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Deal recruited new ethics chief as probe of his campaign heated up
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By JIM WALLS
Sept. 19, 2013 — Gov. Nathan Deal’s office recruited a new director for the state ethics commission just as it was ramping up a high-profile probe of his 2010 campaign, Atlanta Unfiltered has learned. A year later, the agency’s staff attorney alleges, the new ethics chief forced her to close the Deal investigation with a minimal penalty on orders from the governor’s office.
The new, behind-the-scenes accounts of the Deal case have emerged as attorneys in two whistleblower lawsuits take evidence and prepare for trial.
The allegations resurrect concerns about the independence of the state’s ethics enforcers and the integrity of its investigations. They also contradict denials that Deal had any role in the shake-up that cost the state’s top two ethics enforcers their jobs.
Holly LaBerge, the commission’s executive director, testified July 31 in a sworn deposition that the governor’s office called in mid-May 2011 to gauge her interest in the ethics job. She said commission members called her twice more in the following weeks to discuss the post.
Stacey Kalberman was still the commission’s executive director at the time, yet to experience the flurry of events that would lead to her forced departure and that of her former deputy, Sherry Streicker. Both women have filed suit alleging they were fired to scuttle the Deal inquiry and their plans to subpoena financial records of the governor and several close associates.
Commission members have insisted repeatedly that budget issues, not political interference, forced them to take the personnel actions. LaBerge, though, testified she saw no sign of financial problems once she took the job. “There was no budget crisis, no budget shortfall,” she said.
Rather, LaBerge testified, one member told her “things were not working out” with Kalberman.
Deal’s office declined to comment this week on the propriety of recruiting a new ethics chief while the investigation of the governor was heating up. They referred a reporter’s inquiries to Deal’s attorney, Randy Evans, who said he didn’t know the particulars of that contact but that it didn’t necessarily sound improper.
“It sounds like, to me, somebody on the commission was concerned [about Kalberman] and was already getting names” for a possible replacement, he said. “Personnel decisions get made every day and they don’t stop just because any one board is investigating someone.”
LaBerge, as executive director, later had frequent private meetings with Deal’s top staffers that included discussions of the ethics investigation, the commission’s staff attorney, Elisabeth Murray-Obertein, testified in an Aug. 1 deposition. Later, under pressure from the governor’s office, the attorney said, LaBerge forced her to agree to a token $3,350 financial penalty in the case.
Murray-Obertein said she reluctantly followed those orders, redrafting the final proposed settlement with Deal “because I already felt defeated, that nobody has listening to my legal opinion.”
The attorney testified that she initially proposed a fine for Deal of more than $70,000, a figure that dropped in negotiations with the governor’s camp to $35,000, then $11,000, and finally a bottom-line $7,100, a figure that she agreed was “pretty ridiculously low.”
“And then,” she said, “they made me cut that in half.”
Murray-Obertein and a third witness, former media specialist John Hair, testified that LaBerge frequently boasted of having a tight relationship with the governor. Hair said he overheard LaBerge telling a staff member, after the Deal case was settled, “Well, I made Governor Deal’s little problem go away; so as far as I’m concerned from this point on, he and his office owe me a favor, they owe me.”
Hair testified he also heard LaBerge say “she pretty much knew that she already had the job before the interviewing process.”
LaBerge, in her deposition, denied making those statements. She fired Hair in April on charges that he insists were fabricated. Murray-Obertein testified that she expects to be fired.
Critics have long complained of the political nature of the commission, whose members are named and budget controlled by the governor and legislative leaders. Calls to give the agency more independence, authority and funding have gained no traction in the Legislature.
Atlanta Unfiltered compiled the following chronology, combining information from the depositions of LaBerge, Murray-Obertein and Hair and past interviews with the key players. Investigative files from the commission and from Georgia’s inspector general, who looked into charges that Millsaps engineered Kalberman’s departure on Deal’s behalf, were also reviewed. Disputed points, where known, are noted.
