American Democracy Legal Fund

455 Massachusetts Avenue, NW

Washington, DC 20001

Honorable Tom Miller

Iowa Attorney General

1305 E. Walnut Street

Des Moines, IA 50319

Dear Mr. Miller:

The American Democracy Legal Fund ("ADLF") respectfully requests that your office investigate whether Joni Ernst violated Iowa conflict of interest laws while serving as Montgomery County Auditor and the county's Chief Financial Officer for its flood disaster assistance operation as her father, Richard Culver, secured county contracts for his construction business.

Background

Ms. Ernst was elected as Montgomery County Auditor in November 2004, and continued in that position until January 2011.[1] In June 2007, Ms. Ernst also was named the Chief Financial Officer for the county's flood disaster assistance operation.[2] In those roles, Ms. Ernst was involved in supervising the process for awarding county construction contracts, and was responsible for initiating contract bid notices and soliciting proposals for county contracts.[3]

During Ms. Ernst's tenure, Montgomery County awarded a total of $215,665 in government contracts to Culver Construction, owned by Ms. Ernst's father, Richard Culver.[4] Notably, Culver Construction's winning bids regularly came in just under those of other bids, and Culver Construction does not appear to have received any county contracts prior to Ms. Ernst's assuming her position as auditor.

Culver Construction apparently was awarded its first county contract in April 2009.  According to the minutes of the Montgomery County Board of Supervisors, the county awarded Culver Construction a FEMA grant contract for $40,428, the "low quote" for the project.[5] A few months later, in August 2009, Culver Construction was awarded another FEMA grant contract, this one for $63,501.[6] The county received two quotes for this contract, and Culver Construction's was "approximately $10,000 under the second bidder."[7] In October 2009, Culver Construction was awarded a FEMA repair project contract for $32,425 after reportedly coming in with the lowest bid.[8]

With Ms. Ernst still serving as County Auditor, Montgomery County awarded Culver Construction three more contracts in 2010.  In April 2010, Culver Construction was awarded a Department of Homeland Security grant contract for $10,871, just $680 below the next lowest bidder.[9] A few days later, Culver Construction was awarded a $59,480 contract for a FEMA grant project.[10] In that instance, there were two bids, and Culver's was $6,513.96 less than the other bid of $65,993.96.[11] Even as Ms. Ernst was running for state senate in December 2010,[12] Montgomery County awarded Culver Construction another FEMA contract, this one for $8,960, to repair three flood damaged sites.[13]

Legal Analysis

Under Iowa law, county officers or employees are prohibited from having "an interest, direct or indirect, in a contract with that county." Iowa Code Ann. § 331.342(2).  Ms. Ernst appears to have an indirect interest in the contract's awarded to her father's company as a result of their familial relationship.

While § 331.342(2) does not define a direct or indirect interest, Iowa has a long history of broadly interpreting conflict of interest laws.  As the state Supreme Court made clear in Wilson v. City of Iowa City: "We doubt if any rule of law has more longevity than that which condemns conflicts between the public and private interests of governmental officials and employees nor any which has been more consistently and rigidly applied."  165 N.W.2d 813, 822 (Iowa 1969).  The "well-established and salutary rule" that a person "who is entrusted with the business of others cannot be allowed to make such business an object of pecuniary profit to himself . . . does not depend upon reason technical in character and is not local in its application."  Bay v. Davidson, 111 N.W. 25, 26 (Iowa 1907).  The rationale for conflict of interest rules, Iowa courts repeatedly have asserted, is "a man cannot serve two masters [because] . . . [a] temptation would be offered . . . to disregard his public duty, and yield to the temptation of personal interest."  James v. City of Hamburg, 156 N.W. 394, 309-10 (Iowa 1916); see also, e.g., Wilson, 165 N.W.2d at 819.

