients and their payments would have to be disclosed. If Advance North was a corporation, and Stevens owned 50 percent of the stock or less, disclosure wasn't required.

In its decision, the commission said an LLC was very similar to a partnership.


Stevens himself acknowledged that he and McCabe jointly ran the business, much like a partnership might. But he argued the corporate rule should govern his disclosure requirements.

Tan took a different path. Limited liability companies weren't listed in the statute that enumerated the business structures requiring full disclosure, he noted; nor had the commission attempted to extend the law to LLCs in its own regulations. Stevens had no duty to report the details of his clients, he said.

A 2000 attorney general opinion may have suggested an LLC was like a partnership, he wrote, but that assertion appeared only as a footnote in a larger document. The disclosure form provided by the commission to legislators may have asked them to fully report their income from LLCs, but there was no evidence that the form represented official policy or just the idea of a staff member, Tan said.

Until APOC delved into Advance North following Metcalfe's complaint, "it would be fair to say that the APOC was itself confused on what the statute and regulations required of LLCs," Tan wrote.

The Legislature has since changed disclosure law to include LLCs.

Assistant attorney general Margaret Paton-Walsh said the state has not yet decided whether it will appeal the decision.

Metcalfe said Friday that he hoped the state would appeal and that the Supreme Court would reverse Tan. He said Tan decided the case on "minutiae" rather than following the principles of the law.

"The bottom line is, you're supposed to present an accurate representation of what you do for your money," Metcalfe said, citing a Supreme Court decision in a 2003 disclosure case over a different issue. "The judge here is game playing with hair-splitting, and he's narrowly defining something the Supreme Court already broadly defined."


Jim Torgerson, Stevens' lawyer, declined to comment because the state still could appeal. Holly Hill, executive director of the Public Offices Commission, also declined to comment, citing her brief tenure in office -- five days as of Friday.

The case was the second involving Stevens to be thrown out on appeal this year. In January, Superior Court Judge Mark Rindner ruled that APOC erred when it fined Stevens $630 in 2007 for failing to disclose more than $70,000 in deferred compensation he received as a director of Semco Energy, the parent company of Anchorage natural gas utility Enstar. The state is appealing Rindner's decision to the Alaska Supreme Court.

Federal prosecutors have cited violations of state disclosure law as evidence of fraud and conspiracy in several of the corruptions cases they've brought even when no violations were detected or enforced by APOC.

Bill Allen, the former chairman of Veco and the central figure in the corruption investigation, has testified that the $243,250 in "consulting" fees his company paid to Stevens were in part to get Stevens' assistance in the Legislature. Veco vice president Rick Smith testified that he bribed Stevens.

Allen and Smith have pleaded guilty to conspiracy and bribery and are cooperating with government.

Stevens has denied wrongdoing but has never said what he did for his consulting money. He didn't return a message left at his home Friday.

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