Corruption Potential High In Nevada Little Opportunity To Catch Thieves

Taxpayers Beware: It Appears Nevada Has No System To Apprehend Those Who Steal

by David Thompson, Publisher

On Opportunities for Public Corruption

In a previous opinion piece published in The Nevada Observer, I described the system of financial accountability in the State and showed that it was defective -- that Nevada’s financial system was a weak, nearly blind and toothless administrative scheme designed to look good and deliver nothing. At common law, recurrent problem areas of public corruption were subject to an annual review by a grand jury. However, Nevada has no state grand jury whatsoever, and only 2 of the state's 17 counties (Washoe and Clark) have grand juries which are regularly convened . NRS 172.175(2) makes grand jury review of these recurrent problem areas discretionary. Nevada does not have an ombudsman or inspector-general to provide an alternative to grand jury review. As a result, Nevada currently has no independent process to systematically review its government agencies for financial irregularities.

This article describes how, without adequate financial checks and balances, the State's assets can be looted by thieves operating individually or as part of a ring.

Since the 2003 legislative session, Nevadans have $836 million in new taxes to pay over the next two years to fund our state government. At that time the Nevada Department of Taxation was already collecting $3 billion per year from 16 different sources and sending it to an out-of-State contractor in Arizona. Our state government now costs nearly $4 billion annually to operate. According to the latest figures released prior to the upcoming legislative session, that figure might end up above $5 billion.

With taxes like that, Nevadans can only hope that the state government will function even more honestly and efficiently than it has in the past. To help maintain the clean, streamlined operation of an effective state government through these troubled times, The Nevada Observer offers this essay on recurrent problem areas of public corruption.

How public corruption works

One of the leading ideas behind our system of government is that all citizens are (or should be) equal in the eyes of the law. The purpose of corruption is to ensure that equality before the law is no more than a naive and idle dream. It does this by siphoning off public resources for the benefit of the favored few, and also by assuring that the favored few don't have to share the tax and regulatory burdens of their fellow citizens.

The spoils system

In conversations with others, I often hear that corruption (the "spoils system") is inevitable in a democracy, so why bother worrying about it? The "spoils system" concept has a Roman origin, but is well-established in the United States, and particularly in the State of Nevada. Its motto is ex spolia optima – which means “To the victor belongs the spoils.”

The problems which this point of view overlooks are easily stated. Imagine that Nevada has a bag of gold dust -- in this case, the accumulation of state taxes and property. Now imagine that the bag has a rip in it, so some of the gold dust runs out of the bag and onto the floor. How much of a leak is an acceptable loss, in your opinion? Does the situation get any better if you refuse to watch how much gold dust leaks out of the bag?

Now imagine that when the gold dust in the bag starts to run out, the state legislature demands that you replace it. How enthusiastic should you be about replacing the gold dust that leaked out onto the floor (or more to the point, fell into the hands of spoils system advocates)?

One of the more serious problems with the system of financial administration in this state is that no one can tell how much gold dust is leaking out of the bag. The suggestion from a $4 billion dollar a year budget and an $836 million dollar tax increase is that the leaking gold dust amounts to at least 10 percent per year, and maybe more. If the problem is going to improve, the system has to change. That brings us to the problem of electing the right people.

Electing the right people

Election day is coming up. In terms of candidates, "product confusion" abounds. For the most part, responsible citizens of the state must choose the candidate of their choice on the basis of self-promoting advertisements, carefully designed to avoid any serious discussion of issues. Many candidates apparently want to avoid the public, and if a reporter asks them a question which they can't or don't want to answer, the candidate gives a non-responsive "sound bite." Others take in huge sums of campaign contributions, and fill out forms so that you can't tell who the real contributors were or what happened to the money.

Responsible people vote, but what can you do about candidates like that? The answer is easy: Don't vote for them. If all other considerations are equal, vote for the candidate that came to your house to ask for your vote and talked with you, or one who returns telephone calls and e-mails from ordinary citizens, or who will give a direct answer to a direct question about issues. If you want a good idea of who's "pulling the strings," go to the Secretary of State's website and look to see who gave the candidate $5000 or more. If you look at the "expenditures" portion of the C&E report and you see huge payments and no breakdown of costs, ask yourself what the candidate is trying to hide. If you don't, you might as well give your ballot to a special interest group or advertising consultant and let them fill it out -- and get ready to replenish the state's leaking bag of gold dust, too.

