Remember the mini-flap over the settlement terms of a lawsuit the Minnesota Attorney General’s office filed against Capital One Bank? Buried in the June report on the AGO by Legislative Auditor James Nobles was the revelation that the suit (filed by then-AG Mike Hatch) was settled for $749,999. If the case had settled for a dollar more, the money would have gone into the general fund for the Legislature to distribute.
About a third of that amount ($249,999 -- there are those nines again) went to Association of Community Organizations for Reform Now (ACORN), a nonprofit that calls itself the nation's largest community organization of low- and moderate-income families.
If you haven’t heard much of ACORN, you might soon. The group was the focus of a story in the Wall Street Journal that reported that aside from its well-known housing advocacy efforts, ACORN is active in voter mobilization efforts. ACORN is co-managing a $15.9 million campaign with the group Project Vote to register 1.2 million low-income Hispanics and African-Americans, the WSJ article says.
Republicans are crying foul, saying that funds from the $5 billion housing bill will indirectly end up in the coffers of groups like ACORN, which, they feel, have a clear Democratic tilt.
Incidentally, after the Capital One settlement and subsequent distribution of funds, ACORN’s political action committee later endorsed Hatch in his gubernatorial bid. I guess in legal terminology that would qualify as your basic quid pro quo.
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Friday, August 1, 2008
Monday, June 30, 2008
Auditor reports on AG's Office to Audit Commission
Minnesota Lawyer just posted an article on today's Legislative Audit Commission meeting, which included a discussion of the June 3 report by Legislative Auditor James Nobles on the Office of Attorney General Lori Swanson.
Certainly the contents of the report -- made public a month ago -- were not a surprise. However, there were a couple of interesting new twists picked up by the reporter, Charley Shaw, who writes for one of our sister publications, the Capitol Report (a/k/a the St. Paul Legal Ledger).
As you recall in the written report, Nobles concluded that the types of allegations made by those who came forward for the investigation -- including charges of mismanagement and misconduct -- were not in purview of the Office of the Legislative Auditor, which typically investigates the uses of state funds. Nobles did call on lawmakers to consider whether attorneys who work at the AG's Office should remain "at-will" or be afforded some kind of civil-service job protections.
However, under questioning from Rep. Steve Simon, DFL-St. Louis Park, Nobles acknowledged that some of the allegations not discussed in the written report involved the use of funds. Nobles said that his office will will follow up on financial allegations involving the use of Medicaid funds in the course of its next regularly scheduled review of federal compliance.
Click here for the full Minnesota Lawyer article.
An interesting side note, we recently reported here that ACORN, a community action group, gave the Minnesota AG's Office an "A+" on its efforts to combat mortgage fraud (one of only six AG's Offices nationally to be so recognized). ACORN, as it turns out, was one of two nonprofits that got to split two-thirds of the $749,999 settlement the Minnesota AG's Office scored from Capital One. (The other third went to the state.) The AG's Office (then under Hatch) got to direct the settlement (rather than having it go into the general legislative coffers) because the settlement amount came to less than $750,000. (By just a $1! What a coincidence!) In any case, now I'm a little miffed Minnesota only got an "A+" ...
It's also worth noting that the settlement occurred under Hatch's watch, not Swanson's (although Swanson was, of course, a top deputy).
Certainly the contents of the report -- made public a month ago -- were not a surprise. However, there were a couple of interesting new twists picked up by the reporter, Charley Shaw, who writes for one of our sister publications, the Capitol Report (a/k/a the St. Paul Legal Ledger).
As you recall in the written report, Nobles concluded that the types of allegations made by those who came forward for the investigation -- including charges of mismanagement and misconduct -- were not in purview of the Office of the Legislative Auditor, which typically investigates the uses of state funds. Nobles did call on lawmakers to consider whether attorneys who work at the AG's Office should remain "at-will" or be afforded some kind of civil-service job protections.
However, under questioning from Rep. Steve Simon, DFL-St. Louis Park, Nobles acknowledged that some of the allegations not discussed in the written report involved the use of funds. Nobles said that his office will will follow up on financial allegations involving the use of Medicaid funds in the course of its next regularly scheduled review of federal compliance.
Click here for the full Minnesota Lawyer article.
An interesting side note, we recently reported here that ACORN, a community action group, gave the Minnesota AG's Office an "A+" on its efforts to combat mortgage fraud (one of only six AG's Offices nationally to be so recognized). ACORN, as it turns out, was one of two nonprofits that got to split two-thirds of the $749,999 settlement the Minnesota AG's Office scored from Capital One. (The other third went to the state.) The AG's Office (then under Hatch) got to direct the settlement (rather than having it go into the general legislative coffers) because the settlement amount came to less than $750,000. (By just a $1! What a coincidence!) In any case, now I'm a little miffed Minnesota only got an "A+" ...
It's also worth noting that the settlement occurred under Hatch's watch, not Swanson's (although Swanson was, of course, a top deputy).
