Did Hatch divert money to allies and ACORN in 2006?

Former Attorney General Mike Hatch barely lost to Tim Pawlenty in the 2006 race for Minnesota Governor — and according to a new legislative audit, he may have abused his position to close the gap.  As part of its settlement with Capital One on a deceptive-advertising complaint, Hatch arranged a payment from the credit company that came a dollar short of the requirement to put the money in the state’s general funds.  What did Hatch do with the money instead?  He directed it to non-profits that — surprise! — supported his gubernatorial campaign, including one organization notorious for its involvement in voter fraud:

A Minnesota government investigator has questioned whether former Attorney General Mike Hatch was out to aid a political ally in a 2006 settlement with a credit card company that steered nearly $500,000 away from the state treasury and toward nonprofit groups.

According to an inquiry by the legislative auditor made public Monday, Hatch’s office agreed to drop its deceptive-advertising case against Capital One Bank that February in exchange for $749,999 — a dollar short of a statutory threshold for automatic deposit of settlement funds into state coffers.

Instead, Hatch’s office and the defendant were able to pick other recipients for two-thirds of the proceeds: the Minnesota chapters of the Legal Aid Society and the Association of Community Organizations for Reform Now, known as ACORN. The state got $250,000 to cover its investigative costs.

Less than a month later, Hatch appeared as a gubernatorial candidate at a news conference to accept the endorsement of ACORN’s Minnesota-based political action committee, which is legally distinct from the nonprofit group’s official work.

Jim Nobles, the Legislative Auditor, demanded answers from Hatch’s successor, Lori Swanson, who worked closely with Hatch both in his capacity as AG and in the election.  Swanson insists that the probe is motivated by state employees who want to organize, not exactly a demographic historically unfriendly to Democrats, in this state or any other.  Nobles says that the pattern of payments and the strange settlement amount caught his notice.

Hatch insists that Capital One chose ACORN, and not him or his office.  However, that doesn’t pass the smell test.  Why would Capital One choose ACORN?  It has nothing to do with credit services.  Ah, but ACORN has plenty of involvement in Democratic politics.  Even if Capital One “chose” ACORN, the selection stinks of political backscratching, a means of sucking up to a hyperpartisan AG with big ambitions.

In any event, an AG should have known that ACORN has its own legal problems.  They have been accused of fraudulent activity in more than one area while driving voter-registration efforts for Democrats, and had faced legal action well before 2006.  Why would the state’s top law-enforcement agent send money that he won on behalf of the state to an organization whose activities were the subject of legal probes themselves?

Nobles may not find any crimes broken in this transaction, but that doesn’t make what Hatch did right.  It smells like a payoff for his own political ambitions, and it should bury any hope Hatch has of a future in Minnesota politics.