The Nevada campaign finance laws need comprehensive reform as well, so don't forget to insist on it after the election.

The shell game

"The shell game" is an old metaphor used to describe an old vice -- lack of accountability. The name comes from the early American sleight-of-hand game of "thimblerig," in which the player, or "sucker," tries to guess which of three thimbles, or half-walnut shells conceals a dried pea. It's a game in which the customer is always wrong. Within the context of state government, the problem is fixing responsibility. The lack-of-accountability shell game makes that task difficult or impossible.

The reason that fixing responsibility is important is that when there's a problem, normally prudent and responsible persons ask two questions: (1) How did it happen? and (2) How can I make sure it won't happen again? Is that how the state system works? No, it isn't. As the earlier opinion piece on the state financial system pointed out, the average citizen is very unlikely to even find out that there was a problem, much less what caused it and why it won't happen again. Was it a wasteful practice which should be stopped? We don't know. Was there something questionable about the purchase? We don't know. Who was at fault? We don't know. Why? Because state agencies no longer feel that it is necessary to tell the public. And really, why should the administrators of those state offices care? They're not elected. They're appointed by the governor, and he's the only fellow they have to keep happy. (Readers of The Nevada Observer who have had similar experiences with state agencies are invited to bring the matter to our attention)

An example of lack of accountability

A recent case in point: The Nevada Highway Patrol decided to replace its radio system. The new system didn't work. That was replaced by another radio system, which also didn't work. Now this is clearly not the fault of the hard-working Nevada Highway Patrol troopers trying to enforce the laws. The faulty radio system changes put them at risk, and makes their tough job tougher. What went wrong on the first fiasco? We don't know. Who or what state administrator was responsible? We don't know. What went wrong on the second purchase of unsuitable radio equipment? We don't know. Who was responsible for the second fiasco? We don't know. What went wrong? We don't know. Where are the public reports on the first and second calamitous purchases of equipment? There aren't any. How can the citizens of Nevada be sure it won't happen again? We can't. Does it look like these purchasing practices might fairly be termed a "snafu"? It does to me.

Is it really too much to ask for a public statement, in which the state agency explains a costly mistake, and says what actions it took to make sure that it doesn't happen again? Apparently so.

The important thing here for all Nevadans to realize is that this isn't just a Highway Patrol problem. This is how all the other agencies in the state operate as well. The problem isn't agency-specific -- it's endemic. Until citizens start to demand accountability, they sure as hell aren't going to get it.

The recurrent problem areas of public corruption

Corruption is easy to find – it flourishes wherever there is money or other forms of material wealth. What should you look for if you want to see it?

The recurrent problem areas of public corruption in other state governments are: (1) The purchase of goods and services; (2) The sale and disposition of government-owned lands and other property; (3) The regulation of commerce and land use; (4) The custody and investment of public funds; (5) Tax assessments and collection; (6) Political patronage; (7) Selective enforcement of the laws; and (8) Embezzlement of public funds or property.

Government contracts

In order to set the stage for corrupt exchanges, it is necessary to arrange things so that a fixed set of friends or supporters get the government contract. To do this, a knowledge of state laws regulating the letting of contracts is helpful. Here's a quick overview of how the government contracting process works in Nevada. If it seems a little long, that's because the subject is intentionally confusing -- that's what a "shell game" is all about.

In Nevada, state purchasing practices are regulated by NRS Chapter 333. The purchasing practices of local government are regulated by NRS Chapter 332. Purchasing practices generally are covered by NRS Chapter 334.

The chief of the Purchasing Division in the Nevada Department of Administration controls most state purchases pursuant to NRS 333.130, NRS 333.135, NRS 333.150, NRS 333.160, NRS 333.250, NRS 333.330, NRS 333.335, NRS 333.340. NRS 333.162 and NRS 333.165 vest substantial discretion for drafting contracts for the state purchase of goods or services in the chief of the Purchasing Division. The chief of the Purchasing Division is also responsible for the purchase of state supplies, pursuant to NRS 333.200, NRS 333.210, NRS 333.230, and NRS 333.250. NRS 333.155 governs state purchases of new equipment. The chief of the Purchasing Department also has broad authority to transfer or sell state property under NRS 334.040.

