The Ralph Carr Judicial Building

The Ralph Carr Judicial Building, which houses the Colorado Independent Ethics Commission.

Four former Colorado Judicial Department employees will not face criminal charges tied to a state fraud audit into alleged misconduct because prosecutors say they didn’t have enough time to investigate the matter before the statute of limitations to file a case would have expired, The Gazette has learned.

That the Denver district attorney’s office received only a “heavily redacted” copy of the audit findings in February 2022 when the Judicial Department released it — nine months after fraud auditors had largely completed their investigation into alleged misconduct in the department — merely added to the problem, several sources familiar with the inquiry told The Gazette.

And although state law requires auditors to “immediately” alert law enforcement when any evidence of fraud is found, much of the delay was from lawyers within the Attorney General’s Office and the Judicial Department and auditors disagreeing over what “immediately” actually meant: at the time auditors uncovered the alleged fraud or after their final report was finished, according to people familiar with those discussions.

The four former employees — Chief of Staff Mindy Masias, Chief Administrative Officer Eric Brown, State Court Administrator Christopher Ryan and an unidentified manager — were referred to the DA for criminal investigation in February 2022 following a yearlong audit into allegations of a contract-for-silence scheme and a whistleblower letter that alleged even more widespread fraud within the Judicial Department.

Although the audit report went through several rewritings before it was released, the essence of the investigation was finished months earlier, around May 2021, sources said. If DA investigators had gotten word of the auditor's discoveries at that time, the statute of limitations would not likely have been a factor, several sources confirmed.

Then, when Denver prosecutors approached auditors, the Office of the State Court Administrator and the Attorney General's Office to obtain the portions of the report that were either blacked out or missing, they were met with resistance that ranged from demands that prosecutors sign nondisclosure agreements to requirements they produce grand jury subpoenas to get it, several sources confirmed.

As a result, prosecutors said they simply couldn't do their jobs in determining whether charges should be filed or not.

“We did not get the report with enough time to investigate the matter and therefore the matter is closed,” Denver DA spokeswoman Carolyn Tyler told The Gazette. She would not elaborate.

A spokesman for the Judicial Department said they cooperated fully when asked.

"The State Auditor's Office completed a very thorough and extensive investigation and we cooperated with them," spokesman Jon Sarche said in an email to The Gazette. "It was entirely under their purview to decide whether and when to refer it for criminal investigation. When the Denver district attorney’s office contacted us, we were ready and willing to cooperate in any way they requested."

A spokesman with the Attorney General's Office did not immediately respond to a request for comment.

State Auditor Kerri Hunter's office said Colorado's fraud hotline laws prevent it from commenting. The audit investigation was largely performed while Hunter's predecessor, Dianne Ray, was state auditor. She did not respond to efforts to reach her.

The anonymous whistleblower letter was addressed to the governor's office and the state Supreme Court and mailed around April 2019, and a similar report was made to the state's fraud hotline.

The writer of the 23-line undated letter, presumably a Judicial Department employee, referred to a number of concerns in the department such as allegations that employees receiving months of unexplained paid leave, and alleged coverups of fraud and wasteful spending. The writer wrote that "... everyone is terrified and sick of the corruption and coverups." Information about the contract was not a part of the letter.

The Colorado Office of the State Auditor took on the investigation into the whistleblower letter in May 2019 at the request of then-Colorado Supreme Court Chief Justice Nathan "Ben" Coats, who told auditors he "already had a chance to look into these allegations myself" before turning it over. Coats' letter to auditors did not indicate the findings of his inquiry.

News stories exposing the alleged quid pro quo multimillion-dollar contract given to former chief of staff Masias were first published in July 2019. Coats then asked the Office of the State Auditor to include the Masias contract in its inquiry.

A performance audit of several problems identified in the letter was made public in December 2020 just before Coats retired, but the core of the fraud inquiry would continue until May 2021.

Even the state auditors had a hard time obtaining information during their investigation, having to sign agreements with the Judicial Department over what they were allowed to see, a summary of their report showed. In some cases, they could take notes but couldn't make any copies of relevant documents.

Auditors eventually concluded there was "at least some evidence of occupational fraud, illegal transactions, and/or misuse or embezzlement of public funds," according to an executive summary of the fraud report released by the Supreme Court in February 2022.

Auditors also said they had given the Judicial Department "multiple opportunities to review the report and executive summary and redact information they identified as privileged, attorney work product or subject to other legal protections" before its release.

The court turned over a redacted copy of the final report to the Denver district attorney’s office the same day it released the summary. The report itself has not been made public, although Chief Justice Brian Boatright, who released the summary, said the entire document would be shared with investigators.

But prosecutors quickly determined the three-year statute of limitations to file any felony charges tied to the case was to expire in April or May 2022, leaving them only a couple of months to complete an inquiry that would typically take several months, according to several people familiar with the matter and with the investigative process. The statute of time to file any misdemeanor charges was even shorter.

That basically meant no charges could be filed.

State law appears to require that prosecutors be notified much sooner than they were.

“If the (auditor’s fraud) investigation finds evidence of apparently illegal transactions or misuse or embezzlement of public funds or property, the state auditors shall immediately report the matter to a law enforcement agency, a district attorney, or the attorney general, as appropriate,” according to the state’s law regarding fraud hotline investigations.

Auditors cited that law in their executive summary and their requirement to let law enforcement know what they found, but quote only the first half of the sentence and paraphrase the remainder, leaving out the operative word "immediately."

Without elaborating, Denver prosecutors said they chose only to look into allegations that Masias and Brown had double-dipped the state’s pay system. The two allegedly received “state compensation while being paid for work by an outside employer,” according to the audit summary.

Auditors determined Masias and Brown earned $17,200 and $26,800, respectively, in state salaries in 2018 and 2019 while simultaneously being paid an undisclosed amount by outside employers. The two were sought-after speakers on personnel issues, mostly through the National Center for State Courts.

"Based on the totality of the circumstances, the (Office of the State Auditor) concludes that there is at least some evidence of occupational fraud, apparently illegal transactions, and/or misuse or embezzlement of public funds," auditors wrote in a report summary.

Although auditors said they also found that Masias and Brown attempted "to influence the (bidding process), sole-source contract, and related processes in favor of Ms. Masias" that ultimately ended up with her being awarded a judicial training contract worth up to $2.75 million, Tyler said prosecutors were not looking into that deal. The contract was canceled following the newspaper reports that exposed it.

Boatright’s statement in February did not specifically address a two-page memo that was allegedly at the center of the contract deal in which Masias reportedly threatened a sex discrimination lawsuit that would expose years of judicial misconduct that were intentionally kept quiet or put aside. Masias was being fired at the time over financial irregularities that occurred months earlier.

According to their summary, auditors "found that Ms. Masias had access to potentially damaging information about the Judicial Branch. This information included notes about alleged sexual misconduct, discrimination, and other misconduct by Judicial Branch staff and judges. Additionally, there is evidence that Ms. Masias secretly recorded her conversation with former Chief Justice Nancy Rice, which included a discussion about why Ms. Masias was not selected to be State Court Administrator when she applied for that job."

The contract scandal led to at least six different investigations — five of them ongoing — and the recent creation of a legislative committee to determine whether the state’s process of disciplining judges is in need of reform.

At the time Boatright issued the audit summary, he said the full report would be given to investigators of other pending inquiries, but did not say which of the five he meant.

It is unclear if the investigators of the other inquiries were given a report as heavily redacted as the one the Denver DA received.

One of those inquiries, by the Colorado Commission on Judicial Discipline, has subpoenaed the Judicial Department to compel its cooperation after it said it had been stonewalled.

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.