In response to AP report, McCrory continues to mislead the public

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Governor blames the media instead of himself for report of questionable six-figure payout from controversial mortgage lender, offers misleading “fact-check” of AP story

On Tuesday, the Associated Press published an investigation into Gov. Pat McCrory’s $185,000 payout from a controversial mortgage broker shortly after taking office. Just 18 days later, McCrory appointed the director of the State Banking Commission as well as eight Banking Commissioners -- which raises red flags about why the payment was not mentioned on the governor’s ethics disclosure.

In response, Gov. McCrory took the tired approach of blaming the messenger and asking for more money instead of taking responsibility for his conflicts of interest and undisclosed payouts from Tree.com. He also released a “fact-check” of the AP story which attempts to further cloud an already-complicated issue and take the blame off of McCrory. That’s why Progress NC Action is “fact-checking the fact-checkers” to give you the real story -- not just the political spin from a desperate governor facing serious allegations.

[Note: Gov. McCrory’s claims are in italics and indented]

AP CLAIM: “McCrory and Sanford deny they did anything improper by accepting the payments from Tree.com, which were not fully described in their ethics statements.”

WHAT THE AP LEFT OUT: Governor McCrory properly filled out his ethics statement as required by law. That source of income was previously listed in another part of the 2014 SEI form; therefore, the form is in compliance with the State Ethics Act (See NCGS 138A-24A3).

The AP Report Includes the Specific Disclosures McCrory Failed to Make in Contradiction to his Claim it was Left out: “On his forms covering 2013, McCrory didn't disclose his $14,438 in fees and cash dividends from Tree.com. The forms specifically ask officials to include stock dividends and fees exceeding $5,000.” (AP, 12/16/14)

McCrory has Previously Admitted to Failing to Properly Disclose Duke Energy Interests on this Form. “On April 15, the day after his sales were complete, McCrory filed an ethics disclosure covering the 2013 calendar year that said he did not own Duke stock as of Dec. 31. That wasn’t the case… This week, McCrory amended the filing to reflect what it asks for, which are his holdings as of Dec. 31. Public officials who “knowingly” do not disclose information on the ethics disclosure form can face criminal penalties. McCrory signed the form as true. He had taken the State Ethics Commission’s required training on the ethics law in July 2013, according to records.” (News & Observer, 8/14/14)

AP CLAIM: “However, more than a dozen securities lawyers and ethics experts told The Associated Press that such stock payouts are uncommon for elected officials, and raise significant concerns. These experts gave differing opinions about whether laws were broken.

WHAT THE AP LEFT OUT: What “securities lawyers” and what “ethics experts?” Name them. Not one “expert” was named. These same “experts” said that such stock payouts are uncommon, but it's the standing board policy of Tree.com to make these payouts. Do these “experts” know that this was Tree.com's policy? Doesn't sound like it.

Cited Sources by the AP Article Include the Chair of the State Ethics Commission that McCrory Appointed and Jacob Frenkel a former Federal Prosecutor and SEC Senior Counsel. “George Wainwright, chairman of the North Carolina Ethics Commission, said he couldn't comment because the issue may become the subject of an ethics complaint.” (AP, 12/16/14)

“But ‘there is no question (this) raises a host of red flags for prosecutors and regulators,’ said Jacob Frenkel, who handled corruption cases as a federal prosecutor and served as senior counsel in the Securities and Exchange Commission's Division of Enforcement.” (AP, 12/16/14)

AP CLAIM: “AP reported that McCrory, a Duke retiree, held stock in the company as his administration made key regulatory decisions involving his former employer. Those decisions are now the subject of a federal criminal investigation.”

WHAT THE AP LEFT OUT: This is an outrageous accusation and this is absolutely incorrect – it is a false statement and was printed and published with malice. The AP is saying that the governor is under federal investigation and that is 100% false. Neither the governor nor anyone he hired has been subpoenaed as part of this investigation.