With certain exceptions, NRS 281.221 prohibits non-legislative state officers from having a direct or indirect interest in state contracts. This statute makes the offense a gross misdemeanor, no matter how much money is involved. NRS 332.800 only provides a misdemeanor penalty for a member of a governing body of local government who has an interest in a purchasing contract, even though the loss involves millions of dollars. NRS 218.605 provides that a legislator with a similar interest is guilty of a gross misdemeanor, with certain exceptions. There are no criminal penalties if a relative of a public officer has a direct or indirect interest in the contract.

NRS 334.050 requires statutory authorization for any transactions involving state lands. NRS 321.003 requires the prior approval of the state land registrar before any state land can be purchased. NRS 321.605 and NRS 321.610 authorize the state land registrar to lease or purchase federal lands for public and recreational purposes.

As for land use, state policy is set forth in NRS 321.640.  "It is in the public interest to place the primary authority for the planning process with the local governments, which are closest to the people," and the state is to maintain a "hands-off" policy: "State participation in land use planning should be limited to coordination of information and data, the acquisition and use of federal lands within the State, providing land use planning assistance in areas of critical environmental concern when directed by the Governor or requested by local governments, and providing assistance in resolving inconsistencies between the land use plans of local governmental entities when requested to do so by one of the entities."

Government contracts generally, but not always, require a bidding process. However, as we shall see, the process in Nevada has many exploitable loopholes. Here's how the process works:

On the State level, NRS 333.315 covers state services contracts in which competitive bidding is used. NRS 333.320 and NRS 333.330 govern state purchases of commodities. NRS 333.335 and NRS 333.340 vest the chief of the Purchasing Division with substantial discretion in evaluating proposals and awarding contracts. NRS 333.370 provides an appeals procedure for unsuccessful bidders, conducted by the hearings division of the department of administration.

NRS 333.300 governs the conduct of competitive bidding in state purchases, and also provides for "emergency" contracts in which competitive bidding is not required. NRS 333.380 allows the chief of the Purchasing Division to make rules for unscheduled or emergency purchases.

At the state level, NRS 333.800 contains a list of prohibited acts by bidders before the contract is awarded, with violations punishable as gross misdemeanors. NRS 333.810 voids contracts made in violation of NRS Chapter 333, and makes the state officer who entered into the contract personally liable for any losses. NRS 333.190 makes the chief of the Purchasing Division for inspecting the quality of state-purchased goods and services, but the willful failure of a public officer to perform his duty is only punishable as a misdemeanor under NRS 281.360, no matter how much money may have been involved.

For local governments, NRS 332.115 contains a long list of goods and services for local governments which do not require competitive bidding. NRS 332.146 and NRS 332.148 contain other exceptions to the competitive bidding procedures for local governments. If bidding is required, NRS 332.045 generally requires local governments to publish a notice to bid. NRS 332.065 directs that contracts go to the lowest "responsive and responsible" bidder. NRS 332.085 sets guidelines, but not rules, for the local government's discretionary determination of who is a "responsible bidder." Under NRS 332.075 and NRS 332.085, local governments may reject bids from a bidder who is not "responsible." If the local government finds the bids unacceptable, NRS 332.148 allows the local government agency to let the contract without soliciting any further bids. Pursuant to NRS 332.055, local governments are not required to solicit competitive bidding for "emergency" contracts.

NRS 332.161 has a list of prohibited practices by bidders and local government officers before the contract is awarded, punishable by a gross misdemeanor regardless of the amount of loss. NRS 332.165 provides that collusive bidding voids a purchasing contract with local governments.

Finally, NRS 281.557 provides that state, county and municipal government grants, contracts or leases made in violation of NRS Chapter 281 are voidable with notice.

At the State level, NRS 333.220 requires the chief of the Purchasing Division to maintain inventory lists of state property. NRS 333.420 requires invoices and memoranda of shipment from state vendors.

