LawReader : OUR MAIN - LAW DIGEST INDEX : STEVE HORNER COLUMN - GOVERNMENT ISSUES IN KY. : JUDGE HORNER ROUNDUP FOR WEEK OF AUGUST 15, 2008

Leonard Lawson, the godfather of all state highway contractors, bribed former state Transportation Cabinet officials, according to a FBI affidavit filed to support the US Attorney’s motion for a search warrant in a year-long inquiry of corruption in former Gov. Ernie Fletcher’s administration. The affidavit – by FBI Special Agent T. Clay Mason – was based in part on tapes submitted by former state highway engineer James Rummage, according to an Aug. 9 story by The Courier-Journal’s Tom Loftus. The 12-page affidavit says that Lawson paid Rummage $20,000 for the cabinet’s confidential cost estimates on eight highway projects – estimates that are to be kept secret until bids are opened. Other allegations in the affidavit accuse former cabinet Sec. Bill Nighbert of receiving bribes exceeding $65,000 for transmitting the same type of information to Lawson. The search warrant was issued on Aug. 1 by US Magistrate Robert E. Wier and executed on Aug. 4 against Utility Management Group (“UMG”) of Pikeville and a Corbin accounting firm, Marr, Miller & Myers, that are both believed to be involved with the transfer of bribery funds to Nighbert.

Before Rummage retired on Mar. 31, the affidavit says Rummage “conducted a number of consensual recordings with Lawson and others…Lawson told Rummage on one tape that ‘they can’t trace cash’ and made overt offers to assist Rummage with finding and paying for an attorney…He also encouraged Rummage to ‘take the Fifth’ at an upcoming Grand Jury session and to get an attorney they could work with.”

Lawson’s lawyer, Larry Mackey of Indianapolis, released an Aug. 8 statement, according to Loftus, that characterized the allegations as “a collection of innuendo and suspicions and should have never been made public.” Mackey said that Lawson had built “award-winning roads” and “does not deserve such unfair treatment.” Mackey also blasted US prosecutors for revealing such information in the affidavit and said that the law places “heavy burdens on prosecutors and FBI agents not to prematurely release information about matters occurring before the grand jury…Today’s events destroyed that presumption and breached the grand jury’s secrecy.” A US grand jury has been meeting since early spring to receive evidence on the corruption probe.

Nighbert’s lawyer, Howard Mann, issued an Aug. 8 statement, according to Loftus, that Nighbert “categorically denies the false and baseless accusations of Jim Rummage.” Mann acknowledged that Nighbert has been working for UMG while and after he was working in state Senate Pres. David Williams’ (R-Burkesville) office from January until July 11. “There is nothing unusual or improper regarding Mr. Nighbert’s association with” the officers of UMG, Mann said. “Mr. Nighbert has not done anything wrong and is guilty of nothing but trying to work and earn a living.”

Loftus reported on Aug. 12 that Mann’s statement included the following: “Rummage’s story is completely unbelievable when you consider that Rummage was on the so-called ‘hit list’ bandied about during the recent merit hiring investigation and was supposedly targeted by Mr. Nighbert because of his political affiliation.” The “hit list” was an Apr. 18, 2005 document uncovered during a 15-month criminal investigation of Fletcher’s administration by a special Franklin County Grand Jury that led to the state indictments of Fletcher and 14 of his officials for political interference into the state merit system. The “hit list” targeted 23 merit and non-merit cabinet officials for termination, transfer, or demotion because all were believed to have supported Fletcher’s 2003 Democratic gubernatorial opponent – US Rep. Ben Chandler (D-KY6) who was then the state’s Attorney-General. One Fletcher official, Dan Druen, has testified under oath that Fletcher in late April 2005 specifically approved the actions called for in the “hit list.” Rummage’s name was on the “hit list.”

Nighbert, who resigned as Williamsburg’s Mayor just before he took over the cabinet in March 2005 shortly before the “hit list” was compiled, left Fletcher’s administration immediately upon the Dec. 11 inauguration of Gov. Steve Beshear who overwhelmed Fletcher’s re-election bid by over 180,000 votes five weeks earlier.

Mason’s affidavit read as follows: “Given that Lawson paid Rummage for information that Nighbert directed Rummage to obtain and give to Lawson, investigators believe that Lawson and Nighbert had some arrangement whereby Nighbert would be compensated when he left state government…Investigators believe UMG is the conduit for Lawson to reward Nighbert for his assistance while serving as (cabinet secretary).”

