Las Vegas Sun

May 19, 2019

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Months of investigating, no end in sight

Nine months after opening a criminal probe into the possible destruction of public documents at the Nevada treasurer's office, state investigators show no signs of wrapping up their work anytime soon.

"It's still under investigation," said Karen Lorenzo, acting chief of the Nevada Investigations Division, which is conducting the probe under the supervision of Attorney General Catherine Cortez Masto and her chief criminal deputy, Conrad Hafen.

Lorenzo would not discuss details of the investigation Tuesday or when it might conclude. But she said it continues to focus on whether documents were illegally destroyed in the office last December during the final days of the administration of then-Treasurer, now Lt. Gov. Brian Krolicki.

Unlawful destruction of state records is a felony with a maximum penalty of five years in prison and a $10,000 fine.

Nicole Moon, a spokeswoman for Cortez Masto, said the attorney general had no comment on the probe and was waiting for the Investigations Division to complete its work.

Current Treasurer Kate Marshall, a Democrat, sought the investigation in March after complaining that her Republican predecessor may have ordered records purged as he prepared to assume his duties as lieutenant governor.

Marshall told the attorney general that her efforts to resolve discrepancies in the $3.3 �billion Nevada College Savings Plan overseen by her office were being hampered by a "lack of historical information and documents" left by Krolicki.

This week Marshall said she has received no information about the criminal probe, but added that Investigations Division agents conducted a second round of interviews last month with current and former office employees.

The Investigations Division, which routinely looks into alleged criminal wrongdoing by state officials, has been involved in the investigation since April.

Krolicki, as he has from the start, this week denied any wrongdoing, saying the College Savings Plan was run well and no records were improperly destroyed as he left the treasurer's office.

"I fully expect the facts, as they discover them, will prove my administration did things correctly," Krolicki said. "I sleep very well at night."

He added: "I would have hoped this process would have been finished by now."

Krolicki confirmed that he has taken a job as a consultant for Reno-based investment firm Navellier & Associates, headed by well-known financial adviser Louis Navellier. Like state legislators' positions, the lieutenant governor's job is part time and does not preclude Krolicki from working in the private sector.

Krolicki said Navellier & Associates does not do any work for the state, and his contract specifies that he will work for the investment firm only outside Nevada, to avoid any conflicts of interest.

As the criminal investigation has proceeded, Krolicki said, he has cooperated with state investigators to help them understand some of the complexities of the treasurer's office and its dealings with the financial world.

"I'm proud of the legacy I left," he said. "We adhered to every statute pertaining to document management."

When Marshall asked for the investigation in March, she said former Krolicki employees reported they were directed to destroy documents as part of the transition to the new treasurer "without any regard to the record retention laws."

Marshall told the attorney general that when she took over, "there were absolutely no files or documents" in the treasurer's office and the office of its chief of staff.

Among other things, there were no records, Marshall later said, that explained why Krolicki, a few days before he left office, renegotiated long-term contracts that appeared to financially benefit key asset managers of the College Savings Plan at the state's expense.

The massive fund, like many across the nation, was created in 2001 during Krolicki's tenure as treasurer to help Nevada families save for college.

A legislative audit requested by Marshall found in May that the money families invested in the fund was protected.

But the audit also found that more than $6 million in fees earned by the college plan was withheld from the state treasury and used to pay for such things as legal services, marketing and consultants - without legislative oversight.

By spending money on its own, the treasurer's office, under Krolicki's direction, violated the state budget act and several Nevada statutes, the audit concluded.

Guidelines established by the Legislature to track the program's financial activity were largely ignored, and Krolicki essentially farmed out the bookkeeping operations to the vendors, who had a financial stake in the accounting, the audit found.

The audit said Krolicki's "fragmented approach" made administering and overseeing the college program difficult, if not impossible, especially for its board of trustees and the Legislature.

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