It is evident that my actions are a distraction to the important work and critical tasks of the Secretary of State’s Office.
By Julia Shumway, Oregon Capital Chronicle
Shemia Fagan, Secretary of State (D), will resign on Monday. This is less than a fortnight after the news broke that she moonlighted as a cannabis company in trouble. Her office had audited this company and it played a major role.
Fagan made the announcement via email on Tuesday, following a virtual press conference held on Monday in which she apologized to Oregonians for breaking their trust and claimed she could not survive on a $77,000 state salary. She also terminated her $10,000-a month contract with La Mota – a cannabis company, whose owner donated $45,000 to Fagan’s campaign.
In an email, Ron Bersin, the Executive Director of the Oregon Government Ethics Commission said that a written complaint prompted them to begin investigating Fagan’s contract. Since then they have received a second one. The Oregon Government Ethics Commission has a 60-day process to review complaints before deciding whether or not to launch an investigation.
Gov. Tina Kotek, a Democrat from Minnesota, urged the commission for an investigation and asked that the Department of Justice analyze the Secretary of State audit of the Cannabis Industry to determine if Fagan was involved. The report indicated that looser regulations would benefit the cannabis industry.
Fagan stated in a press release that, “While I’m confident that the investigation into my ethics will reveal that I followed all the legal and ethical guidelines of the state in order to provide for my family’s needs, it’s clear that my actions are a distraction away from the critical and important work of the Secretary of State’s Office.”
She continued, “Protecting the democracy of our state and ensuring that our elected leaders are trusted–these were my reasons for running for this office.” “They’re also the reason I will submit my resignation today.”
Cheryl Myers, the deputy secretary of the department, will be in charge until Kotek names a new secretary who will serve through to the election in 2024. The Secretary of State’s Office is overseeing the special district election on May 16, with ballots in voters’ hand.
Myers stated in a press release that “this is an agency with a strong division leadership, and internal systems which can withstand changes.” “We are prepared to continue the vital work of the Secretary’s Office during this transition.”
Kotek stated in a press release that she had learned of Fagan’s resignation on Tuesday morning, and she backed the decision.
She said that it was essential for Oregonians to have confidence in their government. “I think this is the first step to restoring trust.”
Oregon does not have a Lieutenant Governor, so the Secretary of State is next in line to become governor.
House Speaker Dan Rayfield, of Corvallis; Senate President Rob Wagner, of Lake Oswego; House Majority leader Julie Fahey, of Eugene; and Senate Majority leader Kate Lieber, of Beaverton are all Democrats. They said that Fagan’s resignation will allow the State to move forward and build trust.
They said: “As elected officials, we understand that our success depends on our ability as leaders to maintain the trust of those we represent and serve.” “Secretary Fagan’s serious lapses in judgment have eroded the trust of Oregonians, including legislators that rely on the Audits Division to provide vital information about public policy.”
This article was originally published by Oregon Capital Chronicle.
Below is a report on the earlier developments…
Oregon Secretary of State Quits Marijuana Consultant Job
“I owe an apology to the people of Oregon.” I made a mistake by contracting with an organization that is owned and regulated by one of my political donors, which was being audited by my audits department .”
By Ben Botkin & Julia Shumway of the Oregon Capital Chronicle
Oregon Secretary of State Shemia Fagan (D) announced Monday she has resigned from her $10,000-a-month consulting side job and tearfully apologized for her “poor judgment” in moonlighting with a politically-connected cannabis company regulated by a state agency her office was auditing.
Fagan released a copy her contract with Veriede Holding LLC. This is an affiliate of the La Mota chain of cannabis dispensaries. Fagan started the contract on February 20 while her office audited the state’s cannabis regulation.
Fagan resigned from the audit at the beginning of February, when she realized that she might start working as a moonlighter for the company. The audit had been completed by that time.
