Idahos secretary of state is responsible for ensuring that the machinery of government operates ethically and cleanly: that corporations file the proper paperwork, candidates report their contributions, lobbyists register themselves and their activities, and elections are conducted fairly.
The GOP primary this spring features five candidates, two of whom Lawerence Denney and Mitch Toryanski are connected to a conflict that sparked accusations of theft, private work done on state time, political retribution, state contracts that benefited the then-speakers family, undeclared potential conflicts of interest and an Idaho State Police investigation that was started, halted and re-started, with evidence that was destroyed.
Investigators concluded that no crimes had been committed, so they never consulted prosecutors.
What might make the tale more bizarre is that the conflict involved not these two candidates for secretary of state, but their wives: Donna Denney and Kim Toryanski, who ended up in the middle of a bitter employment disagreement several years before their husbands would face off in a statewide political race.
Gov. Dirk Kempthorne appointed Donna Denney as the Idaho Commission on Agings public information officer in 2001.
Gov. Butch Otter appointed Kim Toryanski as director of the commission in 2007.
In 2009, Toryanski promoted Denney to head of operations. Then, in 2010, as part of a reorganization, Toryanski combined Denneys appointed position and a classified employee position into one: Denney would have to apply for the job. She applied for neither of two openings at the time, and left the commission at the end of December 2010.
Most of the details for this story are drawn from reports compiled as part of an Idaho State Police investigation that the Statesman obtained through public records requests. The Denneys declined comment, referring questions to attorney David Leroy. Kim Toryanski also declined comment.
According to the State Police documents, another employee moved into Denneys former office and discovered a My State USA software manual and three thumb drives with My State USA labor invoices, documents and other material.
The Idaho Commission on Aging had never done business with the private company, Sam Haws, the current director, told the Statesman.
Also included in the materials Denney left behind was an invoice from Denney Consulting and Contracting in Midvale, a business not registered with the secretary of states office. Leroy said the business is a sole proprietorship that does not need to file.
In 2011, Toryanski hired a computer forensics expert to review Denneys state-issued computers to determine whether anything was amiss, including whether Denney was doing work for a private company during her state job or had misused official databases.
Richard Goldston, a former member of the Idaho State Police cybercrime unit, spent 11 years as a Los Angeles County deputy and 22 years as an investigator with the L.A. district attorneys office. He examined three hard drives, three thumb drives, a laptop and a DVD containing a server backup, according to Goldstons March 2011 reports obtained by the Statesman.
Goldston concluded that Denney was working for My State USA while working for the aging commission: Donna Denneys Internet history, emails, and document attachments show she conducted My State USA business during work hours for the Commission on Aging.
He said Denney had accessed her My State USA email account from her stateowned computer, and he found more than 200 emails sent from Denneys state account to My State USA founder Claudia Bitner, as well as 150 emails Bitner sent to Denneys state account.
Goldston told the Statesman he could not discuss his reports because he had signed a confidentiality agreement with the Commission on Aging.
Based on Goldstons findings, Toryanski contacted ISP. On April 6, 2011, Detective Bret Kessinger was assigned to investigate allegations of theft of time and data from the Idaho Commission on Aging.
Kessinger interviewed Toryanski and others. He held a confidential meeting with Department of Administration IT and security staff in preparation for the possibility of serving search warrants for Speaker Denneys offices, the Denneys Boise apartment, and their residence in Midvale, Idaho, he wrote.
Two weeks after Kessinger started his investigation, Toryanski unexpectedly resigned as director of the commission to take a job as deputy director at the Idaho Division of Human Resources.
Why? In his report, Kessinger said: Toryanski advised me that the political pressures, particularly from Speaker Denney and his political allies, had been a primary reason.
Toryanski also told the detective that the speaker and his allies tried to disrupt passage of the commissions funding. By Toryanskis report, Rep. Maxine Bell was appalled at Speaker Denney and his allies, Kessinger wrote.
Bell, co-chair of the joint budget committee, wouldnt comment on the incident, but did say that legislators often jest about budgets.
Leroy said Denney made no such request of Bell. Denney did vote against the Commission on Agings appropriation the year after his wife left the agency, but Leroy said it was for reasons unrelated to his wifes employment separation.
Leroy also said that Denney never had any contact with Mrs. Toryanski, nor asserted any political pressure on her agency.
