On January 3, 2012, I sent a letter to Troy City Council requesting a five year public audit of the city Law Director's office. In response, the City provided a letter produced by the Law Director that did not provide a five year audit (a link to that letter is below). On March 13, 2012, I sent the following letter to City Council requesting them to reconsider their summary dismissal of my request for a five year audit of the Law Director's office. The citizens of Troy are still awaiting a five year audit of the Law Director's office.
And yet, the stonewalling continues with a second response signed by the President of Council and the Campaign Treasurer for the Law Director that summarily declares "the matter to be closed" and refusing to account for the funds (a link to that letter is below). The legal principles are not disputed. There is more effort being made not to allow an audit than to just produce the documents and answer the questions. Stonewalling and refusing to produce the documentation necessary to conduct an audit certainly creates the inference that something is being hidden. Is that true?
The City of Troy writes checks every year approaching $200,000 payable to a law firm. Yet, when asked, the City cannot account for:
1. What specific work is being done to earn this tax money;
2. What individuals are doing what work when to earn this tax money;[1]
3. What individuals are actually receiving the money.
This lack of accountability for our tax dollars, going on years now, should be unacceptable to every citizen in a democratic society. These people are prosecuting fellow citizens demanding that they be accountable yet they are not accountable for hundreds of thousands of tax dollars. Try explaining the fairness of that. The people of Troy are listening.
[1] Even cities that have their Law Director on a salary still require the Law Director to keep time records of all specific work done for the City. This practice is normal in responsible local government.
March 13, 2012
MARTHA A. BAKER
TROY CITY COUNCIL
718 TRADE SQ.
TROY, OH 45373
JOHN A. STICKEL
AUDITOR, CITY OF TROY
2780 MEADOWPOINT DRIVE
TROY, OH 45373
Re: Law Director
Dear Ms. Baker and Mr. Stickel:
Thank you for your letter of February 9, 2012. Enclosed with that letter was a letter written to the law director and, obviously, providing information solicited by the law director.[1]
Contrary to your intent to ?consider this matter closed?, the letter you submitted was not at all responsive to my initial request. You will recall, I wrote as a taxpayer and citizen of Troy requesting the City conduct a 5 year detailed public audit of the elected law director office.
The reason I requested the audit was/is the public records produced by the city and county over the past several years do not provide the information necessary to answer the legitimate questions I and other citizens are asking about this office. If you would like to review the public records made available to me, I would be more than glad to make those available to you.
The letter provided to you by the Law Director, places great significance on the portion of R.C. 2921.421 that allows a municipality
?? to engage the services of any firm that practices the profession of law upon the terms approved by the legislative authority ? or to designate any partner, officer, or employee of that firm as a nonelected public official or employee of the political subdivision?.
Of course, the city council has the authority granted in this statutory provision to hire lawyers as it deems fit to provide services for the City. However, this authority is not unlimited.
The City of Troy is a statutory municipality which means the Law Director is an elected position and his/her duties are defined by statute[2]. Ohio ethics laws[3] also place restrictions on activities of an elected law director. I submit the Troy City Council does not have the authority to modify these state laws.[4] Otherwise, there would be no basis to preclude a city with an elected law director to hire someone else to perform the statutory duties of the law director to the exclusion of the properly elected officeholder. At the same time, I have found no legal authority that city council is empowered to eliminate ethical restrictions placed upon the law director as an elected official or as a lawyer.
The undisputed legal standards:
The letter provided by the Law Director does not dispute the following legal principles I submitted to you in my initial letter in January, to wit:
1. An elected law director who hires individuals from his own firm to perform law director duties must strictly comply with Ohio?s ethics laws or the arrangement is an unlawful interest in a public contract[5];
2. O.R.C. §733.621 permits an elected law director subject to section 2921.421 of the Revised Code, to appoint as an assistant a person who is an associate or partner of, or who is employed by the law director in the private practice of law in a partnership, professional association, or other law business arrangement. This statute requires the appointment of a person not an undesignated class of people or a law firm. The law requires that the public know the identity of the persons, individually. This information is vital not only because it is required by law but an accounting analysis cannot be conducted unless the specific individuals are known who are (A) supposed to receive the tax dollars and (B) actually performing the services for which the tax dollars are appropriated.
3. Only the specific individuals who actually perform the services are entitled to be paid/receive the money by/from the municipality or the county commissioners. Ohio Ethics Opinion 92-003.
4. The law director is not permitted to share, in whole or in part, any of the earnings of the business associate, partner, or employee paid by the political subdivision to the business associate, partner, or employee for services rendered for the political subdivision. R.C. 2921.421.