Fagan told reporters in a call with the press that he owed an apology to the Oregonians. “I owe an apology to the professionals who work diligently in my agency. I’m truly sorry. I made a mistake by contracting with an organization that is owned and regulated by one of my political donors, which was also under audit from my audits department. “I am sorry that I have damaged the trust that so many of us have worked hard to establish, and I will start working today to rebuild that trust.”
La Mota has a spotty reputation in the cannabis business, as media reports indicate that it is not paying its bills or that there are tax liens. This is despite efforts to increase its political influence.
Fagan claimed that she received payment for the two-month consulting contract.
Records show that she consulted informally with the Oregon Government Ethics Commission on the matter and then decided to recuse from the audit. Fagan and staff of the commission exchanged emails and phone calls between February 9 to February 15, according to documents in her office.
Fagan decided not to seek an official written opinion but instead to recuse herself after receiving past advice from the Commission.
Fagan stated that “an opinion would have allowed me to avoid recusing myself.” “I chose to take on the most restrictive restriction for myself instead.”
Salem was not happy with the arrangement, even though there is no evidence that Fagan violated any laws. Republican lawmakers demanded that Fagan resign while Gov. Tina Kotek, a Democrat, called for the Oregon Government Ethics Commission (OGEC) to investigate this issue.
Fagan said that she is looking forward to the investigation by the ethics commission because “they will confirm I have faithfully followed Oregon’s ethical rules and laws.”
Fagan also said that simply obeying the law wasn’t enough.
Fagan stated, “I’m not here to defend my rule-following.” “I am here to accept that. It’s not the same as doing nothing wrong. I also broke your trust. That was wrong. “I am sorry.
Contract details
Fagan’s contract was with the company to investigate the cannabis industry outside of Oregon in order to look for possible expansion opportunities.
The contract is three pages long and includes:
- A $10,000 monthly salary with no minimum hours or hourly rate required.
- Fagan was to refrain from using government resources, her time or position as a elected official to assist the company.
- Fagan was also eligible for a bonus of $30,000 if it obtained a license to grow marijuana outside Oregon or New Mexico.
Fagan stated that she would not be eligible to receive the $30,000 bonus due to her work in the first two month. She claimed to have spent 15 hours per week doing consulting work. This equates to $150-$175 per hour.
Fagan explained that the deal was made when she caught up with Rosa Cazares – chief executive officer at La Mota – and mentioned to her in February that she taught a class in Willamette University’s law school. This work takes about four hours per week and pays roughly the same as what she earned as a consultant.
Fagan explained that Rosa had mentioned her company’s desire to expand beyond Oregon, and was seeking contractors to conduct research in the U.S. States and Territories. This opportunity was appealing to me as I am a highly qualified attorney who has been in law school for over ten years.
She said that Fagan was no longer registered as an attorney by the Oregon State Bar, and her work did not constitute legal advice.
Her lucrative state job, which paid $77,000 a year, was less than the consulting job.
Fagan claimed that it was hard to live on her salary from the state. She said that in her first year of practice as an attorney, she earned $105,000.
Fagan explained, “Fourteen-years later I am starting from scratch financially following a divorce.” “I have two small children. I have student loan payments and other bills. I rent in Portland’s expensive metro area and am the sole earner of my household. To put it simply, my secretary-of-state salary is not enough to support me.
According to the Department of Administrative Services, at least 25 non-elected agency heads receive salaries of over $200,000 per year. Even the Deputy Secretary Of State Cheryl Myers makes more than Fagan, earning $238.164 per year.
Andrea Chiapella is a spokesperson for the Department of Administrative Services. She said that elected officials are paid differently.
Time of audit
Fagan’s audit plan for 2021 included the state’s cannabis regulation, which was two years prior to the consulting agreement.
Willamette Week broke the story of the first report on the consulting contract. They also reported that Fagan suggested auditors speak to Cazares.
Fagan explained that it is “customary” to suggest Rosa and another person whom he personally knew.