Over 20 Members of McCrory’s Administration Have Been Subpoenaed for a Federal Investigation as Reported by Numerous Sources Since February of 2014. “Federal prosecutors widened their investigation triggered by a massive coal ash spill in North Carolina, demanding reams of documents and ordering nearly 20 state environmental agency employees to testify before a grand jury. The subpoenas were made public by the N.C. Department of Environment and Natural Resources on Wednesday. They also ordered state officials to hand over any records pertaining to investments, cash or other items of value they might have received from Duke Energy or its employees… The 20 subpoenas disclosed by the state agency follow two Feb. 10 subpoenas, which were issued the day after a story by The Associated Press raised questions about a proposed deal between state officials and Duke that would have fined Duke $99,111 to settle violations over toxic groundwater contamination at two facilities.” (AP, 2/19/14)

McCrory Administration Hired Ex-Duke Lawyer to Represent Them in Coal Ash Investigation. “The lawyer hired to represent North Carolina's environmental agency during a federal investigation into its regulation of Duke Energy's coal ash dumps once represented the utility company in a different criminal probe. The state Department of Environment and Natural Resources has hired Mark T. Calloway of Charlotte to help respond to 20 grand jury subpoenas the agency and its employees have received after the Feb. 2 spill at Duke's Eden plant, which coated 70 miles of the Dan River in toxic sludge. Duke has been issued at least two subpoenas as part of that investigation.” (AP, 3/24/14)

Republican Lawmakers Claimed McCrory’s Agency Couldn’t Regulate Coal Ash Due to “ongoing criminal investigations.” “The House’s lead negotiator on the measure, Rep. Chuck McGrady, R-Henderson, said the state’s environmental regulators can’t regulate coal ash directly because, ‘There’s ongoing criminal investigations right now.’ A federal grand jury is investigating DENR’s actions related to coal ash.” (News & Observer, 8/20/14)

Republican Senate Leader Sen. Phil Berger Claimed McCrory was Still Attempting to Shield Duke on Coal Ash Cleanup. “But Senate President Pro Tem Phil Berger, a Rockingham County Republican, thinks McCrory’s true motive has more to do with Duke Energy. ‘The governor’s primary concern appears to be a desire to control the coal ash commission and avoid an independent barrier between his administration and former employer,’ Berger said in a statement.”(News & Record, 9/14/14)

AP CLAIM: “McCrory declined requests for an interview. In a written statement McCrory spokesman Josh Ellis said the governor fully complied with state law and "continues to uphold high ethical standards."

WHAT THE AP LEFT OUT: The AP reporter who wrote this story had dozens of chances to interview the governor. On one single occasion after letting the governor's office know about this story, he had 15 minutes of the governor's time with 3-4 other reporters where he asked two questions that weren't related to this story.

McCrory has previously “admonished” Reporters for being “disrespectful” when asked about conflicts of interests: “During the question-and-answer period after Friday's winter storm update, McCrory took exception to a reporter's question about whether he had communicated with Duke Energy or its lobbyists about his administration's intervention into those lawsuits. ‘I have had no conversations with Duke Energy about the lawsuits or about the federal action,’ McCrory responded. ‘I think some of the premise of your question is totally inaccurate.’ Visibly irritated, he added that he would ‘have [DENR] Secretary [John] Skvarla give you a call and make some of those corrections.’ Another reporter asked the governor whether his ownership of Duke Energy stock creates a conflict or the appearance of a conflict of interest for him.‘In my 14 years as mayor of Charlotte and my one year as governor, I separate my job as governor, and I’m very proud of the job we’ve done as governor, and that regards to any company in North Carolina,’ McCrory answered.  When a reporter attempted to follow up, McCrory shouted him down. ‘Excuse me, sir! Excuse me, sir! You have not been recognized!’ When the reporter tried again, McCrory admonished him, ‘It's no time to be disrespectful.’” (WRAL, 2/14/14)

AP CLAIM: “North Carolina officials are required to disclose their business dealings and their sources of compensation on annual ethics forms. Knowingly providing false information or concealing sources of income is potentially punishable by removal from office and up to eight months in prison.”

