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Auditor reports on AG's Office to Audit Commission

Minnesota Lawyer just posted an article on today’s Legislative Audit Commission meeting, which included a discussion of the June 3 report by Legislative Auditor James Nobles on the Office of Attorney General Lori Swanson.

Certainly the contents of the report — made public a month ago — were not a surprise. However, there were a couple of interesting new twists picked up by the reporter, Charley Shaw, who writes for one of our sister publications, the Capitol Report (a/k/a the St. Paul Legal Ledger).

As you recall in the written report, Nobles concluded that the types of allegations made by those who came forward for the investigation — including charges of mismanagement and misconduct — were not in purview of the Office of the Legislative Auditor, which typically investigates the uses of state funds. Nobles did call on lawmakers to consider whether attorneys who work at the AG’s Office should remain “at-will” or be afforded some kind of civil-service job protections.

However, under questioning from Rep. Steve Simon, DFL-St. Louis Park, Nobles acknowledged that some of the allegations not discussed in the written report involved the use of funds. Nobles said that his office will will follow up on financial allegations involving the use of Medicaid funds in the course of its next regularly scheduled review of federal compliance.

Click here for the full Minnesota Lawyer article.

An interesting side note, we recently reported here that ACORN, a community action group, gave the Minnesota AG’s Office an “A+” on its efforts to combat mortgage fraud (one of only six AG’s Offices nationally to be so recognized). ACORN, as it turns out, was one of two nonprofits that got to split two-thirds of the $749,999 settlement the Minnesota AG’s Office scored from Capital One. (The other third went to the state.) The AG’s Office (then under Hatch) got to direct the settlement (rather than having it go into the general legislative coffers) because the settlement amount came to less than $750,000. (By just a $1! What a coincidence!) In any case, now I’m a little miffed Minnesota only got an “A+” …

It’s also worth noting that the settlement occurred under Hatch’s watch, not Swanson’s (although Swanson was, of course, a top deputy).


  1. Not just a top deputy. Swanson signed the CapitolOne consent judgment, dated February 13, 2006. It’s a public document, go and verify it. She knows more about the settlement than Hatch, and yet when Nobles asked her to answer questions about it, she deferred to Hatch. Nobles’ letter to Swanson is also a public document, dated May 12, 2008. She is the public official, not Hatch. She needs to answer these questions for the people of Minnesota.

  2. Just to clarify – the alleged misuse of Medicaid Fraud division funds occurred in 2007, under Swanson.

  3. The Attorney General oversees nonprofit organizations that solicit and hold money for charitable purposes. State law requires nonprofit organizations to register and file annual financial reports that disclose how money is expended. Minnesota ACORN is a chapter of the national organization based in Louisiana, which has exhibited a pattern of not complying with those Minnesota laws. The Attorney General’s website indicates that ACORN’s registration has been withdrawn, presumably for failure to file an annual report. There is a court order on file concerning ACORN’s previous failure to comply with state laws. So why would the AG direct money to an organization that has a pattern of not being financially and publicly accountable and in consistent violation of the very laws he or she is sworn to uphold? (Unless there is some other benefit to the deal?)

    Jim Bernstein was the Commerce Commissioner under Ventura and is friendly with Hatch and Swanson. He has had some affiliation with Minnesota ACORN after leaving state government.
    Background article:

  4. Two employees – an assistant AG hired at a salary of over $80,000 annually and an investigator being paid $60,000 – were hired in March 2007 to work in Medicaid Fraud. For two months, these two employees’ time was solely devoted to pursuing information to support a case filed by the complex litigation division, which is contrary to the agreement with the federal government that funds the Medicaid Fraud Control Unit. That’s $22,000 not including the hours and mileage involved in transporting purported victims to the Capitol to be paraded in front of the cameras when the AG announced her lawsuit and settlement of the case.

  5. Mark Cohen, editor

    I updated the post to show it was specifically the Capitol One settlement under Hatch’s watch. Thanks for calling that to my attention.