Mann said that Nighbert, while working for Williams, did not cash the checks that he received from UMG when Nighbert was working for them at the same time. However, Mason’s allegations appear to refute Mann’s statement. The affidavit revealed that bank records show that a check for $36,050 from UMG, written to a business called Two Bucks, LLC, was deposited in Nighbert’s personal bank account on Jan. 7. Afterward, three $10,417 checks dated Jan. 9, 2008, Feb. 9, 2008 and Mar. 11, 2008 were deposited by Nighbert into the same account. Mason’s affidavit says, “These payments are believed to be in consideration of Nighbert’s assistance to Lawson.” No business called “Two Bucks, LLC” is registered with the Secretary of State’s office, according to the affidavit. Mann said that Nighbert does own a business called Double-Buck LLC.

Corporation records found at the Secretary of State’s office indicate that Double-Buck LLC was organized on Feb. 7, 2007, and that Nighbert and his brother, Edwin, each own 50% of the company. However, Nighbert failed to list Double Buck LLC on his financial disclosure form for 2007 that he was required to file with the Executive Branch Ethics Commission (“EBEC”), according to Loftus’ Aug. 13 story. State law requires the annual disclosure by high-ranking state officials of their ownership interests of 5% or more, or any equitable interest worth $10,000 or more. Nighbert did disclose on the form four other organizations in which he held ownership interests of at least 5%: Whitley Broadcasting, AABG Corp., Whitley Pharmacy and Gaithers Inc.

EBEC executive director John Steffen told Loftus that he would bring up the matter to the EBEC membership and that he would expect them to require an explanation by Nighbert. “If we’re satisfied with the response, we accept it,” Steffan said. “If we’re not satisfied, it could lead to an investigation.” If the EBEC confirms an ethics violation against Nighbert, it could impose a fine of up to $5,000 against him.

Loftus reported on Aug. 10 that Williams’ office released an Aug. 9 statement saying that Williams has “known Bill Nighbert for over a decade. I have never known him to do anything illegal or unethical. Judgment should be reserved until the end of the judicial process.” The Herald-Leader’s Ryan Alessi reported on Aug. 12 that Williams said the following in an interview: “Bill Nighbert never had a position in the Senate president’s office where he could influence the passage of any legislation or where he could influence the inclusion or exclusion of anything in the budget. I hired him because I felt like he could contribute on a policy level.”

Alessi’s Aug. 12 story also carried a quote by Williams, a Burkesville lawyer, that the US Attorney’s office had acted in a “highly unprofessional manner” when rumored-for-months indictments had not yet been issued by the US grand jury. “The indictments didn’t come, so they released the affidavit and let people know where to find this affidavit,” Williams said. “I think it’s highly unprofessional the way they’re proceeding with this.” Assistant US Attorney Kent Taylor declined to respond to the criticism by Mackey, Mann, and Williams.

Rummage’s lawyer, Marc Murphy of Louisville, who has previously acknowledged that Rummage was cooperating with US prosecutors, told Loftus, “Jim Rummage has recognized he made a mistake. He is trying to correct that error at this time through his cooperation…The conduct in question was not his idea. Among the things he was concerned about during this period of time was his job security and issues related to that.” The affidavit says that Rummage lied to investigators in February, when he was initially interviewed. About a week later, he recanted his lies and agreed to fully cooperate.

Murphy said that Rummage is cooperating without promise of immunity or a plea-bargained deal with prosecutors, according to an Aug. 10 story by The Herald-Leader’s Beth Musgrave and Alessi. “I don’t know what to expect,” Murphy said. “My hope, on behalf of Jim, is that the government appreciates his cooperation and his efforts ... and (will) treat him appropriately.”

Mason’s affidavit mentioned an interview with current cabinet Sec. Joe Prather in which Prather said that “Nighbert told him that to succeed at the job, you have to be friendly with Leonard Lawson.” Prather, appointed as one of Beshear’s first acts to replace Nighbert, confirmed that Lawson told him simply that “you need to take care of Jim Rummage,” according to Loftus’ Aug. 10 story.

The disclosure of the cabinet’s cost estimate for a project is very valuable to a bidder who has no competition. In that case, the bidder knows that he can bid exactly 7% above the cost estimate – the cabinet’s self-imposed ceiling to award contracts – and still be given the contract. Most state road builders concentrate in small geographic areas consisting of only a few counties clustered around their headquarters to economize on transportation haul costs. This situation makes for a lot of one-bidder projects.