In the realm of private business, the person responsible preparing and presenting a false invoice to a private person or corporation is subject to prosecution for theft, NRS 205.0832(1)(c), a felony, or for obtaining money/property under false pretenses, NRS 205.380, a felony, for amounts of $250 or more. Amounts under $250 are punishable as misdemeanors. However, if the victim is the state or a local government, NRS 197.160 only makes the offense a gross misdemeanor, regardless of the amount of money involved. If a public officer of the state or local government knowingly pays on a false invoice, NRS 197.150 provides punishment as a felony if the amount is $250 or more, otherwise the offense is a misdemeanor. If a public officer knowingly makes a false report or certificate, the offense is only punishable as a gross misdemeanor under NRS 197.130 or NRS 197.140, regardless of the amount involved.

NRS 333.450 obliges the state to pay for any purchases approved by the chief of the Purchasing Division.

From this description, the exploitable loopholes in the State laws should be apparent. The criminal penalties involved are negligible, particularly where millions of dollars may be involved. In fact, the criminal penalties for defrauding government agencies are less than those for defrauding private businesses. For the criminal, this means the state is the "sucker" of choice. That brings us to the subject of how those loopholes in the State laws can be exploited.

The purchase of goods and services

Of all of the recurrent problem areas of public corruption in other states, one of the worst involves government purchase of goods and services. The basic theme here is to enrich someone at state expense, by causing the state to pay more money than something is worth, or to pay something for nothing.

In the field of purchasing goods, the purchases can involve real property, supplies or equipment.

In the field of purchasing services, the usual problems involve construction contracts, repairs of state property, and professional services in professions such as architects, legal services, surveying, auditing services and financial consultants, planning services, and advertising.

The usual procedure for corrupt state contracts is to avoid the applicable bidding procedures, in order to pay out public money to a fixed set of friends and supporters. There are several ways of doing this.

These are three types of service contracts: construction, repairs and professional services. In these areas -- and particularly in the area of professional services, a subjective and partisan evaluation of the "quality of service" allows the usual competitive bidding procedure to be ignored and allows for inflated pricing. This can result in exclusive and monopolistic government "lock" contracts with single companies, such as waste disposal firms, ambulance services and advertising agencies. Other areas of service contracts which are recurrent problems are contracts for architectural services, legal services, surveying services, auditing services, planning services, and contracts to market government bonds

Where state laws or regulations require a competitive bidding procedure, a friend or supporter can still be given an "edge" in bidding for public contracts. Even when exposed, failures to abide by established budget procedures in purchasing and service contracts, or a failure to maintain adequate financial records can be passed off as mere "lapses" or isolated events.

There are five regularly encountered abuses seen where competitive bidding is required by law. The first three are collusive bidding, the secret disclosure of rival bids to a favored bidder, and the disqualification of rival bidders.

Another often-seen area of corruption in the area of competitive bidding involves post-bidding "adjustments" to the price. In this variation, the contractor is actually the low bidder on a contract, but makes his profit from cost overruns, and/or a premium price for shoddy or uncompleted work or sub-standard goods.

The final concern involves unofficial, personal lobbying by government officials for a specific recipient of lucrative government contracts. The lobbying is ostensibly "private", but the government official typically supervises or regulates the person being lobbied.

The purchase of undelivered goods and services is another related problem. This involves two different kinds of corruption: agency fraud and vendor fraud.

There are two common types of agency fraud. The first features "ghost" employees. Here, non-existent employees are paid a check which someone else cashes. An oft-seen variation on this theme is the use of payments for unperformed "overtime" to reward favored employees.

The second common type of agency fraud involves work performed for private interests. Public employees use public property on public time to build, repair or improve private property, for partisan campaign work, or for simple "moonlighting" jobs.

The two most common types of vendor fraud both involve false invoices. The first consists of invoices for work not performed or services never rendered. The second is invoice "padding," where the vendor artificially inflates his invoice and pockets the excess.

In these cases involving the purchase of undelivered goods and services, the employees of the government agency involved often have somehow failed to maintain the required records -- and who can be surprised? The cases are rarely prosecuted, and the willful failure of a public officer to perform his duty is only punishable as a misdemeanor under NRS 281.360, no matter how much money may have been involved.