  6. Mark Cohen, editor

    Regarding ACORN, Mike Hatch has made two points in press interviews: 1. it was not ACORN, but it’s PAC that endorsed him; and 2. a Capital One representative picked ACORN as a recipient of the settlement funds.

    I don’t think the first point makes much of a difference, but the second point would. The AP and Strib articles almost seem to there might have been a quid pro quo for Hatch to get an endorsement for his gubernatorial campaign.

    I am not sure really sure I buy that theory: Not to put too fine a point on it, but I don’t see that many Minnesotans even know what ACORN is or what it does, let alone care whom it choses to endorse for governor. Something doesn’t add up with that whole idea.

  7. Here’s what adds up: ACORN is big in DFL politics and the DFL endorsement for governor was hotly contested in 2006. ACORN was a big presence at the convention. Minnesotans at large may not know much about ACORN, but the DFL activists who dominate the convention sure do.

  8. Neither Swanson nor Hatch know it, but the U.S. Department of Justice began a review on April 7, 2008, into allegations of misconduct within the Minnesota U.S. Attorney’s Office, which included allegations of serious misconduct within the Minnesota Attorney General’s Office. Copies of the DOJ letters have been sent to Legislative Auditor Nobles, Representatives Steve Simon, Tom Emmer, and other interested parties. It has been alleged the Medicaid Fraud Control Unit has been unlawfully utilized to fabricate phony lawsuits against innocent small business owners for the illegal purpose of extorting personal and business property under coor of law. I am interested in anyone who can tell me if Deborah Peterson is still the manager of the Medicaid Fraud Division and what her involvement might be in the more recent allegations of wrongdoing that have surfaced. The allegations under review by the DOj involve violations of federal criminal statutes by past and present employees of the Attorney General’s Office and U.S. Attorney’s Office.

  9. Looks like the Perpetually Offended Anti-Swansonites have found another spot in which to leave anonymous accusations.

    Mr. Cohen, if this blog is going to head over into partisan politics, I’d suggest a name change. There are Minnesota lawyers on all thirty-nine sides of these issues, and your “Minnesota Lawyer” implies an illusory inclusivity.

  10. Mark Cohen, editor

    Hmmm. Well you post here; the people whose opinion you disagree with post here; anyone else who wants posts here (attorney or not) — not really sure how more “inclusive” this blog could be. I am a big believer in the words of Oliver Wendell Holmes that sunshine is the best disinfectant.

  11. To Whom It May Concern:

    I own a small retail store in Minneapolis, MN. I lease a space in a center-city global market. Recently I was in need of funds and pursued a loan at a non-profit organization (ADC) that helps small businesses in need. They basically get money from donors and from the City. After a six month loan processing time(long story), I met their demands of getting my credit score up and received a 36 month loan, which I paid off in six months. Being told that good standing with their loan could lead to future larger loans and knowing they were impressed by my prompt payments and closing of the loan, I requested another much needed loan. I was told it was very possible, however, the loan officer told me I needed my previous year tax return and my lease agreement. These are typical loan requests, but I found this strange being that it wasn’t requested for the first loan. Following the previous stated requests, I applied for the loan and the loan officer proceeded to ask me if I wanted to share my business with him. I told him ‘no’ and left the office finding this to be a completely inappropriate request. Within a few days, this same individual came to my place of business to ask again if I wanted to share my business with him. Again I told him ‘no’. A few days later, I returned to the loan office to check on the result of my loan request only to be asked a third time to share my business with the loan officer. I spoke with the market manager of the global market that I lease from, and was told that this was a completely unethical situation and very likely, extortion. I was advised and proceeded to go back to the Director of the loan center and explain my situation. The Director apologized and suddenly my loan was approved. My business was compromised due to their unethical loan officer. Because I paid off the first loan early, I was told I could get a larger loan for having good payment history with them. I was not aware that the loan officer was not processing my second loan until he got me to commit to his business proposal. While waiting for the loan, I was unable to purchase more merchandise for my store, which was in it’s busiest season and therefore missing out on a large amount of business. Please advise me as to what rights I have in this situation

    Mohamoud Abi 612-636-7067

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