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Mike Hatch,
American Bankers and the Twin Cities Media
Part 3: The MeetingAfter
a tumultuous campaign season, Tim Pawlenty was elected governor of
Minnesota in November of 2002. He appointed Glenn
Wilson to the post of Commerce Commissioner. Wilson's main
experience was in the mortgage industry - Ronald Reagan had
appointed him president of the Government National Mortgage
Association ("Ginny Mae") in 1985. On
January 6, Tim
Pawlenty was inaugurated, and his cabinet (including Wilson) were
sworn in. The
January 6 Meeting After
the inauguration, according to the transcript of Attorney General
Hatch's deposition to the Legislative Auditor as well as the auditor's
report [warning - big PDF file], he had dinner at the Oceanaire (a
restaurant in the Minneapolis Hyatt). Hatch
described the meeting in his testimony to the auditor:
So we met at the
Oceanaire. It's Jerich, some guy named Harry at American
Bankers [Harry Bassett, Senior Vice President of Government
Relations for American Bankers] and myself. He makes the offer
exactly like the August 7th settlement, except they said the three
and a half goes to chairty. I said fine, I want this presented
to the Commissioner immediately. Because I wanted to get it on
the table. I wanted to get the bar set. I met on January
8, I believe it was the 8th, it was on a Wednesday. I told
them, I wanted either Jerich or Thornton in my office at 11:00 on
January 8th, whatever the Wednesday is, to make that offer. I
wanted the offer on the table...
This set the stage
for the January 8th meeting between Hatch and Wilson that we'll get to
in a moment here. Such
settlement are, of course, illegal under state
law. The legislative auditor noted this in their report:
We were asked to
examine the Attorney General’s actions because state law prohibits
a diversion of settlement money to a charity (Appendix M). Moreover,
Minn. Stat. §16A.151, Subd. 1(b) makes it illegal for state
officials—including the attorney general—to even
"pursue" such a diversion. The key provision of law says:
(b) A state
official [defined to include the attorney general] may not
commence, pursue, or settle litigation, or settle a matter that
could have resulted in litigation, in a manner that would result
in money being distributed to a person or entity other than the
state.
How serious was this
illegal proposal? Apparently, according to the Auditor's Report,
seriously enough to report:
Attorney General Hatch
reportedly told people attending a task force on mental health
access that he might have a donor for the Community Behavioral Health
Trust Fund. The Attorney General asked Dick Niemiec, a senior vice
president at Blue Cross and Blue Shield of Minnesota, and Mary
Brainerd, Chief Executive Officer of HealthPartners to come back to
his office to discuss the possible donation to the trust fund with
the new commissioner of Commerce.
So - according to
the Auditor on the case, Hatch convened a meeting among a couple
of people who would be key stakeholders in a diversion of American
Bankers' fine to charity, broached the idea, and then walked over to
his office to meet with Glenn Wilson.
The
January 8 Meeting - Wilson meets Hatch On
January 8, Glenn Wilson had been in office for two days.
According to a source familiar with the issue, Wilson had gotten a
call on January 7 from Hatch, calling a meeting for the eighth.
The meeting was supposed to be "primarily a meet and greet",
according to the source, as well as a letter from Ken Wolf (Commerce
Department Reliability Administrator) to Legislative Auditor Jim
Nobles, dated June 18, 2003 - "On
January 7, 2003, the day before the January 8, 2003 meeting between
Commissioner Wilson and Attorney General Hatch, Commissioner Wilson
told me that he was going to meet with Mr. Hatch.
I asked the nature of the meeting and he said he was invited
over for a courtesy visit to meet Mr. Hatch". But
according to the source, there were some indications that Wilson had
no idea this meeting was to be anything but a "meet and
greet" between two men that hadn't worked together before;
Wilson, who reads with glasses, left his reading glasses at his
office. And when officials go to meetings with substantive
issues on the table, they very often take associates, or at least
notebooks. Wilson took neither, according to my source. He
went alone. According
to the source, "It was a setup". Hatch
presented to Wilson the proposal - the $3.5 million dollar settlement
would go to a charity for the mentally ill (the "Community Mental
Health Trust") According to the
source, Wilson asked if it was a "done deal", and Hatch
replied that it was one of the options on the table. At
that point, says my source, Dick Niemiec (an official from Blue Cross)
and Mary Brainerd (from HealthPartners) were brought into the
meeting. Wilson, says the source, thought they'd been brought in
to endorse the contribution. Ron Jerich also entered the meeting
- it was the first time Jerich and Wilson had met, according to my
source. According
to my source, the entire meeting took about twenty minutes. Wilson
went back to his office, and told members of his senior staff "I
can't believe this." My source tells me that Wilson felt
befuddled by the situation - he had no familiarity with American
Bankers Insurance, or the issues involved, and he wondered "why
should I be able to choose where the money [from the settlement]
goes?" The deal was presented to Wilson, says my source, as
"Zero to the taxpayer, $3.5 million to a charitable entity that
Hatch was arguably the inventor of," alluding to the Attorney
General's propensity for installing his own people on the boards of
non-profits with which his office becomes involved (which we'll
discuss in next Wednesday's installment). Although
my source spoke on background, the details of his account are
corroborated by the letter from Ken Wolf.
