Scope of Kitzhaber-Hayes investigation widens

State’s chief operating officer says he was interviewed by the IRS and FBI.

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Damning evidence against former Gov. John Kitzhaber continues to mount, and it appears several federal agencies are taking interest in the case.

The state’s chief operating officer Michael Jordan said Wednesday he was questioned by the FBI and IRS two weeks ago, reports.

The Oregonian/OregonLive was the first to report that Hayes’ federal tax return for 2012 didn’t appear to reflect all her income from her environmental consulting business. The income could have been reported on her business tax return, but Hayes and her attorneys have not responded to repeated requests for those returns or for comment. Hayes hired a criminal defense attorney to deal with her tax situation.

Jordan, who runs the state Department of Administrative Services, also disclosed in an interview Wednesday that state technicians swept through offices of the governor after Kate Brown took office to gather up computers and other electronics used by Kitzhaber staffers. They told Jordan they did so after discussions with the office of U.S. Attorney Amanda Marshall.

The Portland Tribune reports that Kitzhaber’s opponent in the 2014 election foresaw federal charges coming against the now-resigned governor and his fiancee.

Remarkably, a federal grand jury subpoena issued by Marshall’s office shortly after Kitzhaber announced he would resign on Feb. 13 closely tracks the accusations laid out in Richardson’s letter — even though it was written nearly four months earlier. The subpoena demands documents from state agencies related to Kitzhaber, Hayes and seven organizations associated with Hayes. Only two of those organizations were not mentioned in Richardson’s letter.

But more than that, the letter outlined the legal case the federal government may very well be pursuing. Although Marshall’s office will not say anything about the investigation, the letter lays out reasons to believe Kitzhaber and Hayes committed what is called “honest services” fraud by allowing money — in this case, payments to Hayes by the organizations — to influence government decisions. Related crimes outlined in the letter include bribery, money laundering and conspiracy. Richardson is not claiming sole credit for the federal investigation. In fact, he says the accusations in the letter were based entirely on news reports about Hayes’ business dealings that had been published at the time. But the letter pulled them all together into a coherent narrative that lends credence to the fraud allegation.

The Portland Tribune also noted that Kitzhaber saga has bolstered conservatives efforts to forestall green energy bills.

The story, “John Kitzhaber saga fuels conservatives’ fight on clean energy,” detailed how Hayes received $118,000 from the Energy Foundation and the Clean Economy Development Center. The article says the scandal gives conservatives ammunition against billionaire environmentalist Tom Steyer, who helped fund some of the organizations that paid Hayes.

“Beneath the violation of public trust by the Oregon state officials, we have far-left foundations funneling significant funds to an environmental group to orchestrate this type of activism without any public disclosure,” said Senate Environment and Public Works Chairman Jim Inhofe (R-Okla.).

Willamette Week’s Nigel Jaquiss wrote a fascinating story about how Kitzhaber’s emails revealed questionable tactics in the wake of the Cover Oregon debacle — notably, putting a political consultant with little health care experience in charge of the clean up.

In public, Kitzhaber assured Oregonians he was working diligently with state officials to find a solution for the website’s woeful performance. In private, however, Kitzhaber handed oversight of the Cover Oregon mess to a secretive campaign consultant who liked to call herself the Princess of Darkness. …

Records show McCaig oversaw the decision to shut down Cover Oregon rather than work with the state’s contractor, Oracle Corp., to fix it. McCaig—rather than the governor or state lawyers—drove the decision to sue Oracle. And McCaig routinely directed senior government employees and staff in the governor’s office. The records also show McCaig and other advisers based many of their moves on polling and how voters’ perceptions of Cover Oregon might affect Kitzhaber’s hopes for re-election.


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