Kessingers investigation lasted nearly nine months. He concluded that the best evidence had been unwittingly destroyed by the Idaho Commission on Aging when it reformatted Denneys computers. He also said the agencys lax use of passwords made it impossible to investigate potential database misuse.
He determined that although Donna Denney used her state computer and state email account to conduct personal business, likely while on the job, thats generally not a crime in Idaho.
Her actions might constitute a fireable offense even a cause for civil action if the state wanted to collect the wages it had paid. Theft of money or equipment is illegal under Idaho law, but theft of time is not, Kessinger told the Statesman in an interview.
It appears the courts do not recognize employee work time as property, a key element of theft, Kessinger wrote, citing a special prosecutors opinion.
I was dead in the water. I was a car without a transmission.
Kessinger decided to close the case. The investigatory materials he had collected interviews, audio, computer backups were destroyed.
Kessinger and other police officials said it is agency policy to destroy evidence when a case is closed with no charges filed. The Idaho State Police returned Denneys computers to the commission.
Six months later, in July 2012, Kessinger said he was called into Col. Jerry Russells office. The State Police director asked him to write a memo summarizing the Denney investigation and to interview Donna Denney.
The summons and the orders six months after hed closed the case were outside the regular reporting system, Kessinger said.
There was no direct supervisor involved. The director called me into his office, Kessinger told the Statesman. I was ordered to write that memo. I was ordered to talk to Donna Denney.
The orders were a real head-scratcher, Kessinger said. In my 16-year career, I have never been asked to do that.
Russell retired in January 2013. He told the Statesman that he does not remember details: I do remember wanting to make sure all the is and all the ts were dotted and crossed, he said.
UNEMPLOYMENT CLAIM CHALLENGED
In his report, Kessinger noted that Donna Denney had applied for unemployment benefits after leaving the commission. According to documents obtained by the Statesman, the Commission on Aging protested the claim, saying Denney may have had other employment when she left.
ICOA has recovered documentation indicating that Ms. Denney was deriving wages, pay, income or remuneration from other sources during the time that she was in the employ of the commission, Deputy Administrator Sharon Duncan wrote on March 18, 2011.
Leroy told the Statesman: After receiving two or three unemployment checks in early 2011, Donna gained a new job and the subsidy stopped, as she now recollects.
When Kessinger tried to schedule an interview with Denney, she referred Kessinger to Leroy. The attorney told the detective that his client categorically denies misuse of the states database. In early January 2013, Leroy faxed affidavits to Kessinger from Denney and Bitner.
Denneys affidavit said she started working for My State USA in 2001, the same year she began working for the commission: At no time during my public employment did I do private work or outside job work on state time.
Bitner said Denney worked for the company through 2010. At no time, to my knowledge, did Donna ever do work for me or USA on state time or using state resources. Her work during 2001 through 2010 was confined to occasional, after-hours or weekend periods using her personal time.
According to the affidavits, Denney was paid in cash and stock for her My State USA work. From July 2006 through September 2008, My State paid Denney about $15,200 at $25 per hour. In 2007 Denney received 10,000 shares valued at $11.29 per share for assistance to our business over the years, according to Bitner. The amount of stock was based on labor per month that Denney provided from October 2003 to April 2006, the affidavit said.
Denneys affidavit said she did not keep comprehensive records of my actual work, so for the stock transfer she and Bitner prepared a theorized schedule of Denneys hours for that period during which she was employed by the state that totalled 2,535 hours, including an average of 48 hours per week in 2004 and 42 hours per week in 2005. Denney said the estimated hours were fictional and conceptual and no actual work done in those years was ever accomplished on state time.
Two weeks after receiving the affidavits, Kessinger recommended and Russell approved closing the Denney case as unfounded.
CONFLICT OR NOT?
In 2009, My State USA entered a contract for a pilot project with Idaho Military Division. Since then, it has received about $340,000, according to the state controllers office.
Idahos Ethics in Government Act defines conflict of interest as any official action or decision which would be to the private pecuniary benefit of the person or a member of the persons household, or a business with which the person or a member of the persons household is associated.
Members of the House also operate under House Rule 38, which requires them to declare a conflict if their personal interest conflicts with the publics interest. Once disclosed, the member may vote on the bill in question.
Lawerence Denney now in his ninth term, served as speaker of the House from 2006 to 2012. According to House journals from 2002 to the present, he has never declared a conflict.
Rep. Denney had no knowledge that My State USA was awarded a contract with the state of Idaho, Leroy said.
