Phelps Withholding Receipts from State in GEAR UP Corruption Case

According to state prosecutors, GEAR UP/Mid-Central corruption scandal defendant Stacy Phelps and his attorney Dana Hanna are sitting on evidence that could help establish the state’s case that Phelps conspired with deceased Mid-Central business manager Scott Westerhuis to embezzle millions of dollars from the GEAR UP education grant.

The state says that a Mid-Central employee* gave Phelps a box of receipts from AIII for charges for which Phelps was seeking reimbursement from Mid-Central. Phelps gave the box to his lawyer, who has balked at the state’s request to hand over the evidence, demanding in a June 29 e-mail that the Attorney General put in writing “any legal basis for why the Attorney General believes these documents contain evidence of crime or why the State would ahve the lawful authority to demand production of my client’s records.” The state they aren’t Hanna’s client’s records: Phelps is no longer CEO of AIII, the organization in whose names the charges on the receipts were allegedly incurred, and thus has no claim to those AIII receipts.

In a Monday afternoon e-mail to the prosecution and the defense, Judge Bruce Anderson says the state “makes some very important points in paragraph 9 of their response” to Mr. Hanna’s motion to seal the receipts and review them in camera. Paragraph 9 reads thus:

Defense counsel’s requested relief is highly inappropriate because it places the court in the middle of an ongoing investigation. It is akin to a defendant depositing a gun with the court and asking the court to determine if it is the murder weapon before it is turned over to law enforcement. This is not the court’s function. The court does not know, nor should it at this juncture, the potential charges being investigated and, therefore cannot evaluate the relevance of the evidence to the investigation. The court does not have other evidence in the possession of investigative authorities, nor should it at this juncture, to know what pieces of the puzzle are filled in by the evidence in question. The court is not in a position to judge the porbative value of the evidence, and it is highly inappropriate for defense counsel to put the court in the position of an investigator in a case now before it. Per Rule 3.4, it is enough that the receipts are “potential” evidence and, as such, defense counsel was obligated to turn them over to investigative authorities, not the court [State’s Response to Motion to Seal and In Camera Inspection, State v. Phelps, Case #11CRI16-000102, 2016.07.11, p. 4].

Judge Anderson expected Hanna’s response by yesterday afternoon; he may decide the seal/in camera motion today.

*Correction 11:27 CDT: I incorrectly attributed to former MCEC exec Dan Guericke the delivery of the box of receipts to Phelps. The court documents do not name who handed that evidence to the defendant rather than to investigators.

And an update: In her report last night, KELO-TV’s Angela Kennecke posts court documents that include Hanna’s 15:05 response, in which Hanna blasts the Attorney General for trying to hang Phelps in the media on as-yet unannounced charges.


2 Responses to Phelps Withholding Receipts from State in GEAR UP Corruption Case

  1. This kind of thing is why people tend to distrust lawyers.

  2. mike from iowa

    Jackley basically got accused of being bad at his job? Who would have guessed that?