5. No other lawyer or law firm is permitted to receive tax dollars for the services performed by the assistants specifically appointed by the law director. Toledo Bar Assn. v. Batt (1997), 78 Ohio St.3d 189, 677 N.E.2d 349. Only the specific individuals who actually perform the services are entitled to receive the tax dollars appropriated for those services.
6. Elected officials have a special obligation to not violate the public's trust for personal gain.[6]
7. Public officers who expend or authorize the expenditure of public funds on void contracts are liable to the taxing district whose funds have been so expended for all damages or loss sustained by such taxing subdivision in an amount equal to the full amount of such funds paid on or on account of any such void contract.[7]
The questions not answered:
In my letter of January, I set forth specific questions to address in a proper audit of the law director office, to wit:
What documentation, if any, exists to verify compliance with the law by the elected law director during each of the preceding 5 years?
1. What individual lawyers were disclosed in writing to city council for each of the last five years as appointees or employees of the law director entitled to receive compensation from the tax monies of the city budget?
2. What individual lawyers (not an unelected law firm) received the dollars spent by the city and how much did each receive for each of the last five years?
3. What specific professional services were performed for each dollar paid to each individual lawyer during the same time period?[8]
4. What does the legislative authority determine to be the compensation and other terms of appointment or employment of each appointee or employee for each year and are/were they fair and reasonable to the political subdivision.[9]
5. Did the law director or any non-appointee lawyer, either directly, or through a law firm share in funds that should have been paid to the individuals who performed the services for which the funds were appropriated?[10]
6. Were taxpayer monies appropriated to compensate the elected law director or his properly appointed assistants to perform the statutory duties improperly commingled with the monies of an un-elected law firm?
7. What dollar amounts must be returned to the City, if any, as having been illegally spent pursuant to unenforceable/void contracts for each of the last 5 years?
These questions were not answered by the author of the letter submitted by the Law Director. Certainly, no documentary verification was provided.
That letter partially addressed a few of these concerns but when factual conclusions are alleged the letter merely says that these have been ?verified? or ?confirmed? without producing any detailed documentation within the ambit of my request to substantiate these statements. Unsubstantiated, these statements take on the characteristic of mere allegations.
I believe the citizens of Troy have a right to know who actually receives the tax monies appropriated for public services with a detailed accounting of the funds. That has not occurred. Particularly, in these times of tight municipal budgets and spending cutbacks, these are not trivial issues to be summarily dismissed on the basis of a self-serving letter produced by the elected official who is the object of the inquiry.
During the last five years, has the law director[11] shared in any monies appropriated by the city council for prosecutors, assistant law directors, secretaries or a multitude of other items? What documentation exists for public view responsive in detail to this inquiry? Query: what is it called when money is appropriated by council for the provision of specific services and that money is actually received by individuals who did not perform the services[12]?
There are too many questions unanswered in your response to me. It certainly appears that a great deal of effort is being expended to NOT perform an audit, more effort than would be necessary to just account for the monies. Why is that? Why so much effort to cover up the lack of public accountability? When an elected official is requested to account, in detail, for monies about which he/she owes a public trust, the proper response is ?Certainly, and here are all the documents you need to trace every penny.? That is how honest, transparent government is conducted.
Please re-consider your summary dismissal of my request and conduct a detailed, public, audit for the last five years of the law director?s office.[13] Please provide that honesty, transparency and accountability which our local government owes to its citizens, the ones ultimately paying the bill. Thank you.
Respectfully,
David E. Beitzel
CC: City Council
[1] When there is evidence the fox may be raiding the henhouse, most people agree it is highly inappropriate to request the fox to have it investigated.