Though his wife declined to comment, Mitch Toryanski said that during his term as state senator he served on the budget committee while his wife was director of the Idaho Commission on Aging. He said he disclosed that potential conflict of interest.
I did this because it was my belief that the Ethics in Government Act required disclosure, Toryanski said. I also believe in the adage that when in doubt, disclose, disclose, disclose.
He said conflicts with a citizen Legislature are common: The issue is not that conflicts exist. The issue is that these conflicts of interest be disclosed so that other legislators and members of the public can be fully informed of the circumstances surrounding official acts.
Leroy said Denney did not declare a conflict because his circumstances did not trigger the conflict provisions of House Rule 38 which operate only when a members personal interest conflicts with the publics interest.
STAKE IN THE COMPANY
Did Donna Denneys ownership of stock in a company obtaining a state contract present a conflict for her husband? Under the Ethics in Government Act, a conflict does not exist if the value of stock held by a public official or family member is less than $5,000.
The estimated value of Mrs. Denneys holding is $380 and it pays no dividend, Leroy said.
But affidavits Leroy submitted to the Idaho State Police in January 2013 said the stock Denney received in 2003 and 2005 totaled 26,660 shares valued at $1 per share. The stock later split 10-1, giving her 266,600 shares. She then received an additional 10,000 shares of stock valued at $11.29 per share. The value of that stock transfer was $112,900.
Assigned share values, whether $1 or $11.29, were fictional, theoretical and arbitrary with no market basis, Leroy said.
Leroy said Denney has not sold any of her stock and is unaware of any market for it.
Assistant Chief Deputy Attorney General Brian Kane said that based on the information I have right now, Donna Denneys My State USA stock ownership and employment did not constitute a conflict of interest.
House Speaker Scott Bedke was reluctant to answer questions about the Denneys and My State USA. As presiding officer, I dont think it is appropriate for me to judge the actions of my predecessor, he said.
Mitch Toryanski, a former deputy attorney general, said he would not speculate whether Denney might have violated rules. But he said, generally speaking, voting for an appropriations bill that funds a budget from which a members spouse is paid or which benefits a business with which a members spouse is associated as an employee or stockholder would clearly be an official action requiring disclosure pursuant to Idaho Code Sec. 59-704.
DOES IT MATTER?
Idaho has a tradition of electing secretaries of state with reputations of integrity, evenhandedness and nonpartisanship.
Edson Deal, Pete Cenarrusa and Ben Ysursa established a very strong tradition of nonpartisan professionalism in their office, said longtime Idaho political analyst Jim Weatherby. I cant remember a time where there were any charges of favoritism in that office.
In his six years as speaker, Denney was accused of favoritism and poor judgment that his colleagues said contributed to his ousting as speaker.
When North Idaho Rep. Phil Hart claimed legislative immunity rather than paying the state and feds $600,000 in back taxes, nothing happened under Denney until Hart resigned on his own as vice chair of the Revenue and Taxation Committee. In December 2010, after Rep Eric Anderson, R-Priest Lake, filed ethics complaints against Hart, Denney stripped Anderson of a vice chairmanship.
When Denneys appointee to the first 2011 Redistricting Commission was among the six who failed to produce a plan in the allowed 90 days, he tried to remove his replacement commissioner former Rep. Dolores Crow, R-Nampa because she was working with the Democrats on a compromise plan. His lawsuit to unseat the new commissioners was rejected by the Supreme Court.
During the 2012 GOP primary, Denney used House GOP caucus political action funds as part of an effort to unseat six Republican incumbents. All six won.
Denney, particularly with regards to the Redistricting Commission, has some explaining to do. I think that concerned a lot of people, Weatherby said. The secretary of state, being in charge of that process, makes it even more problematic.
THE RACE IS ON
Has the connection between Donna Denney and Kim Toryanski colored the race for secretary of state?
Mitch Toryanski said the discussion of conflicts of interest will likely increase public interest in the secretary of states duty to oversee and enforce document recording laws and campaign finance disclosure laws.
Leroy suggested rephrasing the question: Will the Idaho Statesman allow itself to be drawn into a series of articles two months before a primary wherein it makes or repeats disproved claims about a prominent candidates family member instead of headlining the timing, source and objectives of those who advance unfounded attacks?
Cynthia Sewell: 377-6428, Twitter: @CynthiaSewell