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Taxing the Public Trust

A complaint reawakens the case against Rick Yzaguirre

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On July 28, a group of Idaho citizens filed a criminal complaint against Ada County Commissioner Rick Yzaguirre for misappropriating state funds almost five years ago, when Yzaguirre was a business owner in Eagle. But more than that, the complainants also allege that Yzaguirre having to answer for these acts may have been delayed by preferential treatment from the Ada County Prosecutor's office.

The complaint, filed with the Ada County Sheriff's Department, states that Yzaguirre used Idaho State sales tax funds, lottery funds and Fish and Game fees collected by his two businesses, Justo's Grocery and Eagle Beverage, for business expenses and campaign contributions, instead of remitting the money to the appropriate state agencies. In collecting money on behalf of the state and converting it to public use while also serving as Eagle mayor, the complaint claims, Yzaguirre committed a felony--the same one that precipitated Boise Mayor Brent Coles' expulsion from office and 180-day jail sentence.

Conversion of funds is a felony according to Idaho law, which states that any officer of the State and "every other person charged with the receipt, safekeeping, transfer or disbursement of public moneys" who appropriates "any portion" of that money for "his own use ... makes a profit out of ... or fails to keep the same in his possession until disbursed or paid out by authority of law" faces punishment of up to 10 years of prison time and disqualification from holding any public office.

Public records show Yzaguirre failed to remit nearly $70,000 of state funds while owning the two businesses in 2001 and 2002. According to court documents, in February 2003 Idaho Fish and Game even filed a claim against Yzaguirre in the amount of $1,540.25, after he repeatedly failed to pay the department money collected on its behalf at Justo's Grocery. Idaho Lottery records for Yzaguirre's stores show a similar pattern of debt: He collected money from his customers for goods provided by the state and then failed to remit the money to the state at the appointed time, instead using the money for his personal business expenses. When Yzaguirre sold Eagle Beverage and Justo's Grocery in the summer of 2003, he had accrued $7,288.31 in debt to the Idaho Lottery and had attempted to make payments on his debt with a check written on a frozen account. In addition to debts with Fish and Game and Idaho Lottery--both of which have since been repaid--public records show Yzaguirre also neglected to pay the Idaho State Tax Commission nearly $59,000 in state sales tax collected from customers at his two businesses.

But the money wasn't just going to everyday business expenses. According to the complaint, during the time-frame in which Yzaguirre was failing to pay the state, documents from the Secretary of State's office show he donated a total of $918.80 to various political organizations and election campaigns. The list of Yzaguirre's beneficiaries includes Gov. Dirk Kempthorne, the Ada County Republican Central Committee, the Boise Lincoln Day Association PAC and his own campaign for Ada County Commissioner.

However, the complaint filed on July 28 is not the first time Yzaguirre's financial difficulties as a businessman have come under scrutiny. In June 2003, the Idaho Statesman editorial board called for Yzaguirre's resignation as Ada County Commissioner after a lengthy interview in which he was criticized for failing to disclose his financial difficulties during his campaign for Ada County Commissioner. In the article, Yzaguirre defended his debt to the tax commission by saying, "It's easy to blow off the tax commission in the short term. " He added that the tax commission should be "more aggressive in their collection process." Yzaguirre said that the money he'd collected for sales tax was not paid because his store needed inventory like beer, cigarettes and gas to stay open.

At the time of the editorial, Yzaguirre still owed nearly $36,000 in sales tax revenue. Shortly after his interview, he was given an editorial space in which he admitted to using funds he collected on behalf of the state to "pay [his] employees and [his] suppliers." Despite Yzaguirre's printed admission that he'd misused a substantial sum of public funds as a public official, his actions did not come under investigation until the July 28 complaint was filed.

When asked by BW to comment on the complaint filed against him, Yzaguirre declined to speak, since the case is under investigation by the Idaho State Police Department. However, once the ISP has concluded its investigation, Gem County Prosecutor Tim Fleming will be responsible for filing any appropriate charges against Yzaguirre. Fleming accepted the case after Ada County Prosecutor Greg Bower cited a conflict of interest in the case since he serves as legal advisor to the Ada County Board of Commissioners.

According to Bower, the case was moved to Gem County because the office had sufficient resources to handle the case, and hadn't recently accepted any cases from Ada County. Fleming's only comment was that he had yet to receive a final report from the ISP and does not expect one for 30 to 60 days.

If Fleming determines the evidence against Yzaguirre warrants criminal charges, the complainants say it raises questions as to why an investigation was not conducted two years ago, when Yzaguirre stated he had converted state funds. When former mayor Coles was investigated for misusing Boise City funds, his case was conflicted out to the Attorney General's office. However, the AG's office has no authority to investigate such matters unless requested to do so by the county's prosecuting attorney. In Yzaguirre's case, that request would have to have been made by Bower, Yzaguirre's own legal counsel--which the complainants say reeks of Bower protecting Yzaguirre.

"The question of why charges were never filed before is the question to ask," said former Ada County Commissioner Sharon Ullman, one of the July 28 complainants, in an e-mail to BW. "When a felony is committed, one would think that the county prosecutor would have an obligation to file charges or at least to 'conflict out' the case, but apparently that is not true."

When asked if his office had protected Yzaguirre from charges by not investigating or conflicting out the case until now, Bower refused to comment, saying that it went to "the heart of the matter" and that it was the duty of his office to "prosecute not investigate" such matters. "The tax commission should investigate these matters on their own," said Bower, claiming that his office had "no way of knowing" about Yzaguirre's actions because law enforcement agencies had not previously brought it to his attention.

Complainants in the Yzaguirre case have serious doubts that Bower was completely ignorant about his client's actions and admissions. They liken Yzaguirre's action to a robber walking into a bank, stealing $50,000, and promising to pay it back with interest while completely circumventing the loan process and any legal consequences of the theft.

"It might be interesting to find out in how many other felony cases--for which there is general knowledge of guilt or an admission of guilt in the public record or even just strong evidence of guilt--the prosecutor chooses not to file charges," said Ullman.

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