The sale and disposition of government-owned lands and other property

Another form of corruption involves the sale, lease, use or "swaps" of public property. Again, it is necessary to have an overview in order to spot the flaws in Nevada's regulatory scheme, and see the possibilities for a "shell game." Here it is:

NRS 321.0005 contains a legislative declaration that state lands are to be used "in the best interests" of the residents of the state, with the primary considerations being "multiple use" and "sustained yield."

The management of state lands is controlled by the provisions of NRS Chapter 321. State lands are held by the division of state lands of the state department of conservation and natural resources, pursuant to NRS 321.0007 and NRS 321.001. The state land registrar is the head of the state land office pursuant to NRS 321.010. NRS 321.040 requires the state land registrar to maintain records of state lands. Under NRS 321.067, the state land registrar administers a revolving fund for costs associated with state land management.

NRS 334.050 requires statutory authorization for any transactions involving state lands. All this means is that there has to be a state law which permits the transaction. NRS 321.003 requires the prior approval of the state land registrar before any state land can be sold. NRS 321.005 requires notice to local government entities where the land is located and a hearing before any sale, disposition or transfer of state land can be approved by the state land registrar. NRS 321.125 authorizes the state land registrar to sell state lands to a public agency or local government. NRS 321.335 sets forth the procedure for the sale of state land to other entities and private persons.

The use of state lands is regulated by NRS Chapter 322. Of uses there are two types, uses authorized by permit and leases. NRS 322.010, NRS 322.060, and NRS 322.070 grant broad power to the state land registrar to lease state lands. The state land registrar may lease state land to certain state officers or employees for a reduced charge, pursuant to NRS 322.063. He may also lease state land to certain nonprofit organizations or educational institutions for a reduced charge, pursuant to NRS 322.065. NRS 322.007 provides that all leases with terms extending beyond one year, except residential or ranching leases, must be approved by the state board of examiners and the interim finance committee.

The use of state lands by permit is different from a lease. NRS 322.100 authorizes the state land registrar to issue permits, licenses or other authorization for any lawful use by private persons. NRS 322.170 authorizes the state land registrar to adopt such regulations as are necessary to provide for issuing permits, etc. for any lawful use of state lands.

Special rules apply to the Fort Mohave Valley Development (NRS 321.480-321.536), the Lincoln County Pilot Land Development and Disposal (NRS 321.540-321.590), and Lake Tahoe (NRS 321.595-321.5957)

For other property, NRS 334.040 allows the chief of the Purchasing Division to dispose of "surplus" state property. NRS 333.195 allows the chief of the Purchasing Division to donate state property to certain groups, while NRS 333.490 and NRS 333.495 empower the chief of the Purchasing Division to distribute federal surplus property to eligible institutions and organizations.

On the local level, NRS 332.185 requires similar procedures for sale of local government property as provided for in the bidding procedures for purchases generally outlined in NRS Chapter 332, and provides: " The governing body or its authorized representative may dispose of personal property of the local government by any manner, including, without limitation, at public auction, if the governing body or its authorized representative determines that the property is no longer required for public use and deems such action desirable and in the best interests of the local government. (emphasis added)" These provisions do not apply to the sale of land and improvements. NRS 332.175 allows local government entities to "trade in" government property as an allowance against the purchase price of new property.

Now that you've seen the overview, it's time to look at the corruption potential. Note the lack of checks and balances in the state regulatory scheme. Whenever government property is leased, sold or transferred, there is an opportunity for a favored person to purchase or acquire something of value, owned by the government, at a bargain price. Again, the underlying theme is the profit of a corrupt few at the expense of the ordinary citizens of the state. This is particularly common in transactions involving land. Public corruption in government land swaps typically takes the form of exchanging usable government land for unusable or less valuable privately-owned land.

Another area of potential corruption is the misuse of government-owned lands -- the private exploitation of public property. An example of this occurs when government officers unofficially permit private persons to mine, log or use government land for personal profit. A related variation involves government officers unofficially permitting private interests to dump toxic wastes without the usual safeguards. Where the person can pay the state less than market value for a permit to log, mine or otherwise use public lands, similar opportunities for corruption arise.

