Breaking: Palin settles ethics complaint on legal defense fund

Eleven months ago, Sarah Palin found herself on the business end of yet another ethics complaint about her political activities while serving as Governor of Alaska, this time over the legal defense fund Palin’s team launched, ironically to cover the cost of defending herself from ethics complaints that all turned out to be baseless.  As Allahpundit wrote at the time, this complaint looked more substantial, not because Palin had done anything unethical, but because Alaska law makes it difficult for public officials to have legal defense funds.  (Remember that Alaska is also one of the few states in which the state Attorney General cannot provide that defense.)

The Personnel Board referred this ethics complaint to an independent investigator, whom today announced the conclusion that the legal defense fund violated ethics regulations in two points.  First, the fund used the word “official,” which the investigator concluded gave the impression that Palin was using her office to raise funds.  Secondly, one of the trustees was a sitting member of the Board of Agriculture and Conservation (appointed by Palin) and on the Creamery Corporation Board, which is administered  by the BAC.  Both of these are so technical that the investigator agreed that “they are not so obvious as to impute knowledge to Governor Palin especially as her attorneys did not advise her of the ethics problems.”

In any event, Palin reached a settlement agreement with the Personnel Board that concludes the inquiry.  In the agreement, Palin agrees to refund all donations to the fund received before her resignation as Governor, which Palin had not dispersed since the ethics inquiry was ongoing.  Any trustees in public office will resign from the trust.  Palin admits no wrongdoing but simply has decided to settle the probe rather than dispute it any further.

In a conference call with Tim Crawford, an adviser to Palin, and other bloggers, Crawford stressed that at no time before the complaint was Palin aware that either issue would create a question of ethics.  The use of the word “official” was intended to distinguish this fund from several others that had been launched without Palin’s approval, and not intended to express an official activity of the Alaska government.  The trustee issue is even more murky, as it doesn’t appear to violate any explicit prohibition.  The investigator concluded that the relationship between Palin and Cole created a connection that could have been exploited for political gain for donors or the parties involved, but makes no suggestion that it ever was.   In fact, the settlement states that “concededly, there is [no improper motivation or evidence of undue influence] here.”

The settlement acknowledges that “Palin has fully cooperated with the investigation,” and it makes a more important point.  The investigator agreed that Palin consulted “no less than three law firms” in establishing the legality of the trust before ever launching it.  In Alaska, unlike most jurisdictions, this doesn’t amount to a defense of benign intent, however.  In other words, a defendant in an ethics complaint could get the thumbs-up from every white-shoe law firm in the state, and an ethics investigator could still file charges against a subject of a probe.

At any rate, the probe has now concluded, and the only change Palin will have to make is to return the money the fund received before July 26, 2009, when she resigned as Governor, and find other trustees.  As far as an ethics slam goes, this isn’t even weak tea.  It’s more an indication that Alaska really needs to address its Byzantine ethics regime, which forces public officials to privately fund their own defense and then makes the legal code surrounding that effort so confusing that three top-notch law firms couldn’t figure it out.

Update: Meghan Stapleton, Palin’s former spokesperson, offered this statement, which should be read in full:

The Cost of Legal Warfare – A Few Words About Today’s Defense Fund Agreement

It is no secret that Governor Palin has been subject to political and legal attacks on an unprecedented scale.  Since these attacks originate from her opposition, sometimes it can be a badge of honor to be the focus of such irrational hatred. But there is a cost to all of this.

Last year, those who willfully and excitedly violated or abused Alaska law showed they would do it again and again to either bankrupt Governor Palin or paralyze her success for Alaska. Governor Palin had a choice: plead guilty to things she didn’t do so that she could focus on the state and save money for the family – or defend her good name and reputation. She chose to fight back. In the end, Governor Palin and her attorney, Thomas Van Flein, successfully defended against well over two dozen complaints, lawsuits, and allegations. Time and time again during and after the 2008 Presidential election cycle, independent investigators proved that Governor Palin’s actions were sound, her judgment was proper, and her intentions were honest. In fact, the Personnel Board, the ethics board for the Governor of the state, never even had to take up a case as each was dismissed before making it to the next level.

But it did cost the Palins financially.

Seeing this nonsense, it was suggested to me from both sides of the aisle that one way to deal with the substantial financial cost these tactics were inflicting, was to create a trust fund for legal fees – just like all the other legal defense funds for prominent politicians who are targets.

As reported in the Wall Street Journal, “Such funds have become increasingly common as scrutiny of politicians has intensified.”  (“Palin Backers Set Up Legal-Defense Fund”, Wall Street Journal, p. A-3, April 24, 2009)

When I approached Governor Palin with the idea, she had one primary directive – if it can be done lawfully, then I will support it. She also asked that, if possible, we keep it Alaskan.

One might think that creating a trust fund to collect money to pay legal fees should not be that complicated, but it turns out, it is exceptionally complicated.  You should know that as many as seven lawyers were involved in the process; some of whom were and are nationally prominent experts in creating legal defense funds, in evaluating federal and state election laws, state trust law, federal and state tax laws, state reporting requirements and state ethics requirements.  It is a sad commentary on public life today when the legal system can be used as a political weapon against an elected official, and it takes a battalion of lawyers to figure out how to fund a defense and counter-attack.

