Krolicki asks judge to throw Masto’s office off his case

Attorneys for Lt. Gov. Brian Krolicki asked a District Court judge Friday to disqualify the state attorney general's office from prosecuting him on felony charges that he misappropriated state funds while serving as state treasurer.

The charges stem from Krolicki's handling of the $3.3 billion college savings program.

The attorney general's office accuses Krolicki of misappropriating about $6 million in fees earned by the program and not depositing it in state accounts, as required by law.

The funds are accounted for and Krolicki is not accused of embezzlement.

Attorney Margaret Stanish said it's improper for the attorney general's office to prosecute Krolicki because the office had given a "green light" to contracts related to the college savings program. She also said Krolicki was merely carrying out his duties as treasurer when he went forward with the college savings program.

"This is not the stuff of criminal activity," she said.

Chief Deputy Attorney General Conrad Hafen, who is prosecuting Krolicki, denied that there was any conflict of interest.

He said the attorney general's office has two distinct sides -- the civil and criminal -- and the two aren't working together to prosecute the lieutenant governor.

He said that in this case, where the attorney general's office worked on the college savings program, prosecutors have created a "Chinese wall" between the two sides to ensure there isn't a conflict.

District Judge Elissa Cadish did not make a decision in the case but will in the future.

Krolicki, 48, attended the hearing in Las Vegas. Afterward he said many people helped him create the college savings program, including legislators and the attorney general's office.

"All their fine work, including from the attorney general's office, is now being prosecuted by the same attorney general's office," he said. "I think it's absurd, sad and outrageous."

A Clark County grand jury indicted Krolicki and his chief of staff, Kathy Besser, on multiple felony charges. Krolicki was indicted 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 principal to misappropriation by a treasurer. She served as chief of staff in the treasurer's office starting in 2001 and later served as chief of staff in the lieutenant governor's office.

Besser also attended Friday's hearing with her attorney.

The Nevada College Savings Program is a public-private initiative aimed at helping students and parents save money for school. The charges arose from a 2007 audit of the program. The auditors found Krolicki went around budget controls and spent more on advertising than the Legislature allowed.

Krolicki, a Republican, has criticized the criminal charges against him as being politically motivated. Last year he indicated an interest in running against Democratic U.S. Sen. Harry Reid. Also, state Attorney General Catherine Cortez Masto is a Democrat.

Krolicki filed his request to kick the attorney general off the case in early March.

In the request, his attorney Richard Wright stated that the attorney general couldn't prosecute the case because it was a clear conflict of interest and gave the "appearance of impropriety" and violated Krolicki's right to due process of law.

Stanish said the attorney general's office reviewed the contracts for the college savings program. She said it was unethical for the attorney general's office to approve the contracts for the program and then, eight years later, prosecute him for it.

"My client would not sign this document without the attorney general's approval," she said.

Hafen said the contract the attorney general's office reviewed had "boilerplate" sections, or parts that are standard in contracts and not specific to the college savings program.

Hafen also brought up an earlier and similar District Court ruling. In 2008, an attorney for former University of Medical Center CEO Lacy Thomas tried to remove the Clark County district attorney's office from prosecuting Thomas in a corruption case, citing a conflict of interest.

Like the Krolicki case, the district attorney's civil division had advised Thomas on some contracts and represented him as a county employee.

But state law requires the district attorney's office to prosecute county employees, just like the attorney general's office generally is required to prosecute state employees, authorities said. A District judge ruled against Thomas.

Krolicki is scheduled to go to trial in July.

Contact reporter David Kihara at dkihara@reviewjournal.com or 702-380-1039.