Springs mayor accused of ethics violation

By Leslie Jorgensen

COLORADO SPRINGS — Mayor Lionel Rivera has been accused of violating the city of Colorado Springs’ ethics code. Under scrutiny is Rivera’s role in negotiating a deal that awarded a $53 million contract to a developer to build a new headquarters for the United States Olympic Committee, remodel offices in a city-owned building and upgrade the Olympic Training Center.

The ethics complaint alleges that Rivera had a conflict of interest because his business clients allegedly include the developer and his partnerships. The allegation of impropriety is the latest in a series of problems plaguing the city’s efforts to entice the USOC to remain here.

The sweet deal — cut in March 2008 — has soured.

• The USOC recently refused to renew the agreement and ordered the city and developer to cease using the Olympic rings logo.

• The developer, Ray Marshall and his LandCo Equity Partners, is mired in financial problems, tax liens and civil suits.

• Marshall and LandCo are being investigated by the Economic Crimes Unit under 4th Judicial District Attorney Dan May.

• Marshall and LandCo filed a lawsuit against the city, Rivera, Assistant City Manager Mike Anderson, the city’s non-profit Public Facilities Authority and USOC to recover unspecified damages for allegedly failing to compensate the developer for work performed on the downtown office building.

Colorado Springs Vice Mayor Larry Small said that the city can’t even put together another offer to the USOC or consider hiring another developer to complete the construction project until a settlement is reached with the developer. The city has until May 31 to respond to Marshall’s lawsuit.

“It would be better to settle the lawsuit than spend months in court fighting it,” said Small, adding that if a prolonged legal battle were waged, Colorado Springs would be at risk of losing the USOC to another city.

Meanwhile, Chicago and Denver businessmen have indicated their interest in luring USOC from Colorado Springs. During the Mizel Museum’s annual fundraising dinner last week, several Denver power brokers told a Colorado Springs businessman that if Colorado Springs can’t resolve these problems, they stand ready to make an offer to the USOC.

“They’d rather have the USOC in Denver than wind up in Chicago,” said the well-known Springs tycoon, adding that no one in Colorado Springs wants to lose the USOC to any city. “This is a mess. It’s embarrassing to our community.”

This week, the city’s ethics commission — a 3-member panel appointed by the City Council — postponed considering a complaint that accuses Rivera of having a conflict of interest in negotiating the deal on behalf of the city because of his business relationship with Marshall.

Ron Johnson, president and CEO of Central Bancorp Inc., asserted that Rivera, a vice president of UBS Financial Services, was an investment advisor to Marshall and LandCo.

“The Mayor has failed to conduct himself with regard to the USOC building project in a way that ‘… should assure that businesses, operations and services are conducted openly to safeguard public confidence in the integrity of the City by avoiding any conduct creating the appearance of impropriety,’” Johnson stated in his complaint and referenced a section of the City ordinance governing ethics.

“The Mayor has and continues to negotiate on behalf of the City with parties (LandCo and Ray Marshall) with whom a direct conflict of interest exists. The conflict exists by virtue of Mayor Rivera’s employment and compensation at UBS Securities where Mr. Rivera manages accounts of, and accounts controlled by LandCo and Ray Marshall, from which Mr. Rivera receives direct and indirect compensation,” Johnson alleged.

The complaint, dated May 4, was lodged after Johnson failed to receive responses to emails he’d sent to City Attorney Pat Kelly in March.

As the city attorney, Kelly is the legal advisor on the City’s negotiating team with USOC, the lawsuit filed by Marshall, and the city’s Ethics Commission.

“Ms. Kelly, I have watched with some interest over the past several months as the USOC/LandCo/City of Colorado Springs venture has unfolded. On the heels of the recent news articles relating to the project, a nagging concern of mine has come to mind again.

“I am curious what the City maintains as to a conflict of interest policy. Specifically, I refer to the fact that Mayor Rivera receives compensation thru UBS for accounts controlled by Mr. Marshall. The conflict seems clear to me; I assume documentation exists disclosing the conflict and the City’s rational for moving forward. I would appreciate understanding where to locate the policy and any documentation on this specific issue,” wrote Johnson on March 27.

The Ethics Commission tabled the complaint for seven days to allow Johnson time to provide specific information regarding his allegations. The commission will weigh the merits of the complaint on May 28 and either dismiss or formalize it.

Under the ethics ordinance, the commission will not consider allegations of misconduct if the action — and substantiating evidence — occurred 12 months prior to the date the complaint was filed.

The Commission members are Stephen Hook, a former deputy city attorney; Jan Doran, past president of the Council of Neighbors and Organizations; and retired Air Force General Malham Wakin, an ethics consultant and author.

Johnson said his complaint is based on an investment statement regarding LandCo and Marshall that identified Rivera as the investment counselor. However, he said, the statement might have been dated before May 4, 2008 — outside of the 12-month window for admissible evidence.

Johnson said he won’t produce the financial statement unless the committee agrees to review it in a closed meeting — and keep the contents confidential.

“I don’t have a problem with that,” said Wakin. “In fact, I’m concerned about open meetings that deal with privacy issues.”

Committee meetings to review potential complaints should not be open to the public or media in order to protect individuals from being victimized by groundless accusations, said Wakin.

“We’ll confer with Pat Kelly about Mr. Johnson’s request. Her job is to protect the people of the city — not the Mayor,” said Wakin.

Perhaps a larger obstacle for Johnson is that the basis of his complaint questions Rivera’s role as the city’s negotiator during the six-month period prior to March 31, 2008, when the deal was sealed with USOC and Marshall. Under the ethics rules, it would exceed the time limitation for a complaint.

This is the first complaint to be considered by the Ethics Commission since it was formed in 2007.

Rivera has refused to confirm or deny his professional relationship with Marshall.

“The Mayor is staying mum,” said John Leavitt, spokesman for the city.

According to Leavitt, City Attorney Kelly advised Rivera against responding to questions — denying or confirming — his business relationship with Marshall.

Rivera has told reporters that he cannot comment about Marshall for two reasons: Information about investment clients is privileged; and the developer’s lawsuit against the city and the mayor is on going.

Others, including Johnson, contend that Rivera could reveal whether or not his clients included Marshall and the developer’s partnerships without revealing financial information that is legally protected.

In addition, they see no correlation between the lawsuit and the Mayor’s business relationships — particularly if Marshall was not Rivera’s client.

“The Mayor has agreed to talk with us, but I wouldn’t want him to do so unless the commission agrees that Mr. Johnson’s complaint is formally accepted,” said Wakin.

Even if Rivera said that Marshall and LandCo were not his clients, the commission would have to validate his statement, said Wakin.

If perception is a major part of Rivera’s problem, it’s also a dilemma for the ethics panel. Several folks have questioned the neutrality of Hook, an attorney who worked under Kelly, as well as Doran, who endorsed and campaigned for Rivera’s re-election in 2007.

“This is a very independent thinking commission,” said Leavitt.

Kelly wanted the complaint reviewed behind closed doors “to avoid a media circus,” said Leavitt. “Hook disagreed. He wants an open process.”

Rivera supporters have accused Johnson of filing the complaint against Rivera because he’s the nephew of Jeff Smith, chairman of Classic Companies.

“I wasn’t a part of any proposal,” said Johnson.

The city negotiation team — Rivera, Anderson and Kelly — and USOC representatives reviewed sealed proposals for the project submitted by five developers in September 2007. They included Classic, Nor’wood, LandCo, Griffis/Blessing Inc., and RDS Development.

Most had made generous contributions to Rivera’s unsuccessful bid for Congress in 2006 and his mayoral re-election campaign in 2007.