Felony charges against Lt. Gov. Brian Krolicki -- criticized as a political prosecution by his defenders -- were dismissed Monday after a District Court judge ruled prosecutors failed to show specific evidence that a crime was committed.
The state attorney general's office said Krolicki, while state treasurer, and his assistant Kathryn Besser misappropriated about $6 million in fees earned by the Nevada College Savings Trust Fund by not depositing it in state accounts. Some of the money went to marketing the program with ads that featured Krolicki, which the state said was an improper political benefit. No money was ever found missing from the $3 billion fund, and Krolicki and Besser have maintained their innocence.
"We created one of the finest college savings programs in this country," a vindicated Krolicki said. "We made money doing it, we made a profit and it was balanced to the penny."
In the order, Judge Valerie Adair said the indictment against the pair failed to specify which actions were criminal.
"The indictment alleges that the crimes occurred over a five-year period. It does not specify which funds were utilized, the accounts which were used, or the transactions at issue. The indictment also fails to specify the duty that was allegedly violated," Adair said in her order of dismissal.
The indictment also failed to specify any criminal acts allegedly committed by Besser, Adair said.
"This whole thing has been absurd from the very beginning," Krolicki said after his case was dismissed.
Krolicki's attorney Richard Wright described the defect in the indictment: "It was ... scratch your head and try to figure out what the hell am I charged with."
The dismissal came a week before the trial was to begin. Krolicki was indicted in 2008 on two counts of misappropriation and falsification of accounts by a public officer and two counts of misappropriation by a treasurer. Besser was charged with two counts of being a principal to misappropriation and falsification of accounts and being a principal to misappropriation by a treasurer.
Prosecutors had asked that Adair allow them to amend the original indictment if the judge deemed it deficient. Adair denied that, saying allowing prosecutors to do so would undermine the grand jury process.
Prosecutors quickly left the courtroom without comment after hearing Adair's decision.
If prosecutors choose to pursue the case, they could go before a new grand jury and re-indict Krolicki and Besser because Adair dismissed the charges without prejudice. Prosecutors also could appeal Adair's decision to the state Supreme Court.
By late Monday, no course of action had been selected.
"We are reviewing the decision and considering our options," said Edie Cartwright, a spokeswoman for the attorney general's office.
Attorney General Catherine Cortez-Masto was unavailable for comment, Cartwright said.
Krolicki's defenders have asserted the case was a partisan prosecution, noting that the lieutenant governor is a Republican and Cortez-Masto is a Democrat. Krolicki also was contemplating a 2010 run against Sen. Harry Reid, D-Nev., when he was first indicted.
The attorney general's office had maintained there was no political motivation for the prosecution.
Political consultant Ryan Erwin, who works with Krolicki, said it is unlikely the lieutenant governor will now seek to challenge Reid, the most powerful Democrat in Nevada and in the U.S. Senate.
"Brian announced some months ago he is going to run for re-election," Erwin said.
He added that the court case took a toll on Krolicki's career and personal life.
"He was exonerated, but it took a year of his life. They tried to kill him both politically and personally," Erwin said. "Defending yourself against a rogue suit like this costs hundreds of thousands of dollars."
The characterization of the case as a political prosecution gained steam in late November when it came to light that Cortez-Masto's husband was organizing a fundraiser for Robert S. Randazzo, a Democratic candidate for the office Krolicki now holds. Cortez-Masto offered to recuse herself from the case and said she was unaware her husband, Paul Masto, was organizing the fundraiser. He later withdrew from the event.
After the charges were first made last year, Krolicki alleged Reid was behind the effort, an assertion that Reid's office said was false.
"In Nevada, all Democratic partisan roads lead to Harry Reid," Krolicki said in November 2008.
The lieutenant governor did not renew the allegation Monday. "It is just a time for me to be relieved in the moment."
Krolicki also refrained from commenting on Cortez-Masto or the attorney general's office after Adair's decision, but Besser voiced harsh criticisms.
"It's shameful that they have done this," Besser said. "You look at what happened with the attorney general and her husband last week supporting a candidate against my boss and it shows it for the partisan witch hunt that it was."
Besser, who is Krolicki's current chief of staff, said her name was dragged through the mud over the past 33 months of the investigation and indictment.
"I think the attorney general owes me an apology. Catherine Cortez-Masto should be ashamed of herself and what she allowed her office to do," Besser said.
Krolicki said he wanted to review the decision before commenting on the case.
"This has been a very difficult ordeal for my family," he said. "It's time for me to go hug my young family."