Scott Bruun: Kitzhaber - A Smoking Gun Four Decades in the Making

Wednesday, July 22, 2015

Scott Bruun, GoLocalPDX MINDSETTER™

In politics, there is usually a small distinction between healthy scrutiny, healthy skepticism, and shameless piling-on. During the early months of 2015, the media scrutiny applied to then-Governor John Kitzhaber was warranted. Kitzhaber’s colossal errors in judgement justified the public pressures leading to his resignation.

But as months passed, especially as Oregonians watched a legislature dominated by unelected special interests, there was some sense that Kitzhaber’s punishment may have outweighed his sins. After all, Kitzhaber (it was believed) was a victim of love and loyalty rather than greed or corruption. His fall was not a tale of narcissism like it was for other fallen governors, like Eliot Spitzer, Rod Blagojevich or even Neil Goldschmidt. Instead, Kitzhaber’s faults were closer to the blind loyalty that Prince Edward displayed toward Wallis Simpson. In other words, a genuine but misguided loyalty that put love interests ahead of responsibilities to govern.

Even Willamette Week, the paper most responsible for bringing-down Kitzhaber, seemed later to lament his resignation. Willy-Week’s piece in May, “Feed the Beast,” was a several-thousand word expose on the union-fueled disaster of public education in Oregon. The piece concluded by stating that Kitzhaber’s resignation “cost him – and the state – the opportunity to tackle the school-funding disconnect he’d diagnosed and begun to address.”

Some good folks even began to genuinely feel sorry for Kitzhaber, a man who dedicated his entire adult life to service - first in medicine then elected office. In Kitzhaber, people saw a slightly sad, graying older-man who had now lost the chance to be Oregon’s elder statesman. Lost the opportunity to serve on those prestigious boards or earn the honorarium which would have set him up for his sunset years.

A little sad. Sad, that is, until last week when The Oregonian reported on directives Kitzhaber sent to senior staffers as early as 2011. Kitzhaber, as The O said, “gave the order.” Gave the order that state environmental policies would march in lock-step with the agenda of third-party environmental groups, largely funded by California hedge-fund billionaire Tom Steyer, that were paying Cylvia Hayes’ salary.

Oops. There’s that damn smoking gun.

Evan Thomas, former Newsweek editor, has just published an excellent new biography titled “Being Nixon.” Thomas’ slightly sympathetic book discusses the toxic White House environment enabled by Nixon’s difficult personality – part brilliant, part paranoid. With Watergate, Thomas affirms that Nixon, once he was made aware of it, conspired to cover-up the break-in. While he did not order the break-in, it was Nixon’s take-no-prisoners, do-what-it-takes attitude toward elections that inspired the lesser-angels of his staff to commit felonies. In the final analysis, Nixon enabled corruption.

In Oregon, what enables corruption is not entirely the individual. Corruption happens in Oregon because of the collective. Collective thought, collective temperament, and collective niceties that have kept one group of people in charge for the last four decades.

Kitzhaber felt comfortable ordering his staff to facilitate Hayes because, well, no one said “boo.” No one challenged the “we’re-all-on-the-same-side” mindset which has dominated Oregon politics since the 1980s. As I’ve written before, none of Oregon’s liberal establishment wants to offend each other. After all, they all run in the same wine-sipping circles. They all attend the same parties and philanthropic events.

They don’t want to look rude, and they certainly don’t want to damage their own ambitions or business interests. So the hard questions don’t get asked.

It’s no surprise then that after decades of single-party rule and insider “Oregon Nice,” our state is degraded and weak. The Oregon Nice that somehow prohibits “friends” in power from asking hard questions until it’s too late, has left us adrift. We are subject to special-interest control and moral-relativism.

Think this is overstated? Well, there remain moneyed-individuals within elite Portland circles that still make excuses for Neil Goldschmidt. Goldschmidt’s merry apologists, followed soon by the same for Kitzhaber. And yet we still wonder how the culture of complicit-corruption grows in Oregon.

Oregon’s culture of corruption is systemic, not individualistic. Kitzhaber could only do what he did because those around him quietly looked the other way. It’s not Kitzhaber’s smoking gun, at least not his alone. It’s Oregon’s. A smoking gun built by quiet complicity and decades of single-party rule.

In 2016, we will see Oregon’s liberal establishment well-represented on ballots. We’ll see Kate Brown or Ted Wheeler for governor, Val Hoyle or Richard Devlin for secretary of state, Tina Kotek as speaker, and Tobias Read for treasurer. All admirable people. And all, without exception, part of the decades-old insider ruling class that has served Oregonians so poorly.

So what to do?

The only remedy for our cancer of complicity is for Oregonians – Republicans, Democrats and independents - to finally follow a different path. To understand that four decades of one party rule is not only a recipe for mediocrity, as we saw with the 2015 legislature, it’s also the gateway toward corruption.

We can stand by as yet another campaign year comes-and-goes and ensures more of the same. Or Oregonians, with eyes wide open, can finally “stand athwart history and yell ‘stop!’”

