As predicted by many, the two-member Independent Ethics Commission cleared Mayor Lionel Rivera of any violation of the city Code of Ethics, as alleged in the complaint filed by Ron Johnson.

The report is carefully crafted, fair, judicious and as complete and accurate as it could be, given the limited scope of the inquiry.

As the report states: “the commission’s investigation was limited to a review of the Mayor’s actions concerning the project as they relate to the allegations contained in the complaint and its supplement.”

Such limitations were proper and necessary.  Johnson’s allegations should not, and did not, trigger a witch hunt, in which the commission might have interviewed dozens of witnesses, who might have made further allegations of unrelated misdeeds, which would then have been investigated, and so on ad infinitum.

Instead, the commission interviewed only the Mayor, Ray Marshall (accompanied by his attorney John Cook), councilmember Scott Hente, assistant city manager Mike Anderson, former councilmember Margaret Radford, and USOC consultant Jim Didion.  All witnesses appeared voluntarily, without subpoena.

The commission declined to interview any other individuals suggested by Johnson or his attorney, noting that “the information allegedly possessed by those individuals was either duplicative or not germane to the issue of the Mayor’s involvement in the USOC project.”

It’s pretty clear that none of the individuals interviewed held any animus toward the Mayor.  To the contrary, every one of them had powerful reasons to present the Mayor’s actions, and by extension their own, in the best possible light. 

During the time that the interviews were taking place, LandCo, the city, and the USOC were in the midst of renegotiating their deals with each other, in the wake of the disastrous collapse of the initial EDA.  Didion’s present role with the USOC, if any, is unknown, but Marshall, Anderson, Hente, and the Mayor have all been deeply involved in restructuring the deals.  Radford’s involvement ended with her council term last April, but she has long been an ally/admirer of the Mayor.

The city’s current spin on the collapse of the previous agreement is this: forget all the lawsuits, allegations, and angry words-it was all the economy’s fault!  In a presentation to council, Mike Anderson cited the “world financial meltdown” as the sole reason for the deal’s demise.  In other words, it’s nobody’s fault, so let’s all move on.

Based on the testimony of these individuals, the commission concluded that the mayor had no part in choosing LandCo as the designated USOC developer, did not take positions or actions that favored LandCo, and that any subsequent contacts with LandCo were made for the purpose of advancing the city’s interests, not LandCo’s.

The most significant omission on the list of witnesses may be that of former USOC CEO Jim Scherr, who, the report noted, had been quoted in “news reports” as saying that the LandCo selection had been made by the city, not by the USOC.  The commission chose not to interview him, both because of “overwhelming evidence” that the choice was made by the USOC, and because of Jim Didion’s statement that Scherr had little or no involvement in the process.

The omission is disturbing, because the “overwhelming evidence” that the report cites presumably comes from the testimony of the six interviewees.  One would think that possibly contradictory testimony would be welcome, even if it presented the two commissioners with the tiresome task of figuring out the truth of the matter from differing accounts.

The most interesting paragraph in the seven page report is this one, in which the commission gingerly tackles the question of Rivera’s failure to disclose a financial relationship with LandCo CEO Marshall

“Finally, the commission wishes to address the issue of whether the Mayor should have disclosed his prior business relationship with Mr. Marshall.  The Mayor’s explanation for not making the disclosure has been that it would constitute a breach of the UBS policy of respecting the confidentiality of its clients.  Had the Mayor disclosed the prior relationship it would probably have negated the suspicions that ultimately led to a request for an investigation.  In the Mayor’s view, it would also have been a serious violation of a business and ethical responsibility.  Whether the Commission agrees with the Mayor’s decision is not pertinent(italics added).  As noted previously, at the time the Mayor had the business relationship decisions were being made as to which developers would receive requests for proposals and, possibly, which developer should be selected to participate in the USOC project.  The Commission could find no evidence that the Mayor participated in any manner in these decisions.  Nor was there any evidence that the Mayor attempted to exert any influence, direct or indirect, in these decisions.  For these reasons the Commission does not believe that the Mayor’s failure to disclose constituted a violation of the Code of Ethics.”

Not even a slap on the wrist!  The commission simply decided that an apparent conflict wasn’t a conflict, since Rivera had, to the best of their knowledge, taken no actions that might unduly benefit LandCo, or disadvantage other applicants.

But here’s the crux of the matter: no person can serve two masters.  The Mayor can either serve his employer, or the people of this city.  He can’t just walk a tightrope, and pretend to serve both.  If his employment is of such a nature that he can’t reveal possibly conflictual actions, he should resign either from UBS or from elected office.

That may seem unfair-but too bad.  It may be that you can’t both be Mayor of Colorado Springs and an ambitious go-getter at the same time.

Clearly, neither the Mayor’s enemies nor the opponents of the USOC deal will be happy with this report.  Too bad for them-game, set, and match to Lionel.

There will still be questions and whispers, as in: How much did the Mayor make from his business relationship with Marshall?  Were there other accounts?  Was all the testimony truthful?  What really happened-surely seven pages of dry legalese can’t close the book on all this juicy gossip?

But from now on, it’s all pointless speculation. We’ll never know.

