The state’s top two ethics investigators were preparing in June to serve subpoenas on Gov. Nathan Deal, his chief of staff and other associates in connection with Deal’s 2010 campaign when one investigator’s salary was cut and the other’s job was eliminated, The Atlanta Journal-Constitution has learned.
The AJC has reviewed drafts of subpoenas prepared, but never served, by the executive secretary of the state ethics commission and her deputy. The documents raise questions about $322,000 the campaign paid to companies that Deal owns or has an interest in, or to businesses controlled by his associates.
For example, Deal’s Gainesville-based business, North Georgia Aviation LLC, would have had to turn over records substantiating the $201,000 that it charged to his campaign. As a candidate, Deal criss-crossed Georgia in 2009 and 2010 on aircraft leased to that company, which he owns with a partner.
The commission’s preliminary investigation found Deal’s campaign may have exceeded limits on air travel expenses and political contributions, among other possible violations of campaign finance law, documents reviewed by the AJC show.
The governor’s chief spokesman, Brian Robinson, said last week that some of the commission’s inquiries stemmed from an activist’s complaints that were “complete garbage” and were twisted by news coverage.
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“We were doing everything by the rules, but it was made to look like we weren’t,” Robinson said. “The use of the word ‘subpoena’ in itself is inflammatory. It is meant to be used as a political hatchet because it paints a picture that is inaccurate.”
The ethics commission did not proceed with the proposed subpoenas and has now asked Deal’s lawyer to produce campaign records voluntarily. Commission member Kevin Abernethy last week declined to say what documents were requested or whether records are being sought from North Georgia Aviation or any other party.
Investigators forced out?
Stacey Kalberman, the commission’s executive secretary, believes that she and her deputy, Sherilyn Streicker, lost their jobs because they were pushing the Deal investigation. Their boss counters that the two were victims of budget cuts, not political manipulation.
“There is no question that there appears to be a coincidence here, but ... we were talking about the budget,” commission Chairman Patrick Millsaps said Friday.
In a May 20 email, Millsaps warned Kalberman that the commission might not have the resources to pursue a major investigation.
“Before we jump into ANY grand campaign, I think we need to look at [the budget] more closely,” Millsaps wrote in the email. “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.”
On June 9 Millsaps told Kalberman that the commission was planning to cut her salary by a third and eliminate Streicker’s job altogether.
A week later, Kalberman emailed Millsaps, asserting that it was no coincidence that those budget moves came right after the draft subpoenas in the Deal case had been submitted for his signature. They had already been reviewed and approved for legal sufficiency by the state attorney general’s office, she noted.
Millsaps told the AJC on Friday that he was never asked to sign the documents.
In her email, Kalberman had assured Millsaps that the commission had the resources to proceed with the investigation, including the use of a forensic accountant on loan from the FBI.
“The only impediment to continuing this investigation would be my and my deputy’s dismissal,” she told Millsaps.
The AJC reported the unusual circumstances of the investigators’ departures in June. But until now there has been no public report as to the scope of their investigation.
According to documents obtained by the AJC, their preliminary inquiry found “widespread and systemic irregularities” in Deal’s campaign disclosures.
Possible violations, according to a complaint drafted by commission staff, included accepting campaign contributions above the legal limit; paying credit card bills without identifying all the expenses or the card holder; and failing to list all of Deal’s assets and liabilities on personal financial disclosures for 2008 and 2009.
Knowingly failing to comply with the state Campaign Finance Act is a misdemeanor, and knowingly filing false statements on a campaign disclosure form is a felony, according to the commission website. The severity of an offense depends in part on the intent of the filer and the nature of the information, the site says.
Political campaigns often hire friends or family members of the candidate. But ethics laws bar candidates from using campaign money for personal benefit, in part by requiring that campaigns pay market rates for services and publicly account for their spending.
The commission, whose name changed this year from the State Ethics Commission to the Georgia Government Transparency and Campaign Finance Commission, has been looking into Deal’s campaign spending since March 2010. That’s when it received a complaint challenging the candidate’s alleged failure to disclose full details of $6,800 in expenditures.
