Judge to rule whether Lt. Gov. Krolicki case continues

By Cara McCoy

Published Tuesday, Nov. 24, 2009 | 11:38 a.m.

Updated Tuesday, Nov. 24, 2009 | 5:20 p.m.

Lt. Gov. Brian Krolicki, accused by prosecutors of improperly managing a multi-billion dollar college savings program while he served as state treasurer, was in Clark County District Court on Tuesday as a judge is set to rule on dismissal of the case.

Judge Valerie Adair heard arguments from attorneys representing Krolicki and Kathryn Besser, his former chief of staff, requesting to dismiss the criminal case against their clients.

Adair hasn’t ruled on the arguments, which in addition to the request for dismissal include issues of law – if wording in state law about the Nevada budget and management procedures is overly vague – and issues related to the grand jury. Defense attorneys said there were problems with the grand jury that indicted Besser and Krolicki.

Adair also must rule as to whether there is a conflict for the Nevada Attorney General’s Office, which is prosecuting the case against Krolicki. A trial was set for Dec. 14.

The judge will issue her ruling after the Thanksgiving holiday, a courts spokesman said late this afternoon.

The office of Nevada Attorney General Catherine Cortez Masto offered to remove itself from the prosecution, but the defense rejected the offer, calling the move “too little, too late.” Prosecutors said Masto learned of a possible conflict after being contacted by the Review-Journal about a fundraising party her husband was planning next month in Las Vegas for a Democratic candidate for lieutenant governor.

“We are willing at this point to give them what we thought they wanted, which was our disqualification,” said Deputy Attorney General Christine Guerci-Nyhus.

The defense, however, objected to removing the attorney general’s office from the case, protesting further delays and the price tag of a contract for a special prosecutor – about a half-million dollars for the services of Dominic Gentile.

“We respectfully decline this offer,” said Richard Wright, representing Krolicki. Wright criticized the use of taxpayer money to hire the special prosecutor, adding that he was skeptical that Masto had no knowledge of her husband’s plans for a fundraiser.

Wright said further delays in the case would be damaging to Krolicki’s bid for re-election.

Adair acknowledged that the fee to retain Gentile was high and hinted that she might not approve the contract if it landed in front of her.

Prosecutors defended the proposed contract with Gentile, saying he was offering his services at a rate discounted from his usual fees. Reports indicate the top deputy in the attorney general’s office earns a yearly salary of $140,000.

Representatives from Masto’s office added that district attorneys’ offices in Las Vegas and Reno had declined to prosecute the case, leaving no option besides the special prosecutor if the attorney general was found to have a conflict.

Wright and co-counsel Margaret Standish previously had said prosecution by the attorney general’s office “creates an extreme appearance of impropriety and fundamental unfairness.”

Before the case landed in front of Adair, Judge Elissa Cadish had ruled there was a conflict and barred the attorney general’s office from prosecuting; however, she removed herself from the case over a potential conflict. In August, both sides agreed to void their protest to the Nevada Supreme Court, allowing the attorney general’s office to continue with the prosecution.

Adair will rule if that prosecution can continue.

The charges against Krolicki and Besser stem from a 2007 audit of a $3 billion dollar, state-run college savings program. The two were indicted in December 2008. Krolicki is charged with two felony counts of misappropriation and falsification of accounts by a public officer, and two felony counts of misappropriation by a treasurer. Besser, as his chief of staff, is charged with aiding and abetting Krolicki’s alleged crimes.

Krolicki, a Republican whose name was discussed as a possible candidate against Senate Majority Leader Harry Reid, has called the charges politically motivated. Reid and Masto, both Democrats, have vehemently rejected those allegations.

No state funds were reported missing, but Krolicki is accused of ignoring state rules in spending and bypassing budgeting rules.

Krolicki’s attorneys said the state attorney general's office advised him and his staff on managing the fund.

Prosecutor Conrad Hafen objected to the calls for dismissal, saying Nevada taxpayers had a reasonable expectation that elected officials are responsible “not to violate public trust and to be responsible for funds they have a stewardship over.”

Sun reporter Cy Ryan contributed to this story.