The American Democracy Legal Fund has filed a complaint with Iowa Attorney General Tom Miller requesting his 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 while her father secured county contracts for his construction business. Under Iowa law, county officers or employees are prohibited from having "an interest, direct or indirect, in a contract with that county." Ernst appears to have had an interest in the contracts awarded to her father's company as a result of their familial relationship.

The full complaint and associated exhibits are available here.

The American Democracy Legal Fund is a group established by David Brock and run by Brad Woodhouse to hold candidates for office accountable for possible ethics and/or legal violations.

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.

Braley highlights importance of RFS and bipartisan Farm Bill to Iowa's economy
Merrill, IA - Today Bruce Braley highlighted the importance of the bipartisan Farm Bill and a strong Renewable Fuel Standard to Iowa's economy while touring the Plymouth Energy Ethanol Plant in Merrill, Iowa.

"When it comes to protecting Iowa agriculture jobs, there's a clear choice in the race for US Senate," Braley said. "I worked across the party divide for three years to help pass a bipartisan Farm Bill, and I've fought to protect the job-creating Renewable Fuel Standard from the EPA's proposed cuts. State Sen. Ernst, on the other hand, stands with the Big Oil interests backing her campaign against the Farm Bill and is 'philosophically opposed' to the job-creating RFS. I grew up in rural Iowa, worked in ag jobs growing up, and will always work to put the 75,000 Iowans whose jobs depend on renewable energy first."

Braley's support for renewable fuels helped him win the endorsement of the Iowa Corn Growers Association.

Braley has fought staunchly to protect the RFS; according to the Iowa Renewable Fuels Association, nearly 75,000 Iowa jobs are connected to renewable fuels. Late last year, Braley was the only member of the Iowa U.S. House delegation to join Governor Terry Branstad at an EPA hearing where they spoke out against the EPA's proposed cuts. In November 2013, Braley teamed up with Republican Rep. Steve King to host an event with Iowa State's Bioeconomy Institute to explain to Congressional staff the importance of keeping the RFS at its current levels. At Braley's request, Iowa consistently has had representation at Congressional hearings examining the future of the RFS. And early this year, he helped deliver 100,000 signatures to the EPA urging them to maintain a strong RFS.

Braley also has a strong record of promoting Iowa agriculture and fighting to grow Iowa's rural economy. He worked for three years across party lines to pass the bipartisan Farm Bill that is critical to Iowa jobs and Iowa's farming communities.

In contrast, State Sen. Ernst would put Tea Party obstructionism before Iowa: Ernst would have opposed the Farm Bill, is "philosophically opposed" to the RFS, and her spokesperson said that "in a perfect world...she would support doing away with the (RFS)."