Palin legal fund may violate ethics law

DONATIONS: Investigator cites "probable cause" to believe it broke state rules.

July 21, 2009 

Gov. Sarah Palin appears to have broken state ethics law by asking people to donate money to a trust set up to pay her legal bills, an investigator hired by the state found.

"In light of the evidence that the governor expressly authorized the creation of the trust and the fact the trust website quite openly uses the governor's position to solicit donations, there is probable cause to believe that Governor Palin used, or attempted to use, her official position for personal gain in violation of Alaska statute," Anchorage attorney Tom Daniel wrote in his report.

Daniel recommended that Palin refuse to take the money raised by her legal defense fund, called the Alaska Fund Trust. But he was also sympathetic toward Palin for the personal legal bills she's accumulated defending herself against ethics complaints. Daniel suggested the Legislature consider changing the law so the state would pay in cases where complaints are tossed out.

"It may seem unfair to require the governor to hire a personal lawyer to defend against actions that arise from the fact that she is a public official, and at the same time, prohibit her from forming a private legal defense fund to help pay for the expense," he wrote.

The matter isn't settled. Daniel said in an interview that his report to the state personnel board was a preliminary "probable cause" finding. He said the case won't be final until Palin resolves it, possibly by refusing to take money from the fund, or it goes to a formal board hearing.

His report was dated July 14. The report said copies were going to Palin and Kim Chatman, the Eagle River resident who filed the complaint. Palin's lawyer, Tom Van Flein, said Tuesday that he's been working with Daniel providing "supplementary information" on the fund.

"There has been no board finding of an ethics violation and there is a detailed legal process to follow before there is a final resolution," Van Flein said.

Palin issued a statement late Tuesday taking issue with the idea that she has taken any action involving the fund.

"In short, I have not 'acted' relative to the defense fund and it is misleading to say I have," she said.

Daniel's report said his decision is confidential "unless confidentiality is waived by the governor." Van Flein threatened legal action against Chatman for Tuesday's release of the report, although he was vague about what that means, saying in an e-mail only that "all options are open in terms of legal remedies." Chatman had no comment.

Ethics complaints against Alaska legislators are automatically dismissed if the people who file them violate the confidentiality. Ethics complaints against the governor are also supposed to be confidential under the law until action is taken, but that's commonly violated with no repercussions.

Palin's supporters created the legal defense fund to help her pay what they've estimated as about $600,000 in bills compiled defending herself in the "Troopergate" investigation last year and other ethics complaints. Palin spokeswoman Meg Stapleton said last week she understands that the fund has raised $250,000, in part from an Internet "webathon" organized by Lower 48 bloggers who support the governor.

Daniel's report found probable cause that the fund violates two parts of the Alaska Executive Branch Ethics Act. One is the rule against Palin using her official position for personal gain. The other is the state's gift rules. Daniel found that "payment of the governor's legal fees by the Alaska Fund Trust will violate the Ethics Act prohibition against a public officer accepting gifts intended to influence performance of official duties."

Daniel wrote that the relationship between the governor and Kristan Cole, a close Palin friend who is trustee of the legal defense fund, could cause a "reasonable person" to think the money is meant to influence the governor. Palin appointed Cole chair of the state agriculture board as well as to the royalty oil and gas advisory board, Daniel wrote in his report. She's also on the creamery board, a state-owned corporation.

Palin made those appointments before the legal defense fund began in April and Cole said they were volunteer positions. Daniel wrote that "it is possible that her formation of the legal defense fund is entirely altruistic without an expectation of anything in return." But he wrote that the circumstances "suggest" that trust fund organizers would expect the governor to be favorably disposed to their viewpoints when policy is made.

Cole did not have a comment in response to questions but said in a prepared statement that she hasn't read the report and "the purpose of the Trust is to help the Governor with the crushing legal fees she has incurred solely because of her public service."

Cole's statement said lawyers from Alaska to the East Coast reviewed the trust when it was set up. She did not say who, but Palin's spokeswoman has previously identified one of them as Randy Evans, a prominent former counsel for the Georgia Republican Party who has advised Newt Gingrich and others on ethics issues.

Evans said in an e-mail that the trust was patterned after trusts of previous presidential candidates "and high profile public servants." He said it was absurd to claim there is anything illegal in such a trust.

Daniel wrote in his report that he's aware figures such as Hillary Clinton, Ted Stevens and John Kerry set up legal defense funds. But there are specific Congressional provisions allowing them that aren't included in Alaska's ethics law, Daniel wrote.

Palin initially responded to the finding Tuesday via the Internet social media Twitter, which limits messages to 140 characters.

"Re inaccurate story floating re:ethics violation/Legal Defense Fund;matter is still pending;new info was just requested even;no final report," she wrote.

Late Tuesday, she issued a longer written statement that said:

"I find the notion that I have taken any action pertaining to the legal defense trust fund misguided and factually in error. I am informed that this fund was created by experienced attorneys in DC and was modeled after other similar funds established for senators and others. The fund itself was not created by me nor is it controlled by me. Neither I nor my lawyer has received a penny from this fund, and I am informed the Trustee was withholding any action or payment pending final resolution with the Personnel Board. This is the hallmark of legal compliance and prudent conduct.

"In short, I have not ‘acted' relative to the defense fund and it is misleading to say I have. I have no doubt that the Trust will welcome guidance by the Board, as do we all, but it is my understanding that this matter was not resolved and the complainant's violation of law has served to mislead the public and prejudice a fair review of this matter."

Palin will resign from office on Sunday, with a year and a half left in her term. The governor has said one reason she's stepping down is frustration over the cost and time involved for the state in dealing what she calls "frivolous" ethics complaints. The state personnel board has received nearly 20 ethics complaints against Palin.

Most were dismissed. But Palin settled one by reimbursing the state $8,143 for trips taken by her children. Now she has to deal with the finding that her legal defense fund appears to be in violation of Alaska law. The state personnel board also has the power to impose civil fines for violations.

Palin spokeswoman Stapleton said Daniels' report came 11 days after Palin announced her decision to step down and this issue played no role on it. Fund trustee Cole told the Associated Press, which first reported the story, that organizers have frozen the legal defense fund pending the personnel board's review. In the meantime, ethics complaints keep getting filed against Palin.

Daniel wrote that it could be possible for the state to reimburse for at least some legal expenses but he doesn't know if Palin's cases would qualify.

"In cases where an ethics complaint has been dismissed for lack of probable cause, it would seem particularly appropriate to require the state to pay for that expense rather than requiring the public official to pay it out of her own pocket," Daniel concluded. "Perhaps the Ethics Act should be amended to specifically address this problem."


Find Sean Cockerham online at adn.com/contact/scockerham or call him at 257-4344.

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