 In a few hours, the curtain will rise on what may be the final act in the USOC saga, when council is expected to approve the new USOC deal in all of its sleek, gleaming perfection.  It’ll cost the hapless taxpayers $40 or $50 million-but who’s counting?  Not I-I’ll be there, hoping that I can get USOC boss Stephanie Streeter to autograph my copy of the agenda…

 

 

 

 

 

 

 

 

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Posted by John Hazlehurst on August 11th, 2009 :: Filed under Blog
Tags :: ethics commission, Jim Didion, Jim Scherr, John Cook, LandCo, Lionel rivera, Margaret Radford, Mike Anderson, Ray Marshall, Ron Johnson, Scott hente, Stephanie Streeter

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Last Friday, the Colorado Springs Independent Ethics Commission asked Central Bancorp CEO Ron Johnson to provide a list of all individuals whom he believes possess relevant information about the conflict of interest allegations that Johnson has made concerning Mayor Lionel Rivera.

In a reply dated June 19, consisting of 15 rambling pages of often-turgid prose, Johnson’s attorney, Lindsay Fischer, lists Rivera, LandCo CEO Ray Marshall, recused Ethics Commission member Jan Doran, Councilman Jerry Heimlicher, Vice Mayor Larry Small, Ward Berlin (an investor in a Marshall-controlled LLC), Jack Mason (as Mason Properties, an investor in a Marshall-related LLC), the board members of the Downtown Development Authority, “media persons” (including yours truly), the manager of the “local UBS office,” Jim Scherr (former head of the USOC), “Ms. (Stephanie) Streeter, the current head of the USOC,” Marshall attorney John Cook, and “any other person who does not come to mind at this time.”

Fischer notes that both Mason and Berlin are under “gag orders” arising from their agreement to confidential settlements of lawsuits involving Marshall, LandCo and certain LLCs. Because of these agreements, neither man could legally disclose any of the “relevant” information that Fischer believes they possess, absent a subpoena by the Ethics Commission.

The word “subpoena” has a certain awful gravity about it. Translated from the latin, the word means “under penalty.” One assumes that, if an entity has the power of subpoena, any failure to comply carries unpleasant consequences — like being jailed for contempt of court, or fined or hauled willy-nilly to the courthouse and forced to testify.

That might be true of a grand jury subpoena, or one from a court of appropriate jurisdiction.

But even a cursory reading of the ordinance establishing the Independent Ethics Commission reveals it to be a panel with neither bark nor bite.

The commission has “jurisdictional authority” only over members of City Council, city employees and appointees to various city boards and commissions. It can, in theory, require that persons belonging to any of those classes appear before the commission.

It can ask anyone else to appear, and can even issue subpoenas.

But here’s some “free legal advice”: If you don’t want to show up, don’t bother, subpoena or not.

That’s because there’s no “poena” in the subpoena. The ordinance prescribes no penalty for failure to appear. All the commission can do to scofflaws is to say “tut-tut, dear fellows — how terribly unsporting of you to decline our kind invitation!” The commission is a cat without claws, a pit bull without teeth, a rattlesnake without fangs.

It’s as if council passed an ordinance empowering the city to set speed limits, but neglected to include any penalties for speeding.

In that happy state, some of us would speed, some would slow down and some would obey the limits anyhow.

But in the event that the commission, in all of its august majesty, issues subpoenas, some recipients might be ready, even eager, to comply — while and others will politely (or impolitely) decline.

We’ll see — or, since the commission has decided to close its proceedings, maybe we won’t.

Our very own Star Chamber — albeit one which is utterly powerless.

And by the way, don’t interpret my ramblings as legal advice. Don’t want to get subpoenaed for impersonating a lawyer …

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Posted by John Hazlehurst on June 25th, 2009 :: Filed under Blog
Tags :: ethics commission, Jack Mason, Jan Doran, John Cook, larry Small, Lindsay Fischer, Lionel rivera, Ray Marshall, Ward berlin

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Time/date: 8:30 a.m., Monday, June 14

Place: El Paso County Courthouse, Judge Ronald Crowder’s chambers

The event: The long-delayed trial of Case # 08CV3286, North County Land LLC et al v. Mason Investments III LLC et al.

Defendants and plaintiffs in attendance: Jack Mason and two lawyers. Ray Marshall, five lawyers, and a paralegal.

Interested observers in attendance: Linda Dix from the economic crimes unit of the DA’s office; several former investors in various of Marshall’s projects who have either been involved in lawsuits against him or are contemplating such action; Jack Mason’s parents; a journalist; and yet more lawyers.

To be decided: Mason alleged that Marshall, without his knowledge or approval, used $1.6 million belonging to North County Land as collateral for leveraged trading in securities at UBS, where he maintained personal and corporate accounts (managed, it appears, by Mayor Lionel Rivera). Dissatisfied with Marshall’s alleged failure to account for these transactions, Mason sued.

The original suit was settled, but, Mason alleged, Marshall failed to comply with the terms of the settlement - so Mason sued again. Marshall countersued. The suit was scheduled to come to trial on Feb. 20, but Marshall’s attorneys asked for a stay. The reason (verbatim from court documents): “Plaintiff Marshall motion for stay due to criminal allegations by Defendant Mason to DA-Granted …The FTR record of this proceeding ordered sealed pending further order of the court.”

