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PIERRE — A deterrent stronger than a Class 1 misdemeanor is needed in state conflict-of-interest cases, state Attorney General Marty Jackley says.

Rep. G. Mark Mickelson, the state legislator who drafted the two most recent laws on the subject of conflicts, says he’s open to considering changes if the attorney general brings the request.

Their differences are noteworthy for a political reason: Both want to run for the Republican nomination for governor in 2018.

In 2015 the Legislature changed a state law regarding conflict of interest and allowed appointed members of state boards to be employed by companies or agencies that receive money in state contracts.

The exemption has been somewhat corrected with a new law passed by the Legislature this year for more than 20 state boards. If a member of one of those boards also is employed by an entity that receives state contracts, he or she must formally declare to the board that he or she has a conflict.

The board or a government official for the board then decides whether the contract is reasonable, fair and in the public interest. If so, the conflict is allowed.

But the 2015 gap in the law meant a person implicated in the GEAR UP scandal will not be prosecuted for having an undisclosed conflict.

Stacy Phelps, of Rapid City, was a member of the state Board of Education at the same time his business was receiving public funding to administer the GEAR UP program in Native American reservation-area schools. GEAR UP helps low-income students understand what they need for further education after high school graduation.

Jackley in an interview said Phelps wasn’t subject to the criminal conflict-of-interest laws because of the 2015 exemption.

Jackley last week announced other criminal charges related to GEAR UP against Phelps and against Dan Guericke and Stephanie Hubers, two top officials who worked for Mid Central Educational Cooperative in Platte.

All of the charges so far are felonies. Phelps and Guericke were charged with illegally altering documents. Phelps’ attorney has said the charges against his client are “groundless,” adding that he thinks Phelps is being made a scapegoat.

Under a different sentencing change made previously, Phelps and Guericke probably would face probation rather than prison if guilty because their charges are lowest-level felonies at Class 6 or Class 5.

Hubers faces theft charges that as Class 4 felonies are punishable by prison time.

Jackley said the criminal-conflict law is a Class 1 misdemeanor. He acknowledged his office doesn’t typically pursue misdemeanor crimes.

“That’s something we rely on our (county) state’s attorneys to do,” Jackley said.

Before the 2015 changes, the conflict crime was an even lesser misdemeanor known as a Class 2.

Neither Jackley nor any members of his staff, however, testified last year at two committee hearings on the conflict-of-interest legislation.

Mickelson, R-Sioux Falls, was prime sponsor of the 2015 measure, HB 1064, which was intended to prohibit and penalize self-dealing by state government employees in the wake of a different contract scandal.

But he didn’t want to deter people from serving on appointed state boards that oversee topics about which they have expertise and where they might do business.

Mickelson said the goal was “to lay out a minimum state policy for enforcement so that the public and other interested parties could form a point of view around perceived conflicts of interest.

“If the employee complies with the guidelines, the presumption that the conflict was disclosed, approved, made public and found to be in the public’s interest would provide some direction to public perception,” Mickelson said.

Mickelson said he took a similar approach this year in HB 1214, which calls for disclosure of conflicts of interest by state board members and by various key personnel in school districts and other education organizations that receive state funding.

The new law keeps the violation as a Class 1 misdemeanor.

Neither Jackley nor any member of his staff testified at two committee hearings this year on HB 1214.

Mickelson said the primary purpose of the two laws was as much civil and public perception as criminal.

Jackley said a stronger deterrent is needed.

He said he would be open to “triggering factors” and “aggravated circumstances” that call for higher levels of punishment depending on the severity of the crime.

Jackley repeated his statement made at the news conference in Platte last week that “an adult conversation” is needed regarding the penalties.

“It needs to be Republicans and Democrats sitting down with the attorney general,” Jackley said.

Mickelson said the first step could be simple.

“Resolution would just involve the attorney general letting policy-makers know what additional tools he thinks he needs,” Mickelson said.

He offered it could start by the attorney general’s contacting the governor’s legal counsel, Jim Seward; or Sen. Craig Tieszen, R-Rapid City, who is chairman of the Senate Judiciary Committee; or three of the lawyers on the House Judiciary Committee, Rep. Timothy Johns, R-Lead, Rep. Mike Stevens, R-Yankton, or Mickelson, the chairman.

“I drafted both bills with a lot of helpers and never heard a word from” Jackley, Mickelson said.

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