In any event, the legal team concluded that the fund they had created was lawful in all respects.  I relied in good faith on that advice and advised Governor Palin of that advice.

Ultimately, the Alaska Fund Trust was borne, and within a day or two, a complaint was filed against it challenging its legality. (And like everything else, the public knew because someone – likely the complainant – violated the law and publicly released the accusation.)  And so started another prolonged legal battle – this time to determine if the legal fund created to defend Governor Palin against frivolous ethics complaints was itself ethical.  Quite a circle really.  We made it clear that no money would be paid out on until the matter had been resolved.

Thus, to this very moment, the money received was frozen and no one, not the Palins, not the Palin’s attorney, no one ever received a penny from the Trust on the Palins’ behalf.

The Personnel Board initially appointed an “independent” investigator.  That investigator, we later learned, had connections with, and was associated with President Obama.  The Personnel Board had hired President Obama’s personal law firm as an “independent” investigator to review whether a fund created to raise money to eliminate a debt incurred as a result of Governor Palin’s opposition to President Obama was appropriate.  We objected to both the illegal leak and the blatant political influence, and a new investigator was appointed.

The new investigator spent considerable time reviewing the old information and collecting new, but I think it proved to be too difficult to reverse an already-public decision. He concluded that the Trust fund violated Alaska law in two respects.  His biggest heartburn was that we used the word “official” on the website. And he was distressed that we turned down an offer from a former White House Special Counsel to serve as trustee and instead chose an Alaskan whom Alaskans would recognize – Kristan Cole.

Kristan sat on several state boards as a volunteer public servant.  The investigator concluded that because she sat on such boards, Governor Palin as governor was technically her boss, and therefore she should not be the trustee of the fund.  That is his conclusion and we respect that.  The law is not clear on this aspect, and not one member of the legal team saw this as an issue, but again, we respect the conclusion here and it is not worth the time or money to dispute that.  But we do want to thank Kristan for taking on that otherwise thankless task. What is it they say about no good deed?

The other conclusion needs context.  There was a point where it appeared that people around the country wanted to start legal defense funds for Governor Palin.  The support and good will the people of this country have shown to the Palins is inspiring.  But a concern was raised whether all these other potential funds would comply with various laws, including donation limits, limits against contributions from lobbyists or contributions from foreign nationals.  So we used the word “official” in the website to distinguish the Alaska Fund Trust from ones we were not sure would be compliant.  In our view, that was a solid and common sense reason to use the word “official,” but the investigator believes that it made it appear that the website was sponsored by the State of Alaska, and thus would be a use of Governor Palin’s ”official” office to raise money.  We are not terribly persuaded that really would be the case or that any member of the public could be confused, but we respect the investigator’s evaluation of this point and it is not worth fighting about.  Again, Governor Palin’s prime directive was simple – if this fund could be set up lawfully, she would support it.  If not, it would not have her support.

So Governor Palin has reached a point where she decided to agree to resolve this matter with the investigator rather than spend time and money fighting an ethics complaint about a fund that was created to reimburse her for the money she has spent fighting bogus ethics complaints drawn up by insiders and outsiders violating and abusing Alaska law.  Really, this is simple pragmatism and common sense.

As you know, we love a good fight, but we must pick our battles carefully.  As a chief executive, Governor Palin makes the calls, and she knows that this battle, though important to her personally, does nothing for the country. She has bigger battles to fight, battles to restore our strength internationally and stand by our allies, battles to stop the downward slide of our economy, and battles to take back control of Congress.

However, I know and you know that no public official should ever have to bear the financial brunt of these attacks. And Governor Palin can lawfully raise money now through a brand new – not official but let’s call it “real” – legal defense fund without any risk of offending an investigator or state law.  And such a fund now exists at

Thanks to everyone who contributed to the Alaska Fund Trust.  Your heart was in the right place.  And Governor Palin and her family have been overwhelmed by your generosity. If you want to, you can contribute to the new fund.  In the meantime, we will try to contact you to get your donation returned from the old trust.

Now – back to motherhood for me! And common sense.

P.S. One last thought as we approach the anniversary of Governor Palin’s “reloading,” thank God she had the fortitude and wisdom to look down the road and see what she did – the state’s bills would have amounted to millions upon millions more and her personal legal bills would be personally insurmountable. I don’t know who would want to hold office under these circumstances and with loopholes our Alaska legislators refuse to close.
– Meghan Stapleton, Mom, Wife, and Now More Knowledgeable Then Ever About Legal Defense Funds

Update II: My friend Tammy Bruce was also on the call and notes the apparent exhaustion of the media on this topic:

If the ABC News report on the latest “Investigator” from the Alaska Personnel Board’s “Cirque de Obsess on Palin” is any indication, even the press has had enough. …

I suppose when lots of money has been spent with a goal of finding something, anything, on Governor Palin, anything will literally do. Interestingly, it does seem the investigator himself understands the final absurdity of the entire Get Palin exercise. While finding the shocking of the use of the word “Official” for the fund, the report notes the governor acted in “good faith” and relied upon the advice of attorneys when setting up the fund.

So, in other words, while Alaska state personnel investigator contortionists found something of slight issue with the fund itself, the governor’s actions are not at issue. Again.

Update III: Rebecca Wales at Smart Girl Politics says Palin “did the right thing.”  Dan Calabrese plays it straight.