Mr.
Wilson frowned and said, "I was set up."
I asked what he meant by that.
He repeated his previous comment to me that it was just
supposed to be a courtesy visit.
However, he told me Mr. Hatch called other people into his
office to present an offer of a settlement of $3.5 million to go to
some charity to settle some case that the Department had outstanding
against some insurance company.
Commissioner
Wilson was taken by surprise by the issue and returned to his office
to investigate the situation.
He told me he didn't yet know his lines of authority.
However, he clearly stated that he felt it was inappropriate
for the Attorney General, the Commissioner, or any other individual
to decide what charity should be the recipient of settlement money.
He felt any fines or penalties should go to the general fund.
The
Meeting - according to Hatch
Hatch described the
meeting in his deposition to the Legislative Auditor's office:
I invite Dick
Niemiec of Blue Cross, and Mary Brainerd of HealthPartners. I
tell everybody, you know what? This company is about to make a
three and a half million dollar offer. They want to give it to
a charity. Maybe they can give it to this group [the mental
health charity]. What a fine thing. I tell these two,
come along to the meeting. I'll introduce you to the new
commissioner, who is their regulator. And so they come to the
meeting. I make them wait in the lobby. By that time
Jerich is there, pursuant to our discussion, and so he's
there. Those two are there. They are in in the
lobby. I go into the meeting with Wilson and Chief Deputy
Eiden [Kris Eiden, deputy Attorney General and a former law partner
of Hatch's]. She gets the letter. She kept the
letter. Gives him a copy of the letter. He's reading the
letter. I go over the mischief. I go over the whole nine
yards what I've explained to you. This thing is bad.
They tried to influence the [pauses] this proceeding by contributing
to both the Democrats and Republican Candidates. You are
going to get hit by political people on this thing. You make
damn well and sure you don't cave in to it. This is
extraordinarily unusual. This is not a good company.
It's disreputable. You don't want to start off with this kind
of a case.
Jerich enters the
picture again.
He had asked
[pauses] I said that Jerich, representing American Bankers, was in
the lobby. They are going to make an offer along the lines of
August 7th, except that it goes to a charitable organization.
I also told him that there were two executives from insurance
companies that propbably have two thirds of the health care in this
state. That he's going to be very much involved in because
health care is a huge issue in this state. And we had a
mental health problem in this state. If it's okay, I would
like to introduce you to the two of them and then they can tell you
want they're doing in mental health. SO I bring them in.
They spend ten minutes to saying that they are doing mental health
and what a fine thing. I bring in Jerich and I tell Jerich,
okay, make your presentation. He makes the presentation along the
lines of August 7th. He agrees. It's the same thing as
August 7th, except for it goes to a charity and wouldn't that be
great. And you two over there, what a fine charity you've got
if it could go there. Kick 'em all out, so now we're getting
to noon. The meeting is going over. I tell the
commissioner to meet with our lawyers. That you can't [pause]
there's a problem here. There's a fly in the ointment, and
that is it can't be done to a charity. But talk [pause] My
recommendation was that he talk to the political people and tell
them up front what he can't do. Tell them about our
conversation. And that our lawyers will brief ou with regard
to what can and cannot be done with this money. He then leaves
the meeting.
The Legislative
Auditor noticed the inconsistency between the two accounts - one of
their findings read:
We received
conflicting and irreconcilable testimony on whether Attorney General
Hatch told Commissioner Wilson on January 8, 2003, about the
campaign contribution American Bankers Insurance made to the
Republican Party.
And noted:
Asked whether Attorney
General Hatch discussed a campaign contribution from American
Bankers to the Republican Party or showed him a letter from Mr.
Eibensteiner to Mr. Jerich, Commissioner Wilson said: "I don’t
believe that happened." Asked whether he was sure it did not
happen, he said: "It didn’t happen." Asked whether it
was possible that the conversation occurred as Attorney General
Hatch described it, but that it did not register on him,
Commissioner Wilson said: "I don’t believe so." Asked if
he could reconcile his recollection and testimony about the meeting
with that of Attorney General Hatch, Commissioner Wilson said:
"No, sir.".
Questions
- So
what did Wilson know, and when did he know it?
- Did Hatch show
Wilson the form letter from Eibensteiner at the January 8
meeting, or not?
- Was it an
Ambush?
- Did
Hatch call Niemiec and Brainerd to the meeting because, as he said,
he wanted them to meet the man responsible for regulating them - as
he confronted the same man with the letter from Eibensteiner?
Or was it to nail down the specifics of the contribution to the
Community Mental Health Trust?
- And did the
Commerce Department actually give American Bankers a better deal
based on their contribution to the national party?
- Why is Attorney
General Mike Hatch bringing his client, Commerce
Commissioner Glenn Wilson, into a meeting with a representative
of his client's adversary (Jerich, representing American
Bankers) and presenting allegedly incriminating evidence about
the Client (Wilson) without (Wilson says) informing the Client
about it first?
We'll
talk about all of this in Monday's installment. [Previous -
The Check]
[Next - "Confusing, deceptive, inappropriate, inconsiderate"]
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