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The Mike Hubbard case: Breaking down the charges

Brian Lyman
Montgomery Advertiser

While Alabama House Speaker Mike Hubbard faces 23 felony ethics charges, many of the counts cover the same actions.

Alabama Speaker of the House Mike Hubbard speaks during the opening day of the Alabama State House Session on Tuesday, March 3, 2015, in Montgomery, Ala. Prosecutors Monday accused Hubbard of seekng to overturn the state ethics law

Below, a summary of the charges the Auburn Republican faces, the background, and what prosecutors and Hubbard’s defense team has said about them.

Counts 1 through 4: Craftmasters and the Auburn Network

The charges: Prosecutors accuse Hubbard of using his position as Alabama Republican Party chairman to steer GOP business to the Auburn Network, Hubbard’s consulting firm, and Craftmasters, an Auburn-based printing firm that Hubbard holds a partial interest in. The charge comes under a law preventing public officials from gaining personal benefit from their position.

The background: Hubbard served as chairman of the Alabama Republican Party from 2007 to 2011, helping the GOP win control of the Legislature in 2010. In 2012, then-chairman Bill Armistead commissioned an audit of party spending during the campaign that found that close to $800,000 in printing business went to Craftmasters. Hubbard pushed for release of the report.

Prosecutors: In a February 2015 filing, prosecutors said the business meant that Hubbard aimed to “essentially embezzle” party money. Prosecutors cite an email where one consultant said they were being “forced” to use Craftmasters despite what they said was higher prices at the company.

Hubbard: Hubbard said the contract with Craftmasters allowed economies of scale that saved the party money. In a September 2015 filing challenging the constitutionality of the Ethics Act as applied to Hubbard, Mark White, then an attorney for Hubbard, did not address the specific actions but argued that political parties had the right under the First Amendment to disburse their money as they saw fit.

Counts 5 and 6: The American Pharmacy Cooperative Inc.

The charges:

Rep. Greg Wren speaks to the media after Wren plead guilty to misdemeanor ethics charges at the Montgomery County Courthouse on Tuesday, April 1, 2014.

Prosecutors accuse Hubbard of attempting to insert language into the 2014 General Fund budget that would have made the American Pharmacy Cooperative Inc. (APCI), one of his clients, the only firm that would have been able to bid on a Pharmacy Benefit Manager (PBM) discussed at the time for the state’s Medicaid program, and then voting for the budget with the language in it. The charge falls under a law forbidding officials from voting for legislation “in which he or she knows or should have known that he or she had a conflict of interest.”

The background: Hubbard had a $5,000-a-month consulting contract with APCI, signed in June 2012 that included a provision that prevented Hubbard “from providing the services of consultant ... within the state of Alabama.” The speaker voted for a version of the General Fund budget that included the language, which ultimately came out of the final budget.

Prosecutors:  Prosecutors say APCI resisted the implementation of a PBM at first but in the spring of 2013 gave suggested budget language to then-Rep. Greg Wren, R-Montgomery, that would have made APCI the only entity that could successfully bid on such a program. Prosecutors say Hubbard or his staff was present during discussions of the language and cite an April 19, 2013, letter from APCI President Tim Hamrick thanking Hubbard for preventing “a large, out-of-state pharmacy benefit manager from taking over the pharmacy program in Medicaid.” Wren, who pleaded guilty to a misdemeanor ethics charge over the issue and resigned his seat, could testify on the issue.

Hubbard: Hubbard has said his work on the APCI contract only involved out-of-state issues. White wrote in his September filing the speaker did not have a conflict of interest as defined in state law because he did not hold a leadership role or ownership stake in the organization and because there was no guarantee APCI would have won a contract and the financial benefits of it.

Counts 7 through 9: The Southeast Alabama Gas District (SEAGD)

The charges:

Governor Robert Bentley discusses the budget impact to Alabama Medicaid Agency at the State Capitol Building in Montgomery, Ala. on Wednesday April 6, 2016.

Prosecutors accuse Hubbard of using his position as Speaker to secure a $12,000-a-month consulting contract with the Southeast Alabama Gas District (SEAGD) and of lobbying Gov. Robert Bentley and Alabama Department of Commerce Secretary Greg Canfield for projects SEAGD supported. The charge falls under laws banning personal benefit and banning members of the Legislature from lobbying executive branch officials.

Background: Hubbard signed the contract with SEAGD in 2012. The Alabama Ethics Commission approved the arrangement, noting it was like work “done by various members of the Legislature,” but added a caveat that Hubbard could not vote on items unique to SEAGD or use “his position or the mantle of his office” to get consulting clients or advance SEAGD business. In letters sent to SEAGD President and CEO Greg Henderson during the spring of 2012, Hubbard outlined efforts to secure a truck assembly plant for Abbeville, including meetings with Bentley and Canfield. In one letter, Hubbard wrote “the Governor committed to me that he will provide the resources necessary” and that “Secretary Canfield told me that the governor had communicated that same message to him.” In another, Hubbard said an executive with a South Korean tire company believed “that my role in government would mean a great deal and put Alabama at the top of list” for an economic development project.