The choice is ours.

Scott Bruun is a fifth-generation Oregonian and recovering politician. He lives with his family in the 'burbs', yet dutifully commutes to Portland every day where he earns his living in public affairs with Hubbell Communications.

Related Slideshow: Feds Probe Kitzhaber and Hayes: 10 Things to Know

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10.

It Could Cost Millions

Defense fees for a federal investigation will rack up quickly, more so if the investigation turns into a trial.

“The fees can be exuberant. You can’t do one of these cases for less than half a million dollars,” Solomon Wisenberg, a defense lawyer from Washington D.C. said.

These cases can cost around $2 million in legal fees, according to Wisenberg.

For example Robert Urciuoli, convicted in 2008 for federal charges of conspiracy and fraud in a case involving a former Rhode Island state senator, had $2.15 million for legal expenses.

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9.

FBI Resources

The FBI may have years of records to comb through, but they have the resources to do so—much more than a state criminal investigation would.

A federal investigation is given millions of dollars and a vast supply of manpower. Attorneys say the feds also have more expertise and experience in handling corruption investigations.

If there is something to be found, the FBI has the tools and time to look for it.

Photo: FBI Headquarters in D.C.

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8.

FBI Undercover Investigation a Possibility

Although a subpoena was delivered on Feb. 13, it does not mean the FBI has just started looking into Kitzhaber and Hayes. Joel Bertocchi, a white-collar criminal defense attorney in Chicago, said federal investigations often involve an undercover stage in the beginning.

Special agents are often recording information and meeting with people long before subpoenas are issued.

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7.

Mail Fraud, Wire Fraud and Corruption

Experts agree Kitzhaber and Hayes are most likely being investigated for breaking federal statutes of mail and wire fraud, as well as corruption.

Because Hayes may have used government resources for her personal gain, such as not disclosing conflicts of interest while using government phones or email services for her paid contracts and speaking appointments, it would fall under those statues.

Federal statutes have a broader reach of power than state statutes, according to Wisenberg, giving more options for prosecution.

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6.

11 State Departments Subpoenaed

In the subpoena from the U.S. Department of Justice to the Oregon Department of Administrative Services, a number of state departments were listed.

The following eleven departments are believed to have documents or records that are of interest to the investigation:

-The Office of the Governor

-Government Ethics Commission

-Housing and Community Services Department

-Oregon Department of Justice

-Department of State Lands

-Oregon Department of Revenue

-Department of Administrative Services

-Business Development/Business Oregon

-Department of Community Colleges and Workforce Development

-Department of Energy

-Department of Environmental Quality

Photo: Oregon's Department of Administrative Services was served a comprehensive subpoena into outgoing Governor Kitzhaber and his fiancee, Cylvia Hayes.

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5.

Hayes’ Contracts are the Focus of the Subpoena

Records pertaining to Kitzhaber and Hayes, as well as a number of other individuals are listed on the federal subpoena. However, it appears Hayes’ contracts and dealings with energy groups are the focus of the investigation.

Federal investigators are requesting records involving private companies Hayes and 3E Strategies conducted business with, such as Demos and Clean Economy Development Center, as well as government projects Hayes was involved with.

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4.

Feds Focus on Cases They Can Win

If the federal government is moving forward with the investigation, it most likely means they have a strong case.

Like most prosecutors, Bertocchi said federal investigators focus on cases they know they can win.

“I don’t think anybody, unless they were nuts, would seek to charge a recently-sitting governor,” Bertocchi said. “It doesn’t mean they can’t lose, but you have to take them seriously.”

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3.

A Grand Jury Will Decide to Indict Kitzhaber and Hayes

The documents and wittiness gathered by the FBI’s investigation will be presented to a grand jury of 23 Oregonians in a United States District Court.

Proceedings and information from the grand jury are supposed to be kept secret, but Bertocchi said sometimes the information is leaked.

After hearing the evidence, the grand jury will decided whether or not to indict Kitzhaber and Hayes and bring formal charges.

The grand jury will start procedings on March 10, 2015.

Photo: "The Jury" by John Morgan via Wikimedia CC.

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2.

Federal Investigations Tend to Favor the Prosecution

Federal investigations tend to favor the side of the prosecution, according to Wisenberg.

The history of corruption in a state can also impact the jury. Bertocchi said in Chicago, where political corruption is a common theme, juries are more cynical and less likely to give guilty verdicts.

However, it might be the opposite in a state like Oregon, where big-time political corruption is more unusual, Bertocchi said. It is more likley the defense will have more convicing to do.

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1.

It Could Drag on for Years

Even though the grand jury begins hearing evidence in less than a month, the final outcome could be years away. Tom Hagemann, who served as Assistant U.S. Attorney in Los Angeles, said a very document-intensive case like Kitzhaber and Hayes' could drag on.

If criminal investigations and proceedings do last years, it will make it difficult for Kitzhaber and Hayes to move on with their lives, or find a steady job.