WHAT THE AP LEFT OUT: What the AP fails to mention here is that the governor did nothing wrong, nor has anyone accused him of doing anything wrong, and he fully complied with state ethics laws.

McCrory has Previously Admitted to Failing to Properly Disclose Interests on this Form. “On April 15, the day after his sales were complete, McCrory filed an ethics disclosure covering the 2013 calendar year that said he did not own Duke stock as of Dec. 31. That wasn’t the case… This week, McCrory amended the filing to reflect what it asks for, which are his holdings as of Dec. 31. Public officials who ‘knowingly’ do not disclose information on the ethics disclosure form can face criminal penalties. McCrory signed the form as true. He had taken the State Ethics Commission’s required training on the ethics law in July 2013, according to records.” (News & Observer, 8/14/14)

AP CLAIM: “In a statement, Ellis said that under state law, the governor wasn't required to disclose his cash compensation from Tree.com because he had disclosed his company stock holdings earlier on the form. As for the other omissions, Ellis said the instructions on the ethics forms were unclear.”

WHAT THE AP LEFT OUT: The governor answered the question (19a) correctly as it was plainly written. The State Ethics Commission recognized that the form needed to be changed and voted at the last commission meeting to rephrase the question on the 2015 SEI form.

The AP Report Includes the Specific Disclosures McCrory Failed to Make in Contradiction to his Claim it was “Left Out”: “On his forms covering 2013, McCrory didn't disclose his $14,438 in fees and cash dividends from Tree.com. The forms specifically ask officials to include stock dividends and fees exceeding $5,000.” (AP, 12/16/14)

AP CLAIM: “McCrory also rebuffed calls earlier this year to disclose the full value of Duke Energy stock he owned following the Dan River coal ash spill.”

WHAT THE AP LEFT OUT: The governor properly disclosed what he was required to by state law.

McCrory Improperly Reported Conflicts of Interest Despite Having Completed Required State Ethics Training Explaining the Disclosures. “On April 15, the day after his sales were complete, McCrory filed an ethics disclosure covering the 2013 calendar year that said he did not own Duke stock as of Dec. 31. That wasn’t the case… This week, McCrory amended the filing to reflect what it asks for, which are his holdings as of Dec. 31. Public officials who “knowingly” do not disclose information on the ethics disclosure form can face criminal penalties. McCrory signed the form as true. He had taken the State Ethics Commission’s required training on the ethics law in July 2013, according to records.” (News & Observer, 8/14/14)

McCrory Refused to Disclose Specific Value of State or Timing of Sale. “McCrory will not say how much stock he owned. Duke Energy offers employees company stock among investment choices in its 401(k) retirement plan. The company’s top executives also receive stock grants as part of their compensation. Spokesman Tom Williams said he could not comment on how McCrory obtained his Duke stock. On Wednesday, a spokesman would say only that McCrory had sold the stock sometime between Feb. 14 and April 15. On Thursday, communications director Josh Ellis narrowed that. “The stocks were sold between April 9 and April 14,” Ellis said.” (News & Observer, 8/14/14)

AP CLAIM: “Despite his Tree.com payments, McCrory did not recuse himself from naming the state banking director in the weeks before receiving his special dividend, or from naming eight commissioners to the regulatory agency 18 days later. In addition to licensing mortgage brokers, the commission investigates complaints, which are kept secret under state law unless they result in discipline.”

WHAT THE AP LEFT OUT: The governor didn't need to recuse himself as per state law. Further, the governor re-appointed the chair, which was appointed by a previous Democratic governor, and he has over 40 years of banking experience. See what Governor Bev Perdue had to say about Ray Grace: http://www.nccob.gov/public/docs/News/Press%20Releases/Grace_nomination_press_release.pdf

“The second type of corruption that we must change however is a different type of culture is in that gray area.  But I don’t think it’s a gray area in big government.  And that’s an area in which we have a conflict – a climate of conflicts of interest.” –Pat McCrory (NC Coalition for Lobbying and Government Reform, 9/16/08)


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