[2] The statutory duties of a city director of law include (these Ohio statutes are not subject to modification or nullification by city ordinance): to act as the legal advisor to and attorney for the municipal corporation; to act as the legal advisor to and attorney for all officers of the municipal corporation in matters relating to their official duties; prepare all contracts, bonds, and other instruments in writing in which the municipal corporation is concerned, and shall indorse on each his approval of the form and the correctness thereof; no contract with the municipal corporation shall take effect until the approval of the city director of law is indorsed thereon; he or his assistants shall be the prosecutor in municipal court, and shall perform such other duties and have such assistants and clerks as are required or provided; the law director will see that all lawfully appropriated funds by the relevant governmental entities are paid to and received by the individuals who perform these functions under his charge (not some other attorney who did not actually perform the functions); the city director of law shall prepare all contracts, bonds, and other instruments in writing in which the city is concerned, and shall serve the officers as legal counsel and attorney; when required to do so by resolution of council, shall prosecute or defend on behalf of the city, all complaints, suits, and controversies in which the city is a party, and such other suits, matters, and controversies as he is, by resolution or ordinance, directed to prosecute; give legal opinions: When an officer of a city entertains doubts concerning the law in any matter before him in his official capacity, and desires the opinion of the city director of law, he shall clearly state to the director of law, in writing, the question upon which the opinion is desired, and thereupon the director of law shall, within a reasonable time, reply orally or in writing to such inquiry; apply, in the name of the municipal corporation, to a court of competent jurisdiction for an order of injunction to restrain the misapplication of funds of the municipal corporation, the abuse of its corporate powers, or the execution or performance of any contract made in behalf of the municipal corporation in contravention of the laws or ordinance governing it, or which was procured by fraud or corruption; when an obligation or contract made on behalf of a municipal corporation, granting a right or easement or creating a public duty, is being evaded or violated, the city director of law shall apply for the forfeiture or the specific performance thereof as the nature of the case requires; in case an officer or board of a municipal corporation fails to perform any duty expressly enjoined by law or ordinance, the city director of law shall apply to a court of competent jurisdiction for a writ of mandamus to compel the performance of the duty; taxpayer suits.
[3] As well as ethical prohibitions for licensed attorneys.
[4] Additionally, I do not believe council has the power of nullification to allow by ordinance violations of applicable state and professional ethics laws.
[5] O.R.C. §2921.42(A)(1); Ohio Ethics Opinion 92-003.
[6] Attorney General Mike DeWine in a Press Release issued 11/21/11 after the prosecution of ethics laws violations of an elected county commissioner. The prosecution was conducted by the Organized Crime Investigation Commission and the Ohio Ethics Commission.
[7] 1928 OAG 2016.
[8] For example, since there are not prosecutors at the courthouse during all business hours, time records identifying tasks performed are necessary to prove the work performed. The same is true of an assistant law director who may be performing work outside the public view.
[9] The letter submitted by the Law Director renders the opinion that the compensation to the unknown assistants is fair and reasonable to the City and that the amounts have been ?verified? by a survey of the compensation paid to assistants of other Ohio law directors performing similar service. At no time is it disclosed what that compensation was, what individuals are receiving the undisclosed compensation amounts, what specific information was contained in the ?verification? survey nor what the similar services being performed are.
[10] The letter submitted by the Law Director renders the opinion that the Law Director, for an unspecified time, has not shared in the monies appropriated for services to be performed by other individual lawyers. The Law Director?s letter states that ?fact? has been confirmed but this statement is unsubstantiated with any documentation to allow such a conclusion. Without documentary substantiation, that ?fact? is hardly more than an allegation.
[11] Or, any other lawyer who did not actually perform the appropriated services.
[12] Or, cannot prove with supporting documentation they performed the services.
[13] I am receiving reports from City Hall that my request has been belittled by way of personal attacks against me. This type of ad hominem argument, while politically inflammatory, is not responsive substantively to the inquiry and the request for governmental responsibility that I am submitting on behalf of my neighbors, the citizens of Troy.
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Response from the City dated February 9, 2012:
________________________________________________________________________________________
January 3, 2012
Dear Councilperson __________:
I am writing as a taxpayer and citizen of Troy. As part of my decision in 2008 to seek the office of Law Director for the City of Troy, I began my due diligence with a series of public records requests. Unfortunately, the documents produced raised more questions than they answered about the lawful operation of the law director?s office. For the next three years, I continued with additional public records requests in an effort to get my questions answered. They were not.
LEGAL ANALYSIS:
Historically, O.R.C. §2921.42(A)(1)[1] prohibited an elected statutory city law director from authorizing, or using his authority or influence with respect to the city and county he serves as law director and prosecutor in the municipal court to secure authorization for the employment of his business associates as assistant law directors/prosecutors. Such employment was classified an unlawful interest in a public contract. The prohibition further extended to the payment of compensation from the city or the board of county commissioners for or to his business associates for serving as assistant law directors/prosecutors. Ohio Ethics Opinion 92-003. A violation of the unlawful interest in a public contract statute was, and still is, a felony and any such contract/agreement for payment is void and unenforceable.
