The Conflicts of Colorado's Public Trustees
Luis Toro, director of Colorado Watch, wrote <a href="http://www.huffingtonpost.com/luis-toro/the-public-trustee-ethics_b_172…; target="”_blank”">an
interesting Huffington Post post yesterday</a> about ethics issues
relating to Colorado's public trustee system.<br>
<br>
Public trustees (one per county) oversee the foreclosure system in
the state. They work things out between lenders and homeowners. Most
of them are elected county treasurers, and ten of them are appointed
by the governor (for some of the larger counties). The funds they
spend are not tax dollars, but they are public funds.<br>
<br>
The biggest problem is that the public trustees do not appear to be subject to any ethics
program, state or local. Nor are they subject to procurement rules
or any oversight of their performance. The result is that their
contracts (primarily their computer systems) are mostly no-bid contracts,
and the principal contractor is a firm owned by the state's principal
foreclosure lawyer (he works for the lenders). The same lawyer funds
the public trustees' association, drafts proposed changes to the
foreclosure laws for the association, and even testifies in favor of
raises for the public trustees.<br>
<br>
Fortunately, the association is subject to state ethics laws.
Ethics Watch <a href="http://www.citizensforethics.org/co-legal/entry/3050/" target="”_blank”">filed a complaint</a> last year against the
association for violating the state gift ban by using corporate
dollars (mostly the computer systems company's) to pay for hotel rooms for 32 public trustees. This resulted
in the largest fine imposed to date by the state EC.<br>
<br>
What is wrong with the situation? Taxpayers aren't paying more for
the no-bid computer systems; only homeowners who save their homes
from foreclosure do. There is no evidence that the public trustees
are giving lenders preferential treatment just because they have a
special relationship with the lenders' principal counsel. But there
is certainly the appearance that they are.<br>
<br>
As one homeowners' attorney told <a href="http://www.denverpost.com/business/ci_18628865" target="”_blank”">the Denver
<i>Post</i> last year</a>, "It all looks awfully cozy and certainly a
red flag or two. It appears there's a vacuum on the side of the
homeowners."<br>
<br>
The governor responded to these revelations by requiring his ten
appointees to file conflict of interest statements and obtain
approval of all purchases or contracts above $5,000. But the state
legislature has not done even this much relative to the other public
trustees. All it has done is require public trustees to submit
budgets for review (but not approval) by county commissioners.<br>
<br>
Where public trustees are elected officials (most of them are), there are additional problems involving campaign contributions from those who do business with them in their unelected role as public trustee.<br>
<br>
A former public trustee has recommended three possible ways to fix
the system. One, instead of being elected or state-appointed officials, public trustees would be full-time employees hired
by each county based on qualifications. Two, they could be made part of the finance or the
treasurer's office. Three, the county clerk (who keeps the
property records used by public trustees) could hire the trustee.<br>
<br>
No matter what the approach, the governor's requirements could be
extended to all public trustees. And they could be made subject to
the state ethics program, and audited by the state.<br>
<br>
County commissioner oversight (the state legislature's solution) is
not the right approach, because county commissioners don't understand or care about
what the public trustees do.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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