Wilson demonstrates how broadly Iowa interprets conflict of interest statutes.  That case considered whether section 403.16 of the Iowa Code, which provided that "no public official or employee of a municipality . . . shall voluntarily acquire any personal interest, direct or indirect, in any urban renewal project," barred members of a city council from voting on an urban renewal project in which they had financial and other interests.  165 N.W.2d at 817.  Looking to the purposes of conflict of interest laws, the Court decided one council member had a conflict of interest simply because he held "positions of responsibility" with the University of Iowa, which was vitally interested in the urban renewal project.  Id. at 821-24.  A public employee's interest does not have to be financial, or even that the official "sought or gained" a private "advantage," the Court concluded.  Id. at 822.  "It is the potential for conflict of interest which the law desires to avoid."  Id. (emphasis in original); see also Iowa Farm Bureau Fed'n v. Envtl. Prot. Comm'n, 850 N.W.2d 403, 415 (Iowa 2014).

The conflict of interest statute here prohibits a county employee from having a direct or indirect interest in a contract with the county.  Ms. Ernst appears to have had at least an indirect interest in contracts Montgomery County awarded to her father's company while she served in a public position involving county contracts.  At a minimum, the potential for a conflict of interest clearly existed.

Conclusion

ADLF therefore requests that your office immediately commence an investigation into whether Ms. Ernst violated Iowa conflict of interest statutes.  These laws are critical to preventing officials from putting their private interests before the public's, and should be enforced vigorously.

Please do not hesitate to contact me if I can be of further assistance.

Sincerely,

Brad Woodhouse

Treasurer

Encls.

An onslaught of retiring baby boomers; the uncertain duration of Social Security funding; difficulty with workplace retirement accounts like 401(k)s - even if these factors were stronger than they are now, you'd still have a heavy burden in managing your finances during retirement, says financial planner Carl Edwards.

"Financial planning for retirement has always been a daunting prospect; the current landscape simply makes your preparation that much more crucial in using your assets well," says Edwards, a highly credentialed consultant and owner of C.E. Wealth Group, (http://www.cewealth.com).

"Many advisors and clients rely too much on single product lines.  This misuse often gives products and the financial industry in general a bad name. Advisors who are restricted in the types of financial products they can offer or understand may not provide the best advice. Independent and credentialed planners, on the other hand, don't have their hands tied in what they can offer clients and may provide better advice."

Edwards reviews seven essential points that everyone should know regarding retirement planning.

•  Avoid trying to time the market. Markets often move in cycles and some investors believe that they can boost their investment returns by buying at the bottom and selling at the top. The problem is that investors are terrible at correctly predicting market movements and multiple studies have shown that market timers usually end up with significantly smaller retirement savings than buy-and-hold investors. While it can be stressful to see your portfolio plummet during a market correction, it's important to stay calm and focus on your long-term strategy.

•  Use risk-appropriate financial vehicles. Retiring can be a risky business. The days of relying on employer-provided pension plans are largely over and retirees now have to deal with risks including investment, inflation, healthcare, longevity and others. Though the total elimination of risk isn't possible, we can manage many of them through competent retirement planning and a clear understanding of factors like your goals, time horizon and financial circumstances.

•  Invest in the most tax-efficient manner. Taxes can take a big bite out of investment returns, which is why we stress tax-efficient planning with our clients. While taxes are just one piece of the overall financial puzzle, it's important to structure your investments so that you are able to keep what you earn.

•  Complete a cash flow analysis. Retirement will involve major changes to your finances. Sources and timing of income will change and financial priorities may shift as you start generating income from retirement savings. A cash flow analysis will identify spending patterns and help ensure that you have enough income to support your retirement lifestyle.

•  Guarantee your required income. For many retirees, having income that is not subject to market fluctuations is an important part of their retirement plan. Many will have at least some level of guaranteed income from Social Security or defined benefit pension plans. However, if you are worried that your expenses exceed your guaranteed income, a financial advisor can help you explore options for additional streams of income for life.  Guarantees are subject to the paying ability of the income provider.

•  Utilize longevity planning. Today's retirees are living longer than ever and many worry about outliving their assets. Longevity planning is about preparing for a happy, comfortable and independent retirement and can help ensure that your wealth lasts as long as you need it to.