Since then, the investigation has widened to examine spending on fund-raising, ground travel and media consultants, the draft subpoenas and related documents show.
A subpoena compels a person to provide documents or other evidence to a judicial or government body, or requires that someone appear in a court or other venue to give evidence. Other draft subpoenas were prepared, but not served, for:
-- Chris Riley, a longtime aide who was Deal’s campaign manager and also his pilot, who would have been required to produce his pilot’s logbook containing details about campaign flights. In addition, Riley sold the campaign a 2008 Honda Ridgeline truck in October 2009 for $25,000. A draft subpoena sought records of that sale as well.
Riley, now the governor’s chief of staff, declined to speak with the AJC. In an email Tuesday, Robinson, the governor’s spokesman, bristled at any suggestion that further explanation is needed for the campaign’s arrangements for air travel, saying questions about it were asked and answered a year ago.
He accused the newspaper of “competing in a race to the bottom as it pertains to coverage of Nathan Deal” and added, “I know y’all are upset that we won. It’s time to get over it.”
-- Southern Magnolia Capital LLC, a company formed in January 2010 by Denise Deal, the governor’s daughter-in-law. The campaign paid Southern Magnolia $90,000 for fund-raising in 2010 and spent more than $40,000 more on her salary and expenses.
Southern Magnolia’s attorney, Robert A. Weber Jr., said last week that he would have “absolutely no comment.”
-- Creekside Consulting LLC, a company operated by Riley’s father. Deal’s campaign paid the firm $6,000 for media consulting.
Someone answering the elder Riley’s home phone hung up on an AJC reporter twice last week when called for comment.
The subpoenas would have sought invoices, receipts, canceled checks, contracts, statements of work and other documents to determine whether Deal’s campaign spent the money in question for campaign-related or personal purposes.
The AJC reported a year ago that the Deal campaign was spending many times more than other candidates for leased non-commercial aircraft. As pilot and campaign manager, Riley said at the time that neither the campaign nor Deal himself was making money from the arrangement.
Campaign Finance Commission rules allow campaigns to spend $500 an hour on the kind of aircraft that Deal used most often — a single-engine plane. Riley has said Deal paid $650 an hour; the campaign spent an additional $105,500 on “fixed costs” that gave North Georgia Aviation access to the plane when the campaign needed it.
When the proposed subpoenas were drafted, there was probable cause to investigate whether Deal’s campaign paid more than market value for the noncommercial flights, according to a second proposed complaint prepared by the Campaign Finance Commission’s staff.
The plane and a helicopter were owned by two other companies that leased the aircraft to North Georgia Aviation. North Georgia Aviation, in turn, owned a piece of both companies.
The draft subpoenas would have required the companies to produce contracts, invoices and receipts that supported the campaign’s payments for air travel.
The proposed complaint said that Deal failed to disclose the departure and arrival airports for those flights. For example, Deal’s disclosure for the first quarter of 2010 lists nearly $29,000 in payments to North Georgia Aviation for “Aviation: fixed cost” or “Aviation: operating cost.”
But the disclosure offers no details beyond that. Commission rules say candidates “must disclose . . . the departure and arrival airport(s) of the flight and the commission mileage rate applicable to the aircraft used and by which the value of the flight is being assessed.”
Having details of the flights would have enabled the commission’s investigators to verify the extent of the campaign’s use of the aircraft and whether it complied with the agency’s regulations.
Jim Walls is a retired investigative editor for The Atlanta Journal-Constitution who worked at the newspaper for 28 years. He now operates an independent “watchdog” website called atlantaunfiltered.com and may be contacted at editor@atlanta unfiltered.com.
Status of the two investigators
-- Sherilyn Streicker, deputy executive secretary of the Georgia Government Transparency and Campaign Finance Commission, lost her position in June when it was eliminated from the commission’s budget. Streicker, an attorney, has declined to comment on the circumstances of her departure.
-- Stacey Kalberman, the executive secretary, resigned under pressure after the commission cut her salary by about 30 percent, but she agreed to stay on until the commission could hire her replacement. Holly LaBerge, a lobbyist for the state Public Defenders Standards Council, was named Friday to succeed Kalberman.