Ethics probe into Colorado Springs to be secret

Mayor Lionel Rivera alleged to have conflict of interest in negotiating deal

By Leslie Jorgensen
THE COLORADO STATESMAN

COLORADO SPRINGS — The city’s two-member Independent Ethics Commission plans to interview Mayor Lionel Rivera about allegations that he had a conflict of interest in negotiating a $53 million deal to prevent the U.S. Olympic Committee headquarters and training site from moving out of town.

Interviews with Rivera and other witnesses, as well as the results of the investigation and recommendations for action, if any, will be kept confidential, said panel member Malham Wakin. It appears that Commission member Steven Hook concurs with that position.

A complaint filed by Ron Johnson alleged that Rivera had served as an investment adviser to Ray Marshall and his LandCo LLP, which won the $53 million contract, beating three other developers who submitted proposals.

The ethics commission had instructed Johnson to produce evidence at the June 12 hearing, but — in a surprise twist — the documentation was provided by John Cook, Marshall’s attorney.

Cook gave the commission documents that validated Rivera’s role in three investment accounts held by Marshall and two of his limited liability partnerships.

The city requested and received four proposals from specific developers — including Marshall and LandCo — in October 2007. The USOC approved the contract in March 2008.

According to Cook’s documents, Rivera, a vice president of UBS, was listed as the investment adviser to Marshall from 2005 to December 2007.

Rivera also was identified as the investment adviser on two limited liability partnership accounts that involved Marshall. The accounts were opened in January 2007 and July 2007, respectively. Rivera’s name was removed from the investment statements in December 2007.

Cook said that Rivera was replaced by Fermin Padilla, a UBS financial consultant, in January 2008. According to Rivera’s 2006 congressional campaign reports, Padilla resides in Cañon City and contributed $500 to the candidate.

Rivera and Padilla were both travelling and unavailable for comment.

At the ethics commission hearing, Lindsay Fischer, Johnson’s legal counsel, asked the two-member commission to instruct City Attorney Pat Kelly to issue four subpoenas to obtain financial information from Rivera, UBS Securities, Marshall and Cook.

Ethics Commissioners Hook and Wakin declined, saying they plan to conduct interviews, but not to issue subpoenas.

According to the city’s ethics ordinance, the ethics commission’s report and recommendations will be confidential and given to the Colorado Springs City Council to make a determination of any action.

Ethics experts disagree about the importance of confidentiality in ethics proceedings.

According to the city’s ethics code, “the ethics commission’s recommendation to the council is supposed to be confidential, which is unusual,” said Robert Wechsler, director of research for City Ethics.org.

“In fact, ethics experts generally agree that government officials should not be involved in enforcement at all, except where necessary,” he said.

“The biggest problem here, I think, is the fact that what is called an independent ethics commission is anything but independent,” he said.

Wechsler echoed Fischer’s concerns that the two-member commission is not funded to retain independent legal counsel and issue subpoenas if necessary.

The commission is advised by Kelly, who has also provided legal counsel to assist the mayor, to develop the contract among the city, USOC, and Ray Marshall and LandCo; and to respond to Marshall’s lawsuit against the city, which remains unsettled.

Questions also have been raised concerning the objectivity of commission members.

“A former city attorney should never be on an ethics commission, because there are too many conflict possibilities, not to mention personal and political loyalties,” said Wechsler.

“Other politically involved people should also not be selected. Even if there are no actual conflicts, there are appearances of bias or even impropriety, which is especially inappropriate on an ethics commission,” he said.

Jan Doran, who endorsed Rivera’s candidacy for re-election in 2007 and his 2006 congressional bid, resigned. Doran said earlier that she had disclosed her political ties to Kelly and was assured by the city attorney that there was no conflict of interest.

In 1994, the city of Colorado Springs adopted an ethics code under Mayor Bob Isaac. Conflict of interest charges were lodged against Councilman Bill Guman, a landscape architect who had bid on city contracts. The code banned city officials from bidding on city contracts.

In March 2005, City Councilman Tom Gallagher was accused of violating ethics rules because he had promoted a water reservoir project that would have financially benefited his employer. Gallagher had talked about the plan during a City Council meeting — and had raised the dander of his Council peers, including Rivera, because the plan conflicted with the city’s water proposal.

Kelly investigated the charges and concluded that Gallagher had not violated the ethics code.

In March 2007, Rivera demanded that Mike Schmidt step down as chairman of the city’s Telecommunications Policy Advisory Committee. He’d accused Schmidt of failing to reveal a conflict of interest to the committee members.

Schmidt allegedly had been paid $3,500 to market software that he’d also recommended for the creation and management of the committee’s Web site.

After Schmidt refused to resign, the Council voted 6-1 to boot him from the volunteer committee. Only Gallagher voted against the motion; two other Council members were absent.

In April 2007, the city adopted a more stringent ethics code and passed a resolution approving the ethics commission’s rules and procedures in December 2007.

Leslie@coloradostatesman.com