Thereafter, the legislature amended O.R.C. §2921.42 and enacted O.R.C. §2921.421. With this amendment, elected city law directors had an exception to this public contract prohibition as long as specific statutory requirements were strictly and publicly met. That exception is now contained in paragraph (F) of §2921.42 which provides in pertinent part:
?It is not a violation of this section ? for a chief legal officer[2] of a municipal corporation or an official designated as prosecutor in a municipal corporation to appoint assistants and employees in accordance with 2921.421 of the Revised Code ?? (emphasis added)
The newly enacted O.R.C. §2921.421 provides specific requirements, as necessary conditions precedent, for a city law director to obtain the benefit of immunity from the prohibitions contained in the O.R.C. §2921.42 i.e. the prohibition from having an unlawful interest in a public contract. O.R.C. §2921.421 provides in pertinent part:
(B) ? a chief legal officer of a municipal corporation or an official designated as prosecutor in a municipal corporation may appoint assistants and employees, except a member of the family of the chief legal officer or official designated as prosecutor, in accordance with section 733.621 of the Revised Code[3] ? if all of the following apply:
(1) The services to be furnished by the appointee or employee are necessary services for the political subdivision or are authorized by the legislative authority, governing board, or other contracting authority of the political subdivision.
(2) The treatment accorded the political subdivision is either preferential to or the same as that accorded other clients or customers of the appointee or employee in similar transactions, or the legislative authority, governing board, or other contracting authority of the political subdivision, in its sole discretion, determines that the compensation and other terms of appointment or employment of the appointee or employee are fair and reasonable to the political subdivision.
(3) The appointment or employment is made after prior written disclosure to the legislative authority, governing board, or other contracting authority of the political subdivision of the business relationship between the prosecuting attorney, the chief legal officer or official designated as prosecutor in a municipal corporation, or the township law director and the appointee or employee thereof. In the case of a municipal corporation, the disclosure may be made or evidenced in an ordinance, resolution, or other document that does either or both of the following:
(a) Authorizes the furnishing of services as required under division (B)(1) of this section;
(b) Determines that the compensation and other terms of appointment or employment of the appointee or employee are fair and reasonable to the political subdivision as required under division (B)(2) of this section.
(4) The prosecuting attorney, the elected chief legal officer, or the
township law director[4] does not receive any distributive share or other portion, in whole or in part, of the earnings of the business associate, partner, or employee paid by the political subdivision to the business associate, partner, or employee for services rendered for the political subdivision. (emphasis added)
Public records for the past 5 years show either no compliance with these statutory requirements or no public records to assure compliance with these restrictions by the current law director or his predecessors.[5]
There are no ordinances, resolutions or other documents that identify specific assistants or employees nor an authorization by the legislative authority[6] for specific budgetary years that the services to be[7] furnished by these specific individuals are necessary services for the political subdivision.
There are no ordinances, resolutions or other documents that the legislative authority determined for any budgetary year that the compensation of and other terms of appointment or employment of the specifically identified appointees or employees are fair and reasonable to the political subdivision.
There are no ordinances, resolutions or other documents for any budgetary year that show the appointment or employment of the specific individuals was made after prior written disclosure to the legislative authority and that the business relationship of each identified employee or appointee and their employment complied with either or both of the preceding requirements.
There is no public record or accounting to assure compliance that the law director or other non-appointee lawyer has not received[8] in any form whatsoever any distributive share or other portion, in whole or in part, of the earnings of the business associate, partner, or employee paid by the political subdivision to the business associate, partner, or employee for services rendered for the political subdivision.[9]
The absence of public records[10] to show compliance with the law by the law director[11] leaves an unpleasant inference[12] that the exception to the prohibition against the unlawful interest in public contracts has not been met thereby (1) voiding any employment contracts/agreements during the years the requirements were not met[13]; (2) making the payments made by the city during those years illegal and (3) making appropriate the imposition of criminal sanctions[14].
The City is hereby requested to conduct an independent audit and accounting of the law director?s office and budget for, at least, the last five years to ascertain compliance with the law. The following questions need to be addressed for the benefit of the taxpayers and citizens of the City of Troy:
What documentation, if any, exists to verify compliance with the law by the elected law director during each of the preceding 5 years?
What individual lawyers were disclosed in writing to city council for each of the last five years as appointees or employees of the law director entitled to receive compensation from the tax monies of the city budget?
What individual lawyers (not an unelected law firm) received the dollars spent by the city and how much did each receive for each of the last five years?
What specific professional services were performed for each dollar paid to each individual lawyer during the same time period?
What does the legislative authority determine to be the compensation and other terms of appointment or employment of each appointee or employee for each year and are/were they fair and reasonable to the political subdivision.
Did the law director or any non-appointee lawyer, either directly, or through a law firm share in funds that should have been paid to the individuals who performed the services for which the funds were appropriated?