Fagan stated, “I think they interviewed around a dozen individuals.” “I was not in the interviews. I did not follow up on the interviews. “My role is primarily as a high-level overseer of the audit.”
The audit included several recommendations. These include that Oregon should better track demographic information about marijuana licenses, and be prepared for the federal government’s approval of marijuana, currently classified as Schedule I substance. Federal authorities view marijuana as having no medical value, and a high potential for abuse.
Fagan, when asked if it was her position that led to the agreement, given her lack of experience in the cannabis sector said she had other qualifications as a researcher with extensive experience.
Fagan stated, “They have never asked me to look into the regulations for the area.” As a general representative of businesses, I am qualified to handle this. You don’t need to be an expert on any one part of it. “I was always looking at the rules and regulations.”
Fagan says that her first contact with La Mota began through her social and professional life.
Fagan: “I have met many, including owners of La Mota, in the cannabis industry.” “They became donors for my 2020 campaign.” Since we met in 2020, our kids are the same age. “I’ve seen them on social occasions.”
Aaron Mitchell, the co-owner of Fagan’s restaurant, has donated $45,000, starting with a contribution of $10,000 in September 2020, just before she was appointed secretary. Fagan has not received contributions from La Mota or Cazares despite both having given tens of thousands of dollars to Democratic politicians.
Fagan received a reimbursement of about $20,000 from her campaign to become secretary of State for her personal expenses.
Fagan stated that she was reimbursed for the costs she had paid in advance for travel and political events, including food, lodging and airfare. This includes travel to California, Alaska and other states.
Salary for Public Service
Fagan’s pay appears to be the same as other elected agency leaders. According to a spokesperson at the Department of Administrative Services, Treasurer Tobias Read and Commissioner Christina Stephenson of Bureau of Labor & Industries both earn $77,000 a yearly. Attorney General Ellen Rosenblum earns $82,200 per year and Gov. Tina Kotek’s (D) annual salary is $98,600.
According to a Capital Chronicle agency survey, neither do they have side jobs. Oregon Health Authority, Department of Human Services and Department of Transportation are among the agencies with directors who do not have side jobs.
Fagan stated, “It is an honor to be Oregon Secretary of State regardless of compensation.”
Fagan replied: “It is not my custom to release tax returns.”
She said, “I’m here because I own up to a mistake I made.”
Rules of the Ethics Commission
The Oregon Government Ethics Commission is often asked for written advice by public officials as they navigate the ethical issues surrounding outside employment. A review of the public database of the Commission shows that more than 80 requests were made for conflict of interest advice in the last five years. This represents about half of nearly 170 requests.
This includes requests from heads of state agencies. James Schroeder asked for assurances about his previous employment with various health organizations, and the retirement funds he contributed while employed, did not create conflict of interest.
Legislators also asked for guidance. Ben Bowman is a new state representative from Tigard. He co-owns Oregon 360 Media which publishes a weekly newsletter and podcasts on state politics. In February, he requested and received from the ethics committee a letter stating that he was allowed to continue holding both jobs but could not use state resources for Oregon 360 Media.
Sara Gelser Blouin (D-Corvallis) received an advice in 2022 that she was likely to have to declare potential conflicts of interest when it came legislation affecting gambling, since her father and brother are both in the industry, and she owns shares in their companies. In 2021 the commission told Sen. Elizabeth Steiner (D-Portland) that she could sublease a lobbyist’s office because she had paid more than fair market rent and did not try to negotiate a lower rate.
Rep. Greg Smith (R-Heppner) has requested and received six letters affirming his employment outside of the House since 2017. This includes owning a firm for economic development that had contracts with Harney County as well as Umatilla Electric Cooperative. The director of the commission told him each time that his employment did not constitute a conflict, but he should be aware of potential conflicts.
This article was originally published by Oregon Capital Chronicle.
The post Oregon secretary of state resigns amid criticism of her marijuana consulting work appeared initially on Marijuana Moment.