Regulation of Land and Commerce

The state and local government regulation of land use mostly involves the conditions for granting or refusing business licenses, land use restrictions and zoning. This is always a fertile field for corruption, since the value of private property may be improved or impaired by adding or removing restrictions on its use. Thus, a lot in a residential area on which only non-commercial structures can be built can be transformed, by the stroke of a pen, into a zone suitable for commercial buildings. By the reverse process, a valuable piece of property can be rendered substantially unusable.

Regulation of commerce can also provide opportunities for corruption. The most obvious example is the public creation of private monopolies, like utilities companies, trash hauling franchises, exclusive ambulance service contracts and the like.

Another example is a "moratorium" on licensing certain types of businesses, which creates a monopoly position for those in existence at the time the "moratorium" takes effect. Of course, the monopoly position lasts as long as the "moratorium" does. An opportune and all but unnoticed change in land use or commercial regulation can also be used to allow a certain type of business to operate, or drive a competitor out of business.

New rules adapted by the state, a city or county can implement protectionist legislation. Existing businesses can be protected by laws or regulation which impede or inhibit new competition. The same new rules can make it all but impossible to conduct other types of businesses, while companies in the same line of business, which were operating before the new regulations took effect, are "grandfathered" in without having to comply with the new rules. Special exemptions are another variation on this theme, which involves the favored business or industry being exempted from laws or regulations affecting everybody else.

The custody and investment of public funds

Public funds are usually either put on deposit, for short-term use, or invested for long-term use. Here are the laws regulating government deposits and investments in Nevada:

NRS 355.045 makes the state treasurer responsible for state deposits and investments, subject to the supervision of the state board of finance. Deposits by state and local governments are subject to the provisions of NRS Chapter 356. NRS 356.010 sets forth the requirements for state deposits. NRS 356.110 makes it a felony to willfully violate any of the provisions of NRS 356.010 through NRS 356.100. It is only a misdemeanor, however, to willfully violate NRS 356.011, which establishes the requirements of an institution into which state money is deposited.

NRS 356.007 establishes a preference for local banks in NRS Chapter 274 "specially benefited zones."

Investments of money by state or local government is generally regulated by NRS Chapter 355. The state has a number of separate funds. The state permanent school fund (NRS 355.050-355.110) is subject to the investment restrictions set forth in NRS 355.060. Investment of state money other than that from the permanent school fund or state insurance fund is subject to the additional investment vehicles described in NRS 355.120 and NRS 355.140. NRS 355.150 contains a due diligence checklist which the state board of finance is required to follow. Once again, however, the willful failure of public officers to perform their duty is only punishable as a misdemeanor under NRS 281.360, no matter how much money may have been involved.

NRS 355.165 creates a local government long-term investment account, administered by the state treasurer. Permissible investments are set forth in NRS 355.165 and NRS 355.170. NRS 354.603 allows county school districts, county hospitals and library districts to maintain separate deposit accounts, supervised by the county treasurer, county auditor and board of county commissioners.

Local government investments are regulated by NRS 355.170, NRS 355.171, and NRS 355.172. If the money is held by local governments pursuant to a deferred compensation plan, the funds may be invested in the manner set forth in NRS 355.170 or placed in the additional investment vehicles described in NRS 355.176. NRS 355.178 regulates loans made by local governments.

State retirement funds are subject to somewhat different rules. The largest of these is the state public employees retirement system (PERS), regulated by NRS Chapter 286. Pursuant to NRS 286.120 and NRS 286.190, PERS is governed by the public employees' retirement board. This board consists of seven persons appointed by the governor and removable for cause shown. NRS 286.120. Disbursements by the PERS board are restricted to those set forth in NRS 286.220. PERS investments are regulated by NRS 286.680 and NRS 286.682, which provide for "every kind of investment which persons of prudence, discretion and intelligence acquire or retain for their own account."

The University of Nevada has a separate retirement system pursuant to NRS 286.802 through NRS 286.816.

Persons who make false statements or certifications, or withhold information in aid of an unmerited application for benefits under either the PERS or UN retirement systems are guilty of a gross misdemeanor, pursuant to NRS 286.820. This criminal provision, directed against false claims by supposed beneficiaries, is the only criminal provision in the entire chapter. There are no criminal provisions in NRS Chapter 286 for any acts of the administrators.

