Krolicki pleads not guilty to felonies

Associated Press

Published Tuesday, Dec. 30, 2008 | 2:09 p.m.

Updated Tuesday, Dec. 30, 2008 | 6:18 p.m.

Nevada's lieutenant governor pleaded not guilty Tuesday to four felony charges accusing him of mishandling a multibillion-dollar state college savings program when he was state treasurer.

Republican Brian Krolicki, who is considering a 2010 run against U.S. Sen. Harry Reid, appeared in Clark County District Court and spoke only to answer brief questions from a hearing master and to enter his plea.

He has claimed that the charges are politically motviated, and outside of court he maintained his innocence.

"I look forward to getting my story out soon, and we'll do that. The facts will absolutely vindicate me in this," he said.

The court set a July 14 trial date.

Krolicki, 47, was indicted by a Las Vegas grand jury this month, along with his chief of staff, Kathryn Besser, who also served as his chief of staff in the treasurer's office. Krolicki served two terms in that office before being elected lieutenant governor in 2006.

He is charged with two counts of misappropriation and falsification of accounts by a public officer and two counts of misappropriation by a treasurer. The four felony counts each carry a possible sentence of up to four years in prison.

The charges arose from a 2007 audit of a more than $3 billion state-run college savings program. Auditors found Krolicki skirted budget controls and spent more on an advertising campaign than was allotted by the Legislature. No money is missing, and he is not accused of embezzlement.

Reid and Democratic Attorney General Catherine Cortez Masto have denied that the charges are political. Asked Tuesday whether he believed he was the target of a partisan attack, Krolicki would not comment.

Besser, 41, who also pleaded not guilty Tuesday, is charged with being a principal to misappropriation and falsification of accounts and being a principal to misappropriation by a treasurer.

From 2001 to 2006, Krolicki's office ran the Nevada College Savings Program, a public-private initiative that helped parents and students save money for school. The indictment alleges that Krolicki improperly accounted for money earned by the state through contracts with Upromise Inc., the company that created the college savings accounts. The company is not accused of wrongdoing.

Prosecutors say Krolicki transferred some of the earnings to unauthorized accounts, a move that kept legislators from properly overseeing the program.

They also allege that more than $6 million in state funds was used to pay for program expenses, including advertising, management and legal services. The Legislature allocated just $1.6 million for those expenditures, according to the 2007 audit.

Krolicki appeared in ads for the savings program, leading some critics to accuse him of running state-funded campaign commercials.

Krolicki's attorney, Kent Robison, says the defense will show Krolicki had the authority to handle the money the way he did.