The buck stops here
The $1 apparently knocked off the Capital One Bank settlement to allow then-Attorney General Mike Hatch to direct the proceeds speaks volumes.
For anyone who missed it, the AG's Office settled a lawsuit against the well-known credit card issuer in 2006 for an oddly precise $749,999. Had the case settled for a dollar more, the money would have gone into the general fund for the Legislature to distribute. Because it fell a hair's breadth beneath the $750,000 threshold, Hatch was able to direct the distribution of two-third of the proceeds to two nonprofits -- $250,000 to the Legal Aid Society (a good cause, but also a politically popular one) and $249,999 to the community action group ACORN (which reportedly later endorsed Hatch in his gubernatorial bid). The other third of the settlement went to the state to cover the costs of investigation.
As with most of the various controversies that have cropped up around the AG's Office over the last 15 months or so, I am not sure there is anything illegal here, but something stinks to high heaven. It reminds me of those individuals you'd sometimes hear about who would withdraw just a little bit less than $10,000 out of banks to avoid the transaction being reported to the IRS. Eventually, the federal government had to outlaw conduct engaged in to skirt the federal reporting requirement,
There is a certain amount of hubris in making the settlement $749,999 -- an amount that can have almost no logical basis but to avoid the $750,000 threshold -- instead of some other amount, such as $700,000, which could at least arguably have some basis in the case. Alternatively, a part of me now can't help wondering whether Capital One would have paid more -- such as $800,000 -- but the higher amount was not sought because that money could not have been distributed in a way politically advantageous to the AG.
Ordinarily, a buck chiseled off a settlement for political reasons would not cause me to lose much sleep. However, in this case, it's yet another indignity in a long string of them. Just once I would just like to see someone in a leadership role in the AG's Office stand up and take responsibility for any of the numerous issues that have cropped up. If you admit a problem is there, at least you can start to deal with it. However, I fear that such an acceptance of accountability will never come -- or, if it ever does, it will likely be a day late, and a dollar short.
For anyone who missed it, the AG's Office settled a lawsuit against the well-known credit card issuer in 2006 for an oddly precise $749,999. Had the case settled for a dollar more, the money would have gone into the general fund for the Legislature to distribute. Because it fell a hair's breadth beneath the $750,000 threshold, Hatch was able to direct the distribution of two-third of the proceeds to two nonprofits -- $250,000 to the Legal Aid Society (a good cause, but also a politically popular one) and $249,999 to the community action group ACORN (which reportedly later endorsed Hatch in his gubernatorial bid). The other third of the settlement went to the state to cover the costs of investigation.
As with most of the various controversies that have cropped up around the AG's Office over the last 15 months or so, I am not sure there is anything illegal here, but something stinks to high heaven. It reminds me of those individuals you'd sometimes hear about who would withdraw just a little bit less than $10,000 out of banks to avoid the transaction being reported to the IRS. Eventually, the federal government had to outlaw conduct engaged in to skirt the federal reporting requirement,
There is a certain amount of hubris in making the settlement $749,999 -- an amount that can have almost no logical basis but to avoid the $750,000 threshold -- instead of some other amount, such as $700,000, which could at least arguably have some basis in the case. Alternatively, a part of me now can't help wondering whether Capital One would have paid more -- such as $800,000 -- but the higher amount was not sought because that money could not have been distributed in a way politically advantageous to the AG.
Ordinarily, a buck chiseled off a settlement for political reasons would not cause me to lose much sleep. However, in this case, it's yet another indignity in a long string of them. Just once I would just like to see someone in a leadership role in the AG's Office stand up and take responsibility for any of the numerous issues that have cropped up. If you admit a problem is there, at least you can start to deal with it. However, I fear that such an acceptance of accountability will never come -- or, if it ever does, it will likely be a day late, and a dollar short.
Wednesday, June 11, 2008
On mortgage foreclosures, Swanson gets an 'A+'
Despite the internal strife that has gripped the Minnesota Attorney General's Office, AG Lori Swanson made an impressive showing in a report that ACORN released this week ranking state AGs' efforts fighting mortgage foreclosures.
Swanson was one of six state AGs who got an "A+" from the grassroots community group. The other state AGs getting the highest ranking were from Connecticut, Massachusetts, New York, Illinois and Iowa.
Management controversies don't always translate to bad external performance by an office. It's worth recalling that despite the turbulence in the local U.S. Attorney's Office last year, it was reported that the office managed to set a productivity record under Rachel Paulose.
Swanson was one of six state AGs who got an "A+" from the grassroots community group. The other state AGs getting the highest ranking were from Connecticut, Massachusetts, New York, Illinois and Iowa.
Management controversies don't always translate to bad external performance by an office. It's worth recalling that despite the turbulence in the local U.S. Attorney's Office last year, it was reported that the office managed to set a productivity record under Rachel Paulose.
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