Now let's get back to the subject of corruption. The usual forms of corruption involving deposits take this form: the public money is deposited in a favored bank, which pockets some or all of any accrued interest on the deposited money. With investments, the public money is placed, on the basis of favoritism, to a chosen brokerage house or to used "bail out" or otherwise advantage a chosen beneficiary who owns the property or business in which the state invests. Favoritism can also be shown to the buyers or vendors of government bonds, who take higher rates of interest or higher fees than those prevailing on the market.

Tax Assessments and Collection

Corruption involving tax assessments usually takes this form: The property of favored persons is assessed at a rate lower than others, or the property of disfavored persons is assessed at a rate higher than others.

Corruption involving tax collection is usually seen like this: The taxes due from favored persons are forgiven or repaid at a lower than prevailing rate, while disfavored persons are prosecuted criminally and/or their property is seized and sold.

Political Patronage

Corruption in this area usually involves the hiring or firing of appointed officers or civil service employees on the basis of favoritism or the receipt of campaign contributions with hidden strings ("I'll contribute $10,000 to your campaign if you fire him/her.")

Political Corruption and Organized Crime

In the field of law enforcement, as well as in the civil arena, this problem takes two forms: non-enforcement of selected laws and selective enforcement of existing laws

With the non-enforcement of selected laws, the usual pattern is a willful failure of government officers to enforce "victimless" crimes, such as prostitution, illegal gambling, or fraud. In "wide-open" towns or governments of this sort, pay-offs to public administrators or even officers are the rule.

Where selective enforcement of existing laws is involved, corrupt public officers use the forms of law to prosecute their enemies, or to create competition-free crime monopolies for their benefactors.

Employee Embezzlement Schemes

These are commonplace, but rarely involve truly massive sums of money. They are usually related to petty cash transactions, false overtime or travel claims, thefts or conversion of government property (credit cards, cell phones, etc.), fake invoices and the like. If these embezzlements are widespread and go unchecked, however, they can become a significant problem, and sometimes involve multi-employee conspiracies.

How do the crooked public officers get rewarded?

This section describes frequently used methods of rewarding corrupt public officers for venal acts.

The most crude of these are bribes and "kickbacks." These are direct "under the table" payments to public officials or their designees. The usual distinction is that the bribe comes before the corrupt official act, while the "kickback" occurs after the corrupt official act.

A more sophisticated method is the "opportunity" bribe. This is an opportunity, to all appearances unrelated to the corrupt official act, for the public officer to purchase something of value at a bargain price, with a subsequent profitable opportunity for resale. This is particularly common in transactions involving land, but can also involve jewelry, art, antique automobiles, boats, etc.

A third way to reward the corrupt public officer is with "featherbedding" employment. In this arrangement, a relative of the public is hired at a lucrative wage for little or no work, or where the payment substantially exceeds market rates. This form of bribe can be quite difficult to detect.

"Loans," made to "help out" the public officer or his relatives, are another form of corruption which is difficult to detect, particularly when the loan is unrecorded.

Finally, the corrupt public officer can be rewarded with one or more expensive vacations or other gifts, paid for by companies or lobbyists for companies the official regulates. These can also take the form of less expensive presents, like free meals, use of property owned by the outside beneficiary ("Use my houseboat! We're friends, aren't we?"), or bottles of liquor at Christmas or other special occasions. These sorts of rewards are almost considered customary, and are even expected. The donor, in exchange, inevitably expects, and usually gets, special consideration from the beneficiaries of his "generosity." The practice is often excused with a statement like: "Why not? You should see what the boss gets."

Well, that just about covers the subject. Some of this corruption may be inevitable, but much of it can be reduced or eliminated by prudent legislation, an effective system of checks and balances, and criminal prosecutions by the Attorney General or the local district attorney's office. If it isn't, the bag of gold dust will just keep leaking, the rich will get richer and the poor get poorer, and the public will pay the bill.

Letters We Get

Editor, The Observer

I enjoyed reading the article on the proposed impeachment and trial of (State Controller) Kathy Augustine.

One correction. While the State Assembly charged District Judge Frank Langan and voted in the majority for his removal in 1921, the State Senate did not get a two thirds vote to remove him.

Guy Louis Rocha, CA
Asst. Administrator for Archives and Records Nevada State Library & Archives.