•  Consider the effects of inflation. Inflation is one of the biggest issues facing retirees because they are disproportionately affected by rising prices. Escalating food, fuel and medical costs can devastate a retirement portfolio unless these costs have been factored into your planning. Positioning your retirement portfolio to fight inflation is critical to ensuring adequate income in retirement.

About Carl Edwards

Carl Edwards, MBA, ChFC®, is a Chartered Financial Consultant® and is the owner of C.E. Wealth Group, (http://www.cewealth.com). He has passed the Series 7, Series 66 and Series 63 securities industry exams. In addition, he has passed the Series 24 principal exam. He represents High Street Asset Management as an Investment Adviser Representative and Calton & Associates, Inc. as a Registered Representative. Edwards is also a licensed insurance agent in Life, Health, Medicare Supplement and Long Term Care insurances. Edwards received a master's degree in business administration and is currently completing a second master's degree in finance from Penn State University. He also is a member of the American MENSA.

Securities offered through Calton & Associates, Inc., Member FINRA/SIPC.  Advisory services offered through High Street Asset Management.  C.E. Wealth Group, LLC, High Street Asset Management and Calton & Associates, Inc. are separate entities. Insurance or insurance related products are offered through C.E. Insurances, LLC. Opinions expressed do not necessarily reflect those of Calton & Associates, Inc. or High Street Asset Management.  Individuals should consult their tax/legal advisors before making tax/legal-related investment decisions as Calton & Associates, Inc. and its Registered Representatives do not offer tax/legal advice.

Oct. 15, 2014 Right-of-Way, Forest, and Aquatic Pest Management, Scott County Extension Office,

9:00 am-11:30 am

Oct. 23, 2014 Mosquito and Public Health Pest Management, Scott County Extension Office,

9:00 am-11:30 am

Oct. 28, 2014 Scott County Extension Council Meeting, Scott County Extension Office, 7:00 pm

Jeremy Camp and Kutless The Come Alive Tour With Special Guest Adam Cappa 7:00 PM Wednesday, October 8th Adler Theater 136 East 3rd Street Downtown Davenport, Iowa This event is brought to us by Echo Ministries.

He is unapologetic about his faith, and his passion resonates through his worship songs and ballads that energize the entire audience to be reckless in their walk with God.

Since the release of his debut album Stay in 2002, BEC Recordings Jeremy Camp has had an outstanding career with 32 No.1 radio hits across all formats, four RIAA Gold-selling studio albums, five Dove Awards, a GRAMMY® nominated project and many more accolades.

Reckless is Camp's latest full-length record featuring the single and title track "Reckless." Camp is excited to share what God has been doing in his life on this new album. New and old fans alike will find Reckless to be as heart-felt and passionate as ever.

* Tickets ($40, $30, $20)

* Groups of 10+ available at a special $18 rate! 
* For Group seating: 
* Call Melissa Shore 563-326-8526 or email the Box Office at mshore@riverctr.com

Tickets available here: 
* Adler Theatre Box Office 
* Online at Ticketmaster here: Get Tickets
* Charge by phone at 800-745-3000
* and at all Ticketmaster outlets

Adler Theatre Box Office:
136 East Third Street
Davenport, Iowa 52801
Phone 563-326-8555
The Adler Theatre Box Office operates Monday through Friday from 10:00 a.m. until 5:00 p.m. 
The Box Office is closed on weekends and evenings, unless it is an event day where hours will vary.

Internet Purchasing: Online at Ticketmaster here: Get Tickets

Charge By Phone: call Ticketmaster at 1-800-745-3000

Ticketmaster Outlets:
· Bettendorf, IA: HY-Vee, 2900 Devils Glenn Rd. 
· Davenport, IA: HY-Vee, 2200 West Kimberly Rd. 
· Davenport, IA: Walmart, 3101 West Kimberly Rd. 
· Davenport, IA: Walmart, 5811 Elmore Ave.
· Moline, IL: Walmart, 3930 - 44th Avenue Dr. 
· Silvis, IL: HY-Vee, 2001 5th St.