Activists say public shouldn’t pick up tab

Alameda Times-Star Online

A consumer watchdog group doesn’t think taxpayers should have to pay attorney bills for state Public Utilities Commissioner Henry Duque in a conflict-of-interest lawsuit that could result in his ouster from office.

Last week, San Francisco Superior Court Judge Alfred Chiantelli tentatively ruled that Duque should be removed from his $114,191 a year post for buying stock in Nextel Communications, a wireless carrier under PUC regulation.

Earlier this week, the Foundation for Taxpayers and Consumer Rights, which filed the lawsuit, sent a letter to PUC President Loretta Lynch requesting that taxpayer funds not be used pay Duque’s cost to appeal the case. The letter also asks that Duque reimburse taxpayers for previous legal bills — estimated by the Foundation at about $100,000 — that already have been paid by the commission.

Duque has maintained that the stock purchase amounted to an honest mistake. At the time, he said he believed wireless carriers were regulated by the Federal Communications Commission but not the PUC. They actually are under the jurisdiction of both.

“This is not a case of bad faith but bad judgment,” Chiantelli wrote in his ruling, which also carries a $5,000 fine payable to the state treasury. The ruling followed a lawsuit filed in 2001 against Duque by the foundation, a Santa Monica-based consumer group headed by Harvey Rosenfield.

Duque’s attorney, Joe Remcho of San Leandro, expects to file papers by the end of the week appealing the tentative ruling, the first of its kind.

“We will appeal the decision on the grounds that the statute does not provide as harsh a remedy as removal from office,” he said Wednesday.

The judge’s ruling could become final Friday, but that is unlikely because of the pending appeal.

It’s unclear if the commission will continue to pay Duque’s legal costs or require him to make reimbursement for previous costs.

“At this time, it’s under review by the commission … as to what’s the next step. It’s up for discussion,” said PUC spokeswoman Sheri Inouye.

Lynch, who OK’d Duque’s request to have his legal bills paid with public funds, could not be reached for comment. The authorization does not apply to fines or payment of the Foundation’s attorney fees, which was also ordered by the judge.

Duque is a Republican appointee whose six-year term ends Dec. 31. Last December, he testified he did not know wireless carriers were regulated by the PUC when his stockbroker invested $10,000 in Nextel in 1999. In August 2000, Duque sold the stock two days after a reporter questioned his investing in a company under PUC regulation.

After the Foundation indicated it would file suit against Duque, commissioners agreed to pay Duque’s legal bills, even though PUC Executive Director Wesley Franklin determined the agency should not pick up the tab. In a letter rejecting Duque’s request for payment, Franklin wrote that the stock purchase was not “within the scope” of Duque’s job.

Remcho, Duque’s attorney, said that the PUC acted appropriately in authorizing payments.

“The PUC agreed to do so because it’s all job-related,” said Remcho, adding that the Foundation’s conflict-of-interest complaint was essentially motivated by Duque’s conservative voting record.

“It has far more to do with how Henry Duque votes than with his personal financial situation,” he said. “Case law says if an action is brought against a public employee, then the agency has the discretion to provide a defense.”

Foundation attorney Pamela Pressley said taxpayers should not have to foot the bill because the stock purchase involved “something (Duque) took for his own personal gain and not related to his duties as a commissioner.”

Pressley dismissed Remcho’s claim the complaint was politically motivated.

Almost two years ago, another Republican was involved in a conflict-of-interest case involving a powerful state regulatory agency. In that case, taxpayers ended up paying about $700,000 in attorney fees for former Insurance Commissioner Chuck Quackenbush.

He resigned from office after revelations surfaced that the department had reached secret settlements requiring insurance companies accused of mishandling claims from the 1994 Northridge earthquake to contribute $12.8 million to foundations created by Quackenbush. Some of the foundations ended up purchasing television ads featuring Quackenbush.

Pressley said there is a clear distinction between the Quackenbush and Duque cases.

“No matter how wrongly, (Quackenbush) was acting under the (authority) of his office,” she said.

“With Duque, nobody told him to invest in this company.”