The Aug. 10 story by Musgrave and Alessi – with attribution to The Courier-Journal, The Associated Press, and The Times-Tribune of Corbin– said that the state awarded 43 contracts to Lawson-related companies between June 2006 and August 2007. During that time frame, of those 43 contracts, nine were between 6 and 7 percent over the engineer’s confidential estimate. Lawson was the only bidder in eight of those nine contracts. Ryan Griffin, a cabinet official who prepared the confidential cost estimates on proposed projects, kept a log and documented each time that Rummage asked him for the estimates, according to an Aug. 9 story by The Times-Tribune’s Brad Hicks. Confidential cost estimates for the eight contracts – which Rummage is alleged to have furnished Lawson – were for projects totaling about $130 million, according to Hicks’ story. The US has jurisdiction here because of the millions of dollars of US funding that have been sent to Kentucky each year that are doled out by the cabinet for highway projects.

An Aug. 14 story by The Herald-Leader’s Jack Brammer and Musgrave reported that the cabinet’s inspector general, David Ray, is now investigating his former boss, Nighbert, for possible violations of law. Records custodian Ann Stansel denied the newspaper’s open records request for certain documents saying that there is “an open investigation” relating to Nighbert. Nighbert fired Ray’s chief deputy, Mike Duncan, on May 13, 2005 against Ray’s recommendation to make Duncan – then a probationary employee – a permanent merit employee. Duncan, who was on the “hit list,” appealed his termination to the Personnel Board and to Franklin Circuit Court. He prevailed in both actions and is back at work still reporting to Ray. The day that Nighbert fired Duncan coincided with then-state Atty.-Gen. Greg Stumbo’s demand for certain cabinet records – an action that kicked off the personnel scandal that engulfed Fletcher.

Asked whether he had any concerns about Ray now investigating Nighbert who previously fired him, Prather told Brammer for his Aug. 15 story, “Mike Duncan is a professional, as is David Ray. They have my absolute confidence. And if I ever thought that a different decision needed to be made on that, then I would act very swiftly. But I have no reason to think that Mike Duncan is not objective and is not a true professional.”

Beshear said that his administration is fully cooperating with the inquiry, according to Loftus’ Aug. 12 story. “I think it’s certainly apparent that there’s been a culture of corruption surrounding the Transportation Cabinet in the past,” Beshear said. “We are determined to turn that culture of corruption into a culture of integrity.”

Larry Forgy, the colorful and outspoken GOP lawyer who lost in 1995 to Democratic former Gov. Paul Patton, had the following comments about Lawson, according to Musgrave’s Aug. 12 story: “He’s almost completely bought the political process since 1981 — purchased it lock, stock and barrel. I think his career has represented the largest political scandal in the history of the commonwealth. He’s like gonorrhea — if you’re near him, you’re going to catch it.”

The EBEC, adopting a recommendation from a hearing officer, has dismissed an ethics charge against former state Highway Commissioner Marc Williams, according to a story by Loftus posted on Aug. 6 at courier-journal.com. The charges grew out of testimony given by former state Chief Highway Engineer Sam Beverage during his successful effort to settle a perjury indictment issued against him for lying on Aug. 30, 2005 to the same grand jury that indicted Fletcher and all the others during the personnel scandal. Hearing officer Ann Sheadel found that “Mr. Beverage is an individual with a history of untruthfulness” and that his testimony “is not credible.” Marc Williams is not related to the Senate President.

Beverage had also admitted ethics violations brought against him by the EBEC in connection with a Harrison County bridge project. Beverage had specifically accused Marc Williams of using his position to steer the project’s contract to a particular highway builder. Marc Williams and Beverage had both worked in Fletcher’s administration.

The grand jury indicted 14 Fletcher officials in 2005 for interfering with the rights of state merit system employees by terminating, demoting, or transferring some of them to make way to appoint Fletcher loyalists to their jobs. Fletcher pardoned them all one day before Beverage’s grand jury appearance. But that didn’t stop Stumbo from continuing his inquiry – featuring non-stop court motions and appeals – which finally led to Fletcher’s indictment on May 11, 2006. After about three more months of legal battles, the 15-month probe culminated in Stumbo’s decision to dismiss the indictment against Fletcher. Stumbo said that the trial court’s order that Fletcher’s trial would have to await his departure from the Governor’s office would only just induce Fletcher to pardon himself on his way out the door making a future trial impossible. Fletcher was politically paralyzed by the scandal.