Prosecutors: Prosecutors say Hubbard “used his mantle of office” to advance SEAGD interests, citing his comments on the South Korean executive. Among other items, prosecutors cite a photo taken of the speaker in 2013 at the Paris Air Show – a trip SEAGD compensated Hubbard for – that show him wearing a name tag identifying him as the Speaker of the Alabama House of Representatives.

Hubbard: Hubbard canceled the SEAGD contract in August 2013, about four days after prosecutors began interviewing potential jurors for the grand jury that investigated and, in Oct. 2014, indicted the speaker.  White wrote in his September filing that Hubbard and SEAGD “took all reasonable steps” to ensure the legality of the contract. White also wrote that “nothing in the documentation” showed Hubbard using the mantle of his office in advancing SEAGD interests, or “anything other than what a good economic development consultant would do.” White also wrote it was “unreasonable” to expect third parties to not recognize his public and private roles.

Counts 10 through 14: Edgenuity and CV Holdings

The charges: Prosecutors accuse Hubbard of using his office to solicit a $7,500 a month consulting contract from Edgenuity, an online and blended learning company. The remaining counts accuse Hubbard of using his office to solicit a $10,000 a month contract with CV Holdings LLC, a cup manufacturing company, and of lobbying executive branch officials on their behalf.

The background:  Hubbard signed the Edgenuity contract in April 2012 and the contract with CV Holdings that September. Edgenuity officials called Hubbard “our contact for House Speakers in all 50 states.” In another email, the speaker said he had spoken with then-State Schools Superintendent Tommy Bice about an Edgenuity product, and a third says Hubbard helped Edgenuity with work in South Carolina. Hubbard also appears to have helped CV Holdings secure a patent, and spoken with Bentley and Canfield about CV Holdings using a training center.

Prosecutors: While saying Hubbard used his “mantle of office” to secure the contracts, prosecutors also accuse Hubbard of using two of his employees – then-chief of staff Josh Blades and executive assistant Kristen Hull – to work on the CV Holdings contract.

Hubbard: White wrote in September that Hubbard’s contract with Edgenuity focused on out-of-state issues and that Edgenuity checked the contract with the Ethics Commission before entering the arrangement with Hubbard. White also wrote the CV Holdings contract resembled the SEAGD contract approved by the Ethics Commission.

Counts 15 through 23: Soliciting jobs and investments from lobbyists, friends, and associates

The charges:

Governor Bob Riley in his office in the state capitol building in Montgomery, Ala. on Monday September 14, 2009.(Montgomery Advertiser, Mickey Welsh)

The longest portion of Hubbard’s indictment breaks down into two areas. Counts 15 to 19 charge Hubbard with seeking $150,000 investments in Craftmasters from Jimmy Rane, president of the Great Southern Wood Company; James Holbrook, former CEO of Stern Agee, a Birmingham investment bank; Will Brooke, senior partner at the Birmingham-based investment firm of Harbert Management Corporation and a Business Council of Alabama board member, and Robert Burton, present of Birmingham-based Hoar Construction. Hubbard is also accused of soliciting an unspecified amount of money from Montgomery lobbyist Dax Swatek.

The remaining counts accuse Hubbard of seeking consulting business from former Gov. Bob Riley and his daughter, Minda Riley Campbell, both lobbyists; BCA President Bill Canary and Will Brooke.

All the charges fall under a state law passed in 2010 forbidding elected officials from soliciting a “thing of value” from a “lobbyist, subordinate of a lobbyist or principal.”

The background: According to emails, Hubbard co-signed a loan of $600,000 to keep Craftmasters afloat and address a tax debt. In a September 9, 2012 email to Riley, Hubbard wrote that Brooke had helped him put together a $1.5 million plan to keep the business alive and said Brooke, Rane, Burton and Holbrook all made contributions.

“I believe if I take the reins of the business, rise (sic) the capital necessary to eliminate the debt – and most importantly take care of the tax debt – I can turn the company around,” Hubbard wrote in a September 4, 2012, email. “Failure is not an option as it means personal and political ruin.”

Hubbard's employer, IMG, let him go after he became speaker. Hubbard said in an email the company forced him to choose between his job and his political office. In two separate emails in 2011, Hubbard asked Riley if he could work at the former governor’s consulting firm, suggesting in one that Riley was a “strategic business consultant, not a lobbyist” and that the Auburn Network could provide Riley’s firm with “buying, polling, focus groups, design work (and) printing).”

Prosecutors: Hubbard’s need to preserve his political career “motivated him to solicit lobbyists and principals for money, even though the Ethics Law prohibits such activities,” prosecutors wrote in the February filing.

Hubbard: In the September filing, White argued the Ethics Act excluded compensation earned from non-governmental activities from its “thing of value” definition, and wrote that Hubbard “made no promise to any of the potential or actual investors” in Craftmasters other than what was set out in the investment agreement. White also wrote Brooke, Rane and Burton were not “principals” as defined in the act. White also argued the contact between Hubbard, Riley, Canary and Campbell fell under a “friendship” exception in the law, which exempts "anything given by a friend of the recipient under circumstances which make it clear that it is motivated by friendship and not given because of the recipient's official position."