Krolicki indicted, faces felony charges

Lt. Gov. Brian Krolicki was indicted Wednesday by a Clark County Grand Jury on charges he misappropriated more than $6 million in state funds and falsified accounts while he was treasurer.

Krolicki, 47, faces four felony counts for his alleged mishandling of the money, which was in the state's prepaid college savings program. His chief of staff Kathy Besser faces two counts accusing her of being a principal to the falsification and misappropriation of the money.

Krolicki said the good news for him is that now he can "begin defending myself in the fairness of an open courtroom." He said he would "clearly demonstrate that these accusations are false" and emerge from the trial completely vindicated.

While the four counts against him each carry a potential four-year prison sentence, they are Class D felonies, which " except in extraordinary circumstances " receive a term of probation instead.

The issue was turned over to the attorney general's office after legislative auditors reported that more than $6 million in state funds was used to pay expenses in the prepaid tuition program over and above the amounts authorized by the Legislature and governor. Auditors also objected to the fact the funds were never run through the state's accounting system but just spent on Krolicki's orders. They included $3.4 million paid to the plan's adviser and $1 million for legal services.

The expenditures that drew the most attention were those for marketing and advertising the plan. A total of $1.5 million bought, among other things, a series of TV ads featuring Krolicki and daughters, which ran during a hard-fought primary contest against Barbara Woolen. She charged even before the funding irregularities were questioned that Krolicki was using state funds to campaign against her.

Krolicki has denied that, saying the majority of state treasurers appear in commercials pushing the college savings plans in their states.

He said the decision to take the case to the grand jury now is "mean spirited" and politically motivated. Krolicki repeated his charge that the indictment was prompted by his announcement three weeks ago that he was planning to run against U.S. Sen. Harry Reid, D-Nev., in 2010.

Auditors did say that all the money involved was used for appropriate purposes to support and operate the prepaid tuition program " just that it was spent without authorization.

Krolicki's lawyer Kent Robison said they would have no more detailed comments on the indictment until they receive the transcript of the proceedings and a list of witnesses who appeared. As for evidence to back the charges, Robison said they know nothing more than they did last week when he and Krolicki announced the investigation.

He repeated his objections to the fact the attorney general chose the secret grand jury process rather than filing a criminal complaint, which would be heard in open court. Robison said the grand jury process also denies Krolicki and his counsel the right to hear any of the evidence and the right to question witnesses.

"This is unfair to a public officer," he said last week, saying it is just an attempt to ruin Krolicki's political reputation.

Now, Robison said, the issue proceeds to the public forum of a district court.

"Mark my words, I will walk away from these proceedings with my head held high, having clearly and unequivocally been found innocent of these allegations," Krolicki said.

He said he will continue in his role as lieutenant governor, including presiding over the Senate when the Legislature opens in February.

The investigation was originally prompted by complaints from Krolicki's successor as treasurer, Kate Marshall. She said her staff had found the irregularities in how the prepaid tuition money was handled and that she wanted an investigation into whether the law may have been broken. The issue became a formal investigation after the report by auditors was turned over to the attorney general's office.

Besser's lawyer, John Ohlson of Reno, could not be reached for comment on the two counts against her. But in cases like this, it is a common prosecutor's tactic to indict a subordinate in hopes of striking a deal for their testimony against the boss.

- Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.