Palin agrees to refund defense fund money after probe

Anchorage Daily NewsJune 25, 2010 

An investigator has determined former Gov. Sarah Palin's legal defense fund broke state ethics law and said Palin has agreed to settle the matter by having the trust return more than $386,000 to donors.

Tim Petumenos, an Anchorage attorney hired by the state Personnel Board to investigate, said Thursday the legal defense fund violated state law because it "constituted using public office to obtain private benefit." He said the fund, which was set up while Palin was still governor, inappropriately said it was the "official website" of Palin, and made reference to her work in public office. Petumenos upheld an ethics complaint that was filed 15 months ago against the trust.

The trust has 90 days to return all the thousands of donations it received before she resigned as governor last summer, according to the settlement agreement signed by Palin.

Palin advisers created the Alaska Fund Trust in April 2009 to help her pay legal bills she incurred defending herself in the "Troopergate" investigation and a series of other ethics complaints. Palin's personal lawyer, Tom Van Flein of Anchorage, "strongly advised" the trust be vetted by the Alaska Department of Law to make sure it was legal under Alaska ethics law, Petumenos wrote.

But Palin instead chose to follow the advice of another attorney who recommended against seeking input from the attorney general, and instead to simply contest the "inevitable" ethics complaint when it came, Petumenos wrote in his report.

"The prudent thing to have done in my opinion would have been to go to the attorney general in advance," Petumenos told reporters on Thursday.

That's especially the case since this was the first attempt at such a trust agreement in Alaska and ethics complaints were considered likely, he said. "Governor Palin was nevertheless following the express advice of one of her attorneys who told her the Trust complied with all laws and was indeed unassailable," Petumenos wrote in his report.

That advice came from Randy Evans, a prominent former counsel for the Georgia Republican Party who has advised Newt Gingrich and others on ethics issues. Evans said Thursday that other, unauthorized, legal defense funds for Palin were being started and action had to be taken to get one set up to be called "official."

"We had rogue trusts popping up, and delay meant defrauded contributors," said Evans, a partner in the Atlanta office of McKenna Long &Aldridge.

Evans said in a Thursday e-mail that he remains convinced the fund was valid. He called the issues raised by Petumenos "manufactured." He's said the trust was patterned after trusts of previous presidential candidates and other high profile public servants.

Numerous public figures including Ted Stevens, Hillary Rodham Clinton and John Kerry have set up such legal defense funds, although Petumenos said this was the first done in the state that was subject to Alaska's ethics act. Palin's personal lawyer, Van Flein, said there were seven lawyers advising Palin and all believed it was legal.

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