The trial was scheduled for 8:30. Nothing happened. Judge Crowder was nowhere to be seen. Groups of lawyers wandered in and out of the courtroom, conferred in hallways, came back, left again. The attorneys had the satisfied mien of men who were each earning several hundred dollars an hour for standing around and waiting for something to happen.

Understanding nothing, I spotted an attorney of my acquaintance who happened to be passing by, and asked for his take.

“They’re gonna settle,” he said.

And how, I asked, did he know this?

He laughed.

“I’ve practiced law for a long time,” he said, “and I know how I’d advise a client in a similar position. (David) Isbell, (John) Cook - they’re as good as they come. They’ll do what they have to - but (Ken) Siegel (Mason’s attorney) is just as good. I’d love to be there when they close the doors, and hammer out a deal. Don’t bother to wait around - the terms will be confidential, and no one will talk.”

Sure enough, after another 15 minutes elapsed, we were all shooed out of the courtroom, the doors were closed, the judge ascended to the bench, and the parties made a deal. The terms of the settlement were not disclosed, and the court records thereof were sealed.

One last note: Before the doors were closed, Marshall spotted an investor in one of his projects, cornered her in the hallway, waved a piece of paper in her face and demanded that the investor sign it on the spot, and thereby settle their dispute.

She refused.

“He wanted me to sign something he’d drawn up, without showing it to my lawyer, without consulting anyone,” she said. “I couldn’t believe it - but I guess that’s just Ray.”

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Posted by John Hazlehurst on June 17th, 2009 :: Filed under Blog
Tags :: David Isbell, Jack Mason, John Cook, Judge Crowder, Ken Siegel, Linda Dix, North County Land, Ray Marshall

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It’s not often that you have the privilege of witnessing history. 

Today’s hearing of the city’s Independent Ethics Commission might, in retrospect, become a defining moment in the city’s history.

After veteran Springs attorney Lindsay Fischer, who has practiced law in Colorado Springs for 45 years, made his presentation on behalf of his client, Central Bancorp chairman Ron Johnson, it seemed unlikely that the commission would take the action that they had requested.  Johnson had alleged that Rivera had an undisclosed fiduciary relationship with LandCo CEO Ray Marshall, that he had not disclosed that fact, and had thereby violated the city’s ethical guidelines. 

But Johnson had no direct proof of his allegations - so he asked the commission to exercise its subpoena powers to determine the facts.

Then attorney John Cook, who has represented Ray Marshall in a variety of lawsuits, came forward and said, in effect, yup, Rivera was Ray’s financial advisor until the end of 2007, and yup, here are the account records.

So what’s next? 

Here are the obvious questions.

-Did the Mayor reveal his fiduciary relationship to Marshall to his fellow council members?  No.  He simply assured them that he had no conflict and cited UBS policy in saying that he could neither confirm nor deny the existence of any customer account - such relationships, he has said, are absolutely confidential.

-Did the relationship amount to a conflict of interest?  In my opinion, absolutely.  Mr. Marshall may have controlled large sums during the 2005-2007 period when the Mayor acted as his financial advisor.  The mayor may have received substantial compensation as a result of that relationship - or his compensation may have been negligible.  In any case, an undisclosed past fiduciary relationship with the developer who, three months after severing the relationship, was chosen to partner with the city and the USOC, constitutes a glaring omission at best, and a severe conflict at worst.

-How could have the Mayor avoided the conflict?

There’s no easy answer to that one.  By recusing himself from the deliberations leading up to the selection of LandCo, Rivera would, in effect, be revealing that one of the developers was a client - which would have been contrary to his firm’s policy.  It would have also been contrary to his obvious desire to drive the whole USOC process, to lead the city as its Mayor, and to assure the success of the project.  He probably saw the whole LandCo/Marshall involvement as a minor sideshow, one that would affect neither his judgment nor his actions on behalf of the city.

There’s yet another complicating factor.  The accounts in question are almost certainly those which are referenced in multiple lawsuits filed by Mason Investments III and Jack W. Mason against Marshall and LandCo.  In the suits, Mason alleges that Marshall illegally transferred funds from limited liability company that he ran, without the knowledge or consent of other investors, and used the funds to leveraged securities speculation.  If Rivera managed these accounts, and if the accounts incurred losses, and if Rivera knew, or should have known, that Marshall did not in fact have the authority to invest them, then there may be additional lawsuits filed.

The whole situation is at best murky, at worst damning.  It seems to me that the Mayor has little choice but to resign, and thereby end the whole circus.  He can no longer effectively lead this city, and at a time of fiscal crisis, the city needs firm, trustworthy leadership. 

To him, this must seem absurdly unfair.  But life, as President Kennedy once remarked, isn’t fair-and neither is politics.

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Posted by John Hazlehurst on June 12th, 2009 :: Filed under Blog
Tags :: John Cook, lawsuits, Lindsay Fischer, Mason, Rivera, UBS, USOC

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