Monday, April 22, 1996 | 11:59 a.m.
CARSON CITY -- A state prison psychologist, fired five years ago for proposing to build a house of prostitution, has won his latest legal battle to retain his job.
A ruling Friday by a district judge held that William Mace Knapp would serve a 20-day suspension and not be demoted. Knapp says that means about $45,000 in back pay and hopefully the end of his legal fight.
"Out of the last five years, I've worked two years," Knapp says. "I'm sick of this."
He has offered a settlement with the state attorney general's office to end the litigation, but nothing has been accepted yet.
District Judge Michael Griffin upheld the findings of a hearing officer that the appropriate punishment for Knapp should be the suspension rather than the more harsh demotion.
In January 1991, Knapp formed a corporation to raise money to build a brothel, saloon and dance hall and re-create an 1880s mining camp in Lyon County. He was fired from his job. So was his wife, Peggy, who was warden at the state women's prison.
The state Supreme Court in May 1995 ruled that Knapp was guilty of "shocking misjudgment" and deserved discipline, but dismissal was too harsh. Knapp was reinstated to his $60,000-a-year job with back pay.
The prison then demoted him and he appealed. A hearing officer said a 20-day suspension was more appropriate and Griffin agreed.
In the meantime, Peggy Knapp, who was unclassified, had filed suit in federal court claiming her civil rights had been violated. She said she had little to do with the venture, which was quickly abandoned by her husband. But a federal judge ruled against her this year.
Peggy has taken up a new career and is getting her bachelor's degree in nursing in the next few weeks.
"Everything is working out," Knapp said. He has sued former Prison Director Ron Angelone and Prison Medical Officer George Kaiser. And his wife has appealed her federal suit to the 9th U.S. Circuit Court of Appeals.
Knapp said he's willing to drop those two suits if the state will not appeal Griffin's ruling to the state Supreme Court.
Norah Ann McCoy, attorney for the State of Nevada Employees Association who represented Knapp, said the prison never paid any attention to the regulation that requires progressive discipline in these cases. She said that although Knapp was demoted, he continued to perform the duties of a psychologist.
"If they appeal, it will surprise me," McCoy said of the attorney general's office.
Referring to his initial plan, Knapp said, "All I wanted was a mining camp. And first of all I didn't know anything about the sex business."
He received a business license and started raising money for the venture. He got inmates at the Northern Nevada Correctional Center in Carson City to type mailing labels and stuff envelopes with advertising fliers. When his activities were disclosed in a newspaper, the prison fired him and his wife.
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