Why Krolicki case isn’t open and shut

By Jeff German, David McGrath Schwartz

Friday, Dec. 5, 2008 | 2 a.m.

Winning a conviction in the criminal case against Lt. Gov. Brian Krolicki apparently isn’t as simple as it seems — or at least, as simple as prosecutors portray it.

Legal experts say that even if Krolicki and a member of his staff did everything they are accused of in the indictment handed down Wednesday, jurors could balk at finding them guilty of crimes.

Jurors are likely to want to know whether some of the $6 million Krolicki is accused of improperly handling as state treasurer benefitted him personally or went to friends or associates, legal specialists say.

If prosecutors have such evidence, jurors could see a strong motive worthy of a criminal conviction.

But if the case comes down to what Attorney General Catherine Cortez Masto has described as a lack of transparency on Krolicki’s part — a failure to run the money through proper state accounts — prosecutors may have a more difficult time winning over a jury, the experts say.

“If he didn’t use any of the money for his own benefit or for the benefit of others, this could backfire on the prosecution,” veteran criminal defense attorney John Momot said Thursday.

“A jury may view this as overreaching or politically motivated,” Momot said. “Some jurors can really be incensed by something brought before them that should have been handled in an administrative way.”

Thomas Pitaro, another longtime criminal defense attorney, agreed.

“For a criminal offense, you have to show an evil motive,” Pitaro said. “You have to show the man took advantage of his position and to the detriment of the state. If there’s no money missing and he accounted for all the money, then I think it becomes difficult to say the man is a criminal.”

Stan Hunterton, a former federal prosecutor who practices criminal defense law, added that the case on the surface doesn’t appear to be one that would naturally strike a jury as being criminal.

“It’s not like the congressman who hid $100,000 in cash in his freezer,” Hunterton said. In Krolicki’s case, based on what is known publicly so far, “None of the money ended up in Switzerland,” Hunterton said. “It just ended up in a state account it’s not supposed to be in.”

Hunterton said a jury will be clamoring for Krolicki’s side of the story,

“This is the kind of case that begs for an explanation,” Hunterton explained. “He almost has to take the witness stand.”

Krolicki, so far, has not been shy about talking.

He was the one who tipped off the media to his pending indictment at a news conference last week in which he proclaimed his innocence and accused the attorney general of mounting a partisan witch hunt against him. Krolicki is a Republican and Cortez Masto is a Democrat.

Krolicki and his lawyers contend the dispute is over “process” and never should have spilled over into the criminal arena.

“In our opinion, there was a statutory process that authorized him to do what he did,” said Krolicki’s attorney, Kent Robison of Reno. “He didn’t benefit personally from this at all.”

What the public doesn’t yet know is whether the attorney general has evidence to the contrary.

The indictment reveals little information about the four felony misappropriation charges against Krolicki, and Chief Deputy Attorney General Conrad Hafen, who presented the case to the grand jury, has refused to discuss what evidence was presented.

But the attorney general’s office has let slip that the charges stem from a May 2007 legislative audit that found that more than $6 million in earnings from the state’s $3.3 billion College Savings Plan, run by Krolicki from 2001 to 2006, had not been deposited with the state treasury as required by law.

Instead of returning that money to the state, where legislators would have a say over how it was be spent, Krolicki’s office ordered the money held separately.

The audit found $2.6 million was used for outside administrative and marketing costs, including radio and television ads that featured Krolicki promoting the college fund.

Krolicki defended the practice as a common one for state treasurers across the country, but his opponent in the lieutenant governor’s race at the time argued that he used state money to make the ads because they promoted his candidacy. Two employees of the marketing firm that produced the college fund ads were among the 11 witnesses listed this week as having testified before the grand jury.

The legislative audit also found that $3.4 million was paid to the Atlanta-based GIF Services, which helped Krolicki and the program’s manager oversee the massive fund.

Krolicki’s mentor and predecessor as treasurer, Bob Seale, was a paid marketing consultant for GIF at the time.

Seale was not charged in the criminal case against Krolicki and was not listed as a witness, and Hafen has indicated that no further charges are likely to be filed. But Hafen wouldn’t confirm whether any evidence involving GIF Services was presented to the grand jury.

Cortez Masto said the criminal case strikes at the heart of good government, pointing out that the audit concluded Krolicki had failed to run the questioned funds through the proper budget process.

“It comes down to transparency in government,” she said. “One individual doesn’t get to decide what money goes into state coffers and what money doesn’t.”

Whether that’s a crime, however, will be up to the jury deciding Krolicki’s fate.