Were taxpayer monies appropriated to compensate the elected law director or his properly appointed assistants to perform the statutory duties commingled with the monies of an un-elected law firm?
What dollar amounts must be returned to the City, if any, as having been illegally spent pursuant to unenforceable/void contracts for each of the last 5 years?
Due to the obvious concern of potential nonfeasance, misfeasance and/or malfeasance of the current law director and his law firm, the City should take care to have independent legal counsel as part of the process to insure, for the benefit of the citizens of Troy, an objective and exhaustive audit of this elected office.
Thank you for your anticipated diligence in upholding your public duty on behalf of the citizens and taxpayers in the City of Troy.
Respectfully,
David E. Beitzel
[1] This statute prohibits an elected public official from having an unlawful interest in a public contract.
[2] Chief legal officer means a city law director. O.R.C. §733.621.
[3] O.R.C. §733.621 provides in pertinent part: ?Subject to section 2921.421 of the Revised Code, a chief legal officer of a municipal corporation may appoint, as an assistant legal officer, prosecutor, clerk, stenographer, or other employee, a person who is an associate or partner of, or who is employed by, the chief legal officer, assistant legal officer, or prosecutor in the private practice of law in a partnership, professional association, or other law business arrangement.? (emphasis added).
[4] Nor any other lawyer. Ohio Ethics Opinion 92-003. Only the people who actually perform the services are entitled to be paid by the municipality or the county commissioners.
[5] Presumably, as a matter of governmental transparency and annual municipal budgeting practices, these statutory requirements should be publicly complied with at least on an annual basis as part of the annual budgetary process.
[6] In the case of the City of Troy, the legislative authority would be city council.
[7] The language of the statute clearly contemplates action by the legislature before services are rendered or payments made by the city to the specific assistants or employees.
[8] On a collateral issue, O.R.C. §1901.34(A) requires the law director to prosecute in municipal court all criminal cases occurring within the municipal corporation and all criminal cases brought before the court arising in the unincorporated areas within the territory of the municipal court. To the extent the law director also prosecutes cases in the municipal court as are required of the prosecuting attorney of the county, the city director of law or any assistants who may be appointed shall receive additional compensation from the county as the county commissioners prescribe. O.R.C. §1901.34(C). There is no authority to pay a law firm with county funds. The monies paid by the county commissioners is clearly earned by and owed to whoever actually performs the services. Ohio Ethics Opinion 92-003. Arrangement for the employment of assistant law directors to prosecute offenses arising in the unincorporated areas within the municipal court's jurisdiction and payment therefor by the county, constitutes a public contract entered into by and for the use of the county. Id.
[9] From a different perspective, there is no public accounting that shows what specific work (time records) these appointees or employees have done to earn the funds they may or may not have received. In fact, there are not public records that show payment to any specific appointees or employees but rather a law firm which is clearly not contemplated by the statutory scheme.
[10]The lack of any public accounting also raises other issues concerning the billing practices of the appointee attorneys concerning what work, if any, was done to earn the monies actually received. Accepting public monies for time not worked is tantamount to misappropriation. Toledo Bar Assn. v. Batt (1997), 78 Ohio St.3d 189, 677 N.E.2d 349. And when professional misconduct involves misappropriation, disbarment is the presumptive sanction, although this sanction may be tempered with sufficient evidence of mitigating circumstances. Dayton Bar Assn. v. Gerren, 103 Ohio St.3d 21, 2004-Ohio-4110, 812 N.E.2d 1280, ¶ 14.
[11] Not only does the law and responsible public policy require complete and full accounting by the elected law director, the City of Troy has contractually assumed the responsibility to see that this is done. The 2011 contract between Miami County and the City for the payment of $120,000 per year from the county to the city for prosecutorial services specifically provides in paragraph 4 on page 2: ?The City agrees further that it will assume the full and complete responsibility of ensuring that appropriate distribution of said funds and proper accounting for the same?.?
[12] "Elected officials have a special obligation to not violate the public's trust for personal gain." Attorney General Mike DeWine in a Press Release issued 11/21/11 after the prosecution of ethics laws violations of an elected county commissioner. The prosecution was conducted by the Organized Crime Investigation Commission and the Ohio Ethics Commission.
[13] Public officers who expend or authorize the expenditure of public funds on void contracts are liable to the taxing district whose funds have been so expended for all damages or loss sustained by such taxing subdivision in an amount equal to the full amount of such funds paid on or on account of any such void contract. 1928 OAG 2016.
[14] Including, but not limited to, O.R.C. §§ 2921.01(A), 2921.41, 2921.42, 2923.03.
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