Lt. Gov. Brian Krolicki, in a case brought by Nevada Attorney General Catherine Cortez Masto, was indicted Dec. 4 on four felony charges of misappropriating state funds and false accounting. His chief of staff, Kathryn Besser, was indicted on two charges of misappropriation and falsification.
The indictment, six pages of dense legal verbiage, is written in such general terms that there is little way for Krolicki’s attorneys to know what to defend against. That will presumably come with the release of grand jury testimony in a few days, but that did not help the lieutenant governor in defending himself before the public when the indictment was released.
Krolicki said, “I respectfully ask the citizens of Nevada to keep an open mind as the legal process proceeds in the coming weeks and months, and I submit that you will come to view this exercise for what it truly is—not a prudent prosecution, but a partisan persecution.”
Though the attorney general’s secrecy makes it difficult to describe the charges against Krolicki with the degree of accuracy normally available in criminal cases, it appears that the case stems from a May 2007 legislative audit finding that more than $6 million in earnings from the state’s $3.3 billion college savings plan, administered by Krolicki as treasurer from 2001 to 2007, was not placed in the state general fund as allegedly required by law, apparently preventing state legislators from determining how the money would be used. No money was missing. The audit said $2.6 million was used for marketing the college program. Radio and television advertising featured Krolicki himself prominently, a common practice in government marketing. (U.S. Sen. Harry Reid and Nevada Speaker Barbara Buckley are currently on the air in similar TV spots.)
Although Krolicki himself had announced he was a prosecution target, the indictment still shocked many in political life. Krolicki had been under investigation for more than a year and a half, but the indictment came just after he indicated an interest in running for the U.S. Senate. That sequence fed the political rumor mill that U.S. Sen. Harry Reid, Krolicki’s assumed opponent in the senate race, had a hand in the criminal case, a view Krolicki encouraged.
The indictment also revived a case that had been seen as dormant because of widely circulating rumors that the Nevada Division of Investigations had cleared the lieutenant governor of criminal wrongdoing. (Krolicki’s attorneys requested a copy of the NDOI report but were refused.) It was speculated in legal circles that Besser’s indictment was designed to get her to testify against Krolicki.
The legislative auditors have long had a reputation for being overzealous and treating mere differing techniques of public administration as questions of propriety, though that reputation may simply derive from their having to perform a disagreeable task.
One former prosecutor read the indictment at the request of the RN&R and said it seemed to be arguing with Krolicki’s executive style more than charging criminal acts: “I guess you could make a case that things had been mismanaged, but mismanagement is not usually prosecuted. You need venality or something stronger.” The indictment says nothing about corrupt intent.
That former prosecutor was reacting both to the language of the indictment and to public comments by deputy attorney general Conrad Hafen, who is handling the case and whose own public statements—such as “It wasn’t run through the appropriate accounting system”—seemed not to be assigning any corrupt intent to Krolicki, just objecting to his management of the system.
When the News & Review asked Hafen why the indictment does not suggest criminal intent, he said it is implied by the indictment’s citation of statutes that require criminal intent. “So whatever the statute says would set forth the intent,” he said.
Asked about his own comments, which seem to argue administrative error more than criminality, Hafen said, “According to the statute that we cited, a treasurer or public officer is required to account for—receive and account for—money that is owed to the state, and that’s what we’re charging him with.”
In one area, the indictment seems to clear Krolicki of charges against him by his successor as treasurer. In March 2007, Nevada Treasurer Kate Marshall asked the attorney general to investigate “potential destruction of public records” during Krolicki’s tenure as treasurer. The indictment contained no such charges.
Krolicki is represented by attorney Kent Robison of Reno. Robison previously represented the family of murder victim Charla Mack in its civil suit against Darren Mack. He also represented a Reno student who was harassed and brutalized at Galena High School. Also on Krolicki’s defense team is Scott Scherer, the GOP nominee for attorney general in 1998 and chief of staff to Gov. Kenny Guinn.
Once mostly ceremonial, the office of lieutenant governor has been beefed up in the last quarter century, giving the office roles in tourism and economic development.
Since the indictment, some news reports have reported that Democratic officials generally dislike Krolicki. That’s not exactly true. There’s a sort of two-tiered reaction to him among elected Democrats. Most Democratic state legislators like him and enjoy his company, knowing he is someone they can work cooperatively with, unlike doctrinaire figures like Jim Gibbons. And some Democrats in the party organization were critical of his Democratic successor as state treasurer for her criticism of him after he left the treasury. “She’s pretty partisan,” one of them said of Marshall.
Another younger Democratic legislator says he has only the verbiage of the indictment to go on, but said, “If this is the case, I wonder if the same kind of thing could be charged against most agency heads—or me.”
But Democratic leaders, who play harder ball, are another matter. They have offered sharp criticism of Krolicki. Initiatives they would probably have supported if offered under Democratic auspices they opposed when offered by Krolicki.
Some have expressed surprise at such antipathy for Krolicki, but it’s not all that difficult to understand. Since Dean Heller’s switch to the social conservative wing of the GOP. Krolicki is the last major Republican figure in the state with a demonstrated ability to cut heavily into the Democratic vote, making him a serious threat to Reid. Krolicki’s moderate views have given him entrée to Democratic voters in both his races for state treasurer and his run for lieutenant governor.
One grand jury witness against Krolicki was Chris Giunchigliani, once a Democratic state legislator, now a Clark County commissioner. She is married to Gary Gray, a campaign consultant for Kate Marshall. (Gray is under investigation for allegedly offering money to a supreme court candidate for her recusal in certain cases before the court.)
The notion that Harry Reid would, or could, arrange an indictment for Krolicki to cripple his candidacy, would normally be rejected, but it is being discussed seriously in political circles because of Reid’s history. He has often been several chess moves ahead of any potential opponents, particularly those who had appeal to Democrats. He once personally recruited a Democratic candidate to run against Republican moderate Sue Wagner. In 2005, when Reid was selecting a nominee for a federal judgeship, he searched the state and decided the best qualified candidate was the state’s rising young Latino attorney general, Brian Sandoval, a Republican (and former member of Kent Robison’s law firm). That removed Sandoval from political life where he might have run against Reid.
On Dec. 3, Reid himself said of the charge that he might have orchestrated the indictment, “This is just absolute fiction. I would not do anything like that. That’s unethical. … It’s kind of insulting to have to answer the question.”
The attorney general told the New York Times, “I do not operate the attorney general’s office in a partisan manner.”
There was clearly one political consequence of the indictment, whether intended or not—Republicans closed around Krolicki. He had incurred some GOP resentment by supporting Gov. Kenny Guinn during the tax fight of 2003, but that was forgotten with Cortez Masto’s action.
But whether it is possible for Krolicki to put his career back together, even if he is found not guilty, is far from certain, since his reputation will be damaged in any event. It’s a rule of thumb in politics that it’s difficult to unring a bell.