Louisville resident Jim Adams – one of the 14 Fletcher officials indicted and pardoned – petitioned Jefferson Circuit on Aug. 5 to intervene to block the EBEC from continuing its prosecution of him on ethics charges stemming from the personnel scandal. Adams and three other Fletcher officials were named last month by the EBEC as having committed violations of the state ethics laws related to the scandal. They are the following: Basil Turbyfill, Darrell Brock, and Druen. Turbyfill was Fletcher’s personnel adviser in the Governor’s office; Brock was the Local Government Commissioner in the Governor’s office before leaving in 2005 to become state GOP chairman – a post now held by Steve Robertson – and Druen was Administrative Services Commissioner in the Transportation Cabinet.

Adams claims that Fletcher’s pardon of him obviates the EBEC’s action against him and that continuation of the EBEC’s efforts constitutes double jeopardy because it could cause him to be punished for a crime for which he already has been pardoned. “The governor intended to wipe the slate clean for James L. Adams,” the petition states.

Turbyfill of Danville has already hit a brick wall on the issue when he went into Boyle Circuit to block the EBEC inquiry. That court found that Fletcher’s pardon of Turbyfill – who was also indicted – related only to criminal prosecutions and had no application to civil or administrative proceedings such as the EBEC’s.

As Stumbo – back in the state House from Prestonsburg after serving one term as Attorney-General – mulls a bid to challenge Speaker Jody Richards (D-Bowling Green) early next year in House leadership elections, he picked up a key endorsement from one of the other four House Democratic leaders who has an opponent himself. Speaker Pro-Tem Larry Clark (D-Louisville) said that he would support Stumbo’s effort to oust Richards if Stumbo does run.

This comes after Stumbo – at Clark’s annual golf outing fund-raiser – announced his endorsement of Clark who will have to turn back an effort by a fellow Jefferson County colleague who hopes to become the first female in the five-member leadership group. Rep. Joni Jenkins (D-Louisville) said months ago that Clark had to go, and Richards then quickly endorsed Jenkins.

“I’m still testing the waters,” Stumbo said, according to an Aug. 7 story by Loftus. “I just think that there’s more members dissatisfied with the situation than what I really had thought. So I’m just going to keep on talking to members and see where it leads.”

Stumbo served about 24 years in the House – including about 18 years as Majority Leader – before his 2003 election as Attorney-General. Richards has been in the House since 1976 and is in his 14^th year as Speaker. Lawmakers will convene in early January to elect their legislative leaders for two-year terms. A 30-day odd-year legislative session then will begin in early February.

The presidential race is becoming a one-sided affair in Kentucky. US Sen. John McCain (R-AZ) now leads US Sen. Barack Obama (D-IL) by 18% among state voters, according to the latest SurveyUSA poll taken between Aug. 9-11 and released on Aug. 12. McCain increased his lead by 6% in August compared to the June poll. A total of 636 likely voters were interviewed, and the poll carries a margin for error of 4%. The following are comments by the poll’s editor posted at surveyusa.com:

“Republican John McCain defeats Democrat Barack Obama by 18 points in an election for President held in Kentucky today, 08/12/08, according to this SurveyUSA poll conducted exclusively for WHAS-TV Louisville, WLEX-TV Lexington, and WCPO-TV Cincinnati. Today, it’s McCain 55%, Obama 37%. Compared to an identical SurveyUSA poll released eight weeks ago, McCain is up 2 points; Obama is down 4. Then, McCain led by 16 points among men; today, he leads by 24. Then, McCain led by 8 points among women; today, he leads by 13. Among voters younger than Barack Obama, McCain had led by 5, now leads by 12. Among voters older than John McCain, McCain had led by 27, now leads by 9. Among voters in-between the two candidates' ages, McCain had led by 14, now leads by 27. There is little or no change in partisan breakdowns over the past eight weeks: McCain today takes 86% of Republican votes; Obama takes 59% of Democratic votes; Independents favor McCain by 5 points. Among voters with household incomes under $50,000 a year, McCain had led by 4; today, the candidates tie. Among voters with incomes greater than $50,000, McCain had by 19, now leads by 30. Obama leads by 4 points in greater Louisville, down from 12 points eight weeks ago; McCain continues to lead in the rest of the state.”

