Conflict of interest alleged in Missouri secretary of state race

JEFFERSON CITY — Democratic secretary of state candidate Jason Kander is accusing his Republican opponent of violating Missouri’s conflict of interest law.

The allegation centers on a contract to operate a state license office held by Republican Shane Schoeller’s wife for three years, 2007-2009, during his tenure as a member of the General Assembly.

“From all the publicly available documents, it is at the very least unethical, and it may even be illegal,” Kander said.

But Schoeller’s campaign said last week that there was nothing wrong or unethical about the fee office contract.

“The service office operated in full compliance with every law and rule, and Jason Kander should know that,” said John Hancock, Schoeller’s campaign spokesman. “State audits and Department of Revenue oversight raised no concerns about the high quality of service to the public.”

Knowingly violating the conflict of interest statute is a Class B misdemeanor. However, even if a complaint were filed today, the Missouri Ethics Commission can only investigate matters that are less than two years old, so the allegation may be moot.

Even if there are no legal ramifications, Kander said, it’s important for voters to know whether “someone running for a very important office engaged in behavior that is at the very least unethical.”

The heart of Kander’s allegation is a Missouri statute that prohibits members of the General Assembly or their spouses from performing any service for the state “for any consideration” in excess of $1,500 a year unless the contract was acquired by a public, competitive bidding process.

Until the law was changed in 2009, state license offices were the last surviving vestige of a political patronage system in Missouri. For decades, control of the offices was doled out by governors to political supporters or their relatives without a competitive bidding process.

Those who are awarded contracts receive no direct payment from the state. Instead, they are compensated through fees added to the cost of various transactions, such as driver’s license, vehicle registration and license plate renewals.

In 2005, Republican Gov. Matt Blunt’s Department of Revenue awarded The Schoeller Group LLC a contract to operate the fee office in Nixa without a bidding process. Schoeller served as Blunt’s chief administrative aide when Blunt was secretary of state.

The Schoeller Group was founded by Schoeller, but ownership was transferred to his wife before the fee office contract was awarded. In paperwork filed with the Department of Revenue, his wife said she had the sole ownership stake in The Schoeller Group.

In 2006, Schoeller ran for and won a seat in the General Assembly. He was sworn in on Jan. 3, 2007.

Schoeller’s wife signed a new two-year contract on Oct. 17, 2007. From 2007 through 2009, the Nixa office collected $612,101 in fees.

But the state completely did away with no-bid license office contracts in 2009, and a competitive bidding process was put in place. The Schoeller Group then submitted a bid for the Nixa office contract, but it was instead awarded to a nonprofit called Alternative Opportunities Inc.

The company’s relationship to Schoeller as a sitting lawmaker was not mentioned in the 2007 contract and was never brought up in any communication between the state and Schoeller’s wife from that time, according to documents obtained by The Star through the state’s Sunshine Law.

The relationship was disclosed in the company’s 2009 bid submitted to the Department of Revenue. His wife’s ownership of the company also was included on all of Schoeller’s personal disclosure forms filed with the state Ethics Commission from 2007 to 2009.

Hancock said the situation was not unprecedented.

But Kander said that’s “not a defense. It’s an excuse.”

“Just because someone commits a crime and doesn’t get caught doesn’t change the law,” he said.

Meanwhile, Schoeller’s campaign countered Kander’s allegations with one of its own, pointing to a state tax lien that was filed against him in March 2011 that was expunged from his record six months later. Schoeller’s campaign alleged that Gov. Jay Nixon’s administration released the $349 tax lien in order to help a fellow Democrat.

“If Mr. Kander would like to discuss releasing information, I suggest he make public the nature of his mysteriously disappearing tax lien from 2011 that seems to have vanished a couple of weeks before he announced his candidacy,” Hancock said.

Kander’s campaign produced a September 2011 letter from the Missouri Department of Revenue explaining that the tax lien was a mistake made by the state. The department apologized to Kander and refunded a tax return that had been redirected by the state to pay the estimated balance.