The commission opened files in 2010 on several complaints against Deal’s 2010 campaign, alleging he’d misspent campaign donations on air travel and on legal fees for a federal ethics investigation; accepted excess contributions; and failed to properly report thousands of dollars in campaign spending. The commission held off on investigating until after the 2010 election when Streicker, a former Fulton County prosecutor, began reviewing the charges.
Soon, Streicker began pursuing new leads involving campaign payments to companies controlled by the governor’s daughter-in-law; his top aide’s father; and Deal’s Gainesville salvage company and political supporters. Kalberman said she briefed Millsaps, as chairman, as the case developed and he “seemed uneasy” the more they spoke about it. Millsaps has said he didn’t pay much attention to the Deal case and would have probably recused himself, since Deal had just reappointed him.
Streicker drafted new complaints to reflect the expanded inquiry and seven proposed subpoenas that were distributed to commission members at their May 3, 2011 meeting. Afterward, she briefed two of them on the preliminary findings.
Millsaps, though, returned to his home in Moultrie. Kalberman said he was noncommittal on whether the subpoenas should be served. Instead, on May 20, Millsaps emailed her to say the commission’s budget might not allow ambitious investigations:
“Before we jump into ANY grand campaign, I think we need to look at [the budget] more closely,” Millsaps wrote. “This commission has the responsibility of setting the priorities based on what we can afford. Put another way, we can’t invade Iraq and Afghanistan unless we know we can afford it without getting ourselves into a quagmire.”
At roughly the same time, LaBerge now says, someone from the governor’s office called to see if she wanted the ethics post. “What they said was basically that, you know, would you be interested in this position; and if you are, somebody will contact you,” she testified.
LaBerge, who said she couldn’t remember who the caller was, responded that she was.
The contact from the commission came June 3 when Josh Belinfante, then the vice chairman, called to ask for her resume.
LaBerge sent Belinfante a follow-up email June 6 thanking him for the call, and he scheduled a conference call between the two of them and Millsaps for later that day.
She described the conference call as her first interview for the job. Millsaps, in his deposition, testified he didn’t speak to LaBerge until her formal interview two months later.
Belinfante told the Office of the Inspector General in August 2011 that the staff moves stemmed from concern that “the budget was running out.” According to an OIG memo of the interview, Belinfante said he was “blown away” that Kalberman had nevertheless requested raises for herself and three other staffers.
He denied having any conversations with Governor Deal, members of his staff, or other officials concerning the personnel actions taken by the State Ethics Board with regard to Kalberman and Streicker. … Belinfante stated that it is ‘factually incorrect’ for anyone to even imply that the personnel actions occurred in order to stall the investigation.
Deal, too, denied asking the commission to let Kalberman go, according to a letter from his executive counsel:
Governor Deal did not gave any discussion with Director Millsaps or anyone from the GGTCFC regarding personnel transactions relating to Stacey Kalberman.
Millsaps was out of his office this week and did not return messages seeking comment. LaBerge and Belinfante declined to comment, but Belinfante acknowledged that he had worked with her previously when he was executive counsel to then-Gov. Sonny Perdue and she worked for the Public Defender Standards Council.
On June 9, three days after interviewing LaBerge, Millsaps and commission member Hillary Stringfellow met with Kalberman. She said she gave Millsaps budget documents but he didn’t look at them. Instead, Millsaps told her that the commission had reached a consensus to cut her pay by 30 percent and eliminate Streicker’s job altogether.
Accounts vary as to what happened next. Millsaps says Kalberman announced she wouldn’t work for that salary and stormed from the room; Kalberman said she left the room but did not resign.
The next day, Kalberman emailed an apology to Millsaps. He responded by notifying her that he accepted her resignation.
A few days later, Millsaps told Atlanta Unfiltered that the meeting with Kalberman had been a “professional courtesy,” not an attempt to force her to leave.
“The meeting that we had with Stacey was not the meeting that we intended,” he said. “We didn’t want to drop that bombshell on Stacey.”
Told that Kalberman said he had misunderstood her, Millsaps said, “If there’s a misunderstanding, we’ll work it out Friday” when the commission next met.