Former GOP Congressman Bob Barr will appear on the state’s presidential ballot as the Libertarian candidate, according to a story by The Cincinnati Enquirer’s Patrick Crowley posted on Aug. 12 at the newspaper’s nky.com. Crowley reported that Les Fugate, a spokesman for the state Secretary of State’s office, said that Barr had filed the required petitions containing the signatures of at least 5,000 state voters. Barr achieved infamy as the chief “prosecutor” during the GOP-driven US House’s impeachment of former Pres. Bill Clinton – an effort undone by the US Senate’s failure to go along and remove the President.

Kentucky voters gave Pres. George Bush margins of about 20% over then-Vice-Pres. Al Gore in 2000 and about 15% over US Sen. John Kerry (D-MA) in 2004. In 1992 and 1996 Clinton narrowly carried the state in three-way races against independent Ross Perot in both races and then-Pres. George H. W. Bush in 1992 and then-US Sen. Bob Dole (R-KS) in 1996. For 40 years Kentucky has voted for the winner of every Presidential election beginning with Pres. Lyndon Johnson in 1964.

The latest SurveyUSA poll released on Aug. 12 shows that US Senate Minority Leader Mitch McConnell (R-KY) has widened his re-election campaign lead to 12% over Democrat Bruce Lunsford, a multi-millionaire Louisville businessman. McConnell, 66, led Lunsford by 5% in June’s poll. The latest poll interviewed 636 likely voters between Aug. 9-11 and carries a 4% margin for error. The following are comments posted by the poll’s editor at surveyusa.com:

“In an election for United States Senator from Kentucky held today, 08/12/08, incumbent Republican Mitch McConnell defeats Democrat Bruce Lunsford 52% to 40%, according to this SurveyUSA poll conducted exclusively for WHAS-TV Louisville, WLEX-TV Lexington, and WCPO-TV Cincinnati. Compared to a SurveyUSA poll released eight weeks ago, McConnell is up 2 points; Lunsford is down 6. Among men, McConnell had led by 8, now leads by 11. Among women, McConnell had led by 2, now leads by 11. Among voters age 18 to 49, McConnell had led by 5, now leads by 6; among voters 50+, McConnell had led by 5, now leads by 11. McConnell holds 83% of Republican voters; Lunsford holds 63% of Democrats, little changed from eight weeks ago. Then, McConnell led by 10 among Independents; today, Independents evenly split between McConnell and Lunsford. Lunsford leads in the Louisville area by 6 points, down from 13 points eight weeks ago; McConnell continues to lead in the rest of the state. McConnell, the Senate Minority Leader, is running for his fifth term. Lunsford, a Louisville businessman, ran in the Democratic primaries for Kentucky Governor in 2003 and 2007.”

The Kentucky Gazette compiled a summary of the reports filed by state Senate candidates 30 days after they survived their May 20 primaries. The six truly contested races are recapped below with incumbents’ names italicized and with cash-on-hand noted in their post-primary reports filed with the state Registry of Election Finance:

“…when people run for office, as Steve Beshear did last year, saying they are going to clean up the Transportation Cabinet and take politics out of spreading asphalt, many voters simply move on to the next promise to see whether it will be more believable.

“His Transportation Cabinet announced a plan called ‘practical solutions,’ to drive road-building decisions. Hiding behind that bureaucratic label, Transportation Secretary Joe Prather seems to have a real reform effort. That became clear when Prather said the cabinet will review all 600 projects already in the works to see whether they meet the new standards.

“Few will argue with this plan — until a project in their backyard is pared down. That’s when the proverbial rubber will meet the road. The governor will have to choose between his own political security and the safety of Kentuckians traveling our highways.

“…Over the weekend, (this newpaper’s Tom) Loftus offered exclusive reports on court filings that shed legal light on a federal probe – a probe that finally may impose legal accountability on the operation of ‘good old boy’ networks. It could reveal to what extent we follow not the ABCs of public works but the three Ps – pavement, patronage, and profligacy.

“The legal process has a long way to go, and nobody has been indicted, much less convicted of anything. But the particulars that have emerged to date should end any pretense that Ernie Fletcher’s spotless administration was merely the victim of political assault and partisan smear.

“…(US Sen. Mitch) McConnell’s campaign is again the modern version of the bread-and-circuses approach of Roman emperors as the empire declined – appropriations and entertainment to keep the populace placated. Today’s voters are very unhappy, so he has tried to gain the advantage on gas prices with his usual "Princess and the Pea" approach – find a tiny, deeply buried nugget and use TV ads to make it look like a boulder.