Krolicki blames Reid for inquiry

CARSON CITY -- Republican Lt. Gov. Brian Krolicki on Monday accused state Democratic leaders, including U.S. Senate Majority Leader Harry Reid, of spearheading a move to have a grand jury indict him on charges of mishandling funds when he served as state treasurer.

"In Nevada, all Democratic partisan roads lead to Harry Reid," Krolicki said about the Nevada Democrat at a news conference.

He said it was no coincidence he received notice Friday that the attorney general's office will seek to indict him, pointing out that only a few days earlier he announced he might run against Reid in the 2010 Senate race.

Krolicki said Reid has been preparing for that Senate race for two years. A Reno newspaper survey found he is more popular than Reid, according to the lieutenant governor.

"This is a complete partisan enterprise," Krolicki said. "I did nothing inappropriate.

"I think I can overcome it. The people will see through it."

But Reid spokesman Jon Summers said there was no basis in fact for Krolicki to blame Reid.

"The inquiry into whether Mr. Krolicki violated the law has been under way for some time, according to public reports," Summers said. "Senator Reid has not been involved in any way in this inquiry. Efforts by Mr. Krolicki to suggest otherwise are false."

At a news conference, Krolicki said he received a notice Friday from Deputy Attorney General Conrad Hafen that the attorney general's office will seek to indict him during a Dec. 2 meeting of the Clark County grand jury.

Although contending he is not sure of the reasons for the indictment, Krolicki said it might be over his handling of a college savings program operated by the treasurer's office.

Before being elected lieutenant governor in November 2006, Krolicki served eight years as state treasurer.

Legislative auditors reported in May 2007 that Krolicki broke state law by letting $6 million in college savings program funds remain in control of consulting firms and trust fund managers, instead of depositing the money in state accounts where it could have earned about $38,000 in interest.

He also was accused of letting Rose-Glenn Advertising of Reno spend $1.33 million more on advertising to promote the college savings program than was allowed under a state contract.

But Krolicki said Monday that Upromise, the program contractor, was required under other contracts to do separate marketing and it might have contracted with Rose-Glenn to do that advertising.

Some advertisements showed Krolicki surrounded by children as he touted the benefits of the college fund savings program.

Democrat Kate Marshall, who replaced him as treasurer, also said Krolicki spent $1 million on legal services for the college savings program with the Orrick Herrington & Sutcliffe firm in Sacramento, Calif., during 2002-06.

Although he would not talk about the attorney general's case against Krolicki, Chief Deputy Treasurer Steve George said Monday his office does not accuse Krolicki of embezzling state money.

He said all the money Krolicki left in the hands of contractors and consultants has been returned to state control by Marshall.

"No college saving money has been lost and no accounts are in danger," George said.

Krolicki would not release the letter he received from the attorney general's office, but his lawyers said it listed the law under which the lieutenant governor will be charged.

That law deals with misappropriation and falsification of accounts by a public officer. That includes destroying or falsifying public information.

When he left the treasurer's office, Krolicki was accused of destroying office e-mail.

Violation of this law is a felony. Public officers convicted of felonies in Nevada are required to give up their seats.

The accusations against Krolicki first were raised by Marshall during a March 2007 appearance in the Legislature.

Krolicki said the college savings program has been one of the most successful in the country. Parents contribute money to the program and the treasurer invests that money, hoping to secure a more favorable return than they could get on their own.

"I never lost a dime of taxpayer money despite investing billions of dollars in often turbulent markets," he said.

One of Krolicki's lawyers, Kent Robison, said there is little doubt that Krolicki will be indicted, because a prosecutor could persuade a grand jury "to indict a ham sandwich"

Krolicki said he will refuse to consider even stepping down temporarily from his position.

"I believe this is absolutely done in a partisan way," he said.

Robison and Scott Scherer, another Krolicki attorney, have asked Attorney General Catherine Cortez Masto to cancel the grand jury appearance.

If Krolicki were to be indicted, then it should be during a preliminary hearing before a judge where the lieutenant governor would have a chance to present evidence and witnesses to rebut the charges, Robison said.

He said they had heard nothing back from Masto.

Krolicki called Masto's handling of the matter "shameful," noting he relied on the advice of the attorney general's office in executing contracts for the college savings program.

"If any of the contracted activities in my former office are the subject of her accusations, this is essentially a process whereby the attorney general is pursuing criminal charges against the former state treasurer for activities that were prepared and approved by the attorney general," he said.

Neither Masto nor Hafen can comment on Krolicki's statements under state law since the investigation is continuing, according to Edie Cartwright, the attorney general's spokeswoman.

Hafen repeatedly has refused to comment about the case during the probe by the Nevada Division of Investigations over the last year.

"The indictment itself is the punishment," Robison said.

If he is indicted, Krolicki said Democrats will have a "partisan heyday."

"The impact on my future is profound," he added.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.