That Fridau, June 17, the commission voted to approve the spending cuts, saving a projected $40,000 to $50,000 on Kalberman’s and Streicker’s salaries.
The subpoenas, which Kalberman and Streicker had hoped to serve June 15, were never approved. Instead, Belinfante drafted a letter asking Evans to voluntarily supply much of the information listed in the subpoenas.
Omitted from Belinfante’s letter were requests for invoices and other documents from Southern Magnolia Capital LLC, a fund-raising firm founded by Denise Deal, the governor’s daughter-in-law; North Georgia Aviation and two other companies that owned aircraft used by the Deal campaign; and Creekside Consulting, a firm run by Richard Riley, the father of Deal’s chief of staff, Chris Riley.
Deal’s campaign had reported paying those vendors hundreds of thousands of dollars in 2009 and 2010. Streicker and Kalberman questioned whether those were arms-length transactions for which the campaign received full value.
Once LaBerge took over, she posted a new opening for a staff attorney with many of the same duties that Streicker had performed. Streicker applied but never got an interview.
“I don’t think it’s good policy to hire former employees,” LaBerge testified, “so I did not consider hiring Miss Streicker.”
Murray-Obertein, the new staff attorney, started Dec. 1, spending the next seven months trying to make sense of the thousands of pages of investigative files in the Deal case.
“Nobody sat down with me,” she said. “I was just given a big mess to look at.”
As she sorted through the files, the attorney testified, LaBerge was meeting regularly with Deal’s key staffers, including chief of staff Chris Riley.
“She had an unusually close relationship with the governor in that – especially considering that we were investigating his case – because she would meet with Chris Riley and his private [staff] attorney, and I was not invited or privy to any of the conversations that they would have; and they were in reference to the pending litigation.”
She said LaBerge told her that the governor wanted to settle the case rather than risk an administrative law hearing where the Attorney General Sam Olens, whom Deal considered a potential rival for governor, would have been responsible for presenting the case.
“Randy wanted to go to trial on everything, and she was telling me that the governor wants to settle. He does not want to go to trial. And I was told that one of the reasons why he doesn’t want to go to trial is because it would go over to the AG’s office and that Sam Olens is – a possibility he might run against him for governor – I don’t know if any of this is true or not; I was told that – and that the governor did not want to be in the hands of Sam Olens.”
Evans, for his part, acknowledged Wednesday that he opposed a settlement.
“I wanted to try it. Absolutely,” Evans said. “I felt [the charges] were completely groundless.”
LaBerge’s meetings with Riley, Evans said, were entirely legitimate. “In these cases, clients talk to clients all the time,” he said.
Murray-Obertein testified that pressure increased to whittle down the charges against Deal, decimating the proposed fine or eliminating it altogether. Finally, she said, the governor’s office called LaBerge at the beach to dictate settlement terms.
“The number that I heard that came from the governor’s people was 2500, and Holly was very outraged at that number and said no way. We’re not settling for 2500. … At first, she was very irate that she should settle for that; but by the end of the week, she came to me and told me to accept that number.”
Evans’ colleague, attorney Ben Vinson, came up with the $3,350 offer that Deal ultimately paid. Even then, though, both LaBerge and Murray-Obertein raised concerns that the commission couldn’t settle the case until it signed off on advisory opinions on points of law in two of the key allegations.
The commission went ahead and dismissed those allegations in July 2012 without the advisory opinions. Evans argued the opinions weren’t necessary, since the commission couldn’t enforce a law if it acknowledged that its interpretation was unsettled.
Ultimately, Murray-Obertein testified, she had no input on how the case would be resolved, prompting this exchange with Kalberman’s attorneys:
Q: Do you think that there’s some truth to the fact that the Kalberman administration was actually removed so that a new administration could come in and start watering some of these things down in the Deal investigation?
A: I think that that’s part of it; but I think that they wanted to have somebody that was on their team that – not just for the Deal, but for everything.
Q: Right. And that’s exactly it. Somebody that they could control?
Q: And somebody who could be their pawn?