The crime would be easy to commit. Your chances of getting caught would be slim to none. If you did it right, your $40,000 per year part-time job could earn you far more than your salary in ill-gotten gains.
This is the environment members of the Colorado Senate operate in. What’s unclear is how many of them realize it.
This spring, the Colorado Times Recorder conducted an audit on the personal financial disclosures filed annually by every member of the state Senate by comparing the businesses and properties disclosed on each form against the public record. For the past few weeks, we have been publishing the findings of that audit. We reported that the laws governing transparency and disclosure by elected officials are full of holes, and that the system is un-audited and unenforced. We reported on several specific violations by two senators, amounting to millions of dollars in undisclosed assets and business interests.
Today, this third – and for now, final – installment of our Capitol Gains series will cover the remainder of our relevant findings about the 35 members of the Colorado Senate, naming multiple additional senators who have skirted, violated, or wrestled-with the Public Official Disclosure Law in recent years -– some through fault of their own, others through the fault of the system. Unlike our reporting on Sen. Jerry Sonnenberg (R-Sterling), who appears to have knowingly withheld information from his disclosure forms, many of the quasi-, pseudo-, and semi-violations detailed below seem to stem from flaws in the law or on the disclosure form itself rather than from willful obstruction. Others stem from senators’ ignorance of the law’s requirements.
The violations, however, are not the main finding of our audit.
Our main finding, rather, is the decrepit, non-functioning system governing the violators: a system which allows lawbreaking with impunity, and which could be manipulated to steal thousands of dollars from the taxpayers of Colorado without anyone batting an eye.
This article will outline how state legislators could abuse their offices for personal profit under the current set of laws governing ethics and disclosure, and what can be done to fix the broken system so that they no longer have the option to do so.
Ambiguous at Best
As we reported in the second part of this series, nearly every single member of Colorado’s Senate has committed at least minor violations of the Public Official Disclosure Law in recent years, omitting assets and business interests from cash-value life insurance policies to multimillion-dollar land deals. It is, to say the least, a sliding scale.
Something which became apparent during the reporting of this series, though, is that the senators themselves often lack a working understanding of the law’s requirements. This lack of understanding, in turn, leads to omissions and other violations driven more by ignorance than malice.
The offenses listed here today are not the biggest or the most shocking. These violations, pseudo-violations, gaps, and loopholes are smaller in both dollar amount and potential for abuse than some of those previously reported. In most of the cases below, violations could have been avoided if the disclosure form were more robust, or if elected officials and caucus staff viewed disclosure as a serious legal requirement worthy of time and effort. In some of the cases below, the public cannot be sure whether any violation was committed at all, due to the paucity of the disclosure form and public records – which is, in itself, a problem that should be fixed.
Rather than being included here for shock value, each of the cases below serves to highlight specific flaws in either the laws governing disclosure, or the disclosure form itself. Though state senators should be expected to understand the laws which govern them, it is worth appreciating that even someone attempting to file a disclosure with perfect accuracy may fail to do so through little fault of their own. In some instances, it’s not clear what the law requires. In other instances, it’s simply unclear what the form is asking for. Due seemingly to the lack of seriousness with which the disclosure laws are treated, many of the ambiguities inherent in the system have gone unresolved for years.
The disclosure form is where many of the problems start.
As an example, look to Sen. Chris Kolker (D-Centennial). Kolker, a financial adviser, appears to have done his best to file a thorough disclosure for each of the past three years: two years in office and one as a candidate. Unlike so many others, for instance, Kolker declared two separate life insurance policies as assets. He also disclosed his spouse’s income (a requirement which is unambiguous on the form, but still often neglected), and his spouse’s role in a government job, as a teacher. Similarly, the public record revealed no assets or business interests that the senator failed to disclose. All in all, it seems clear that Kolker is not trying to hide anything.
Despite his diligence, though, certain aspects of Kolker’s disclosures still raise questions about flaws in the form.
First, Kolker did not disclose his role as the chairman of the board of a local group – the Denver-area branch of 100 Men Who Care – in the section of the form which asks the filer to list “all offices, directorships and fiduciary relationships held by you, your spouse, or minor children residing with you.” Kolker, to his credit, accurately listed his role as a financial adviser in the section, but neglected to mention the 100 Men group.
The matter is more complicated when one takes into account that 100 Men Who Care is not technically a charity. It does not have a bank account, and it does not accept money. Rather, as Kolker put it, “it’s a facilitator.”
“It’s a group of men who get together and each donate $100 as individuals,” Kolker told the Colorado Times Recorder in an interview. The group – ideally of 100 participants – assembles quarterly and votes on a charity to support, at which point each attendee cuts a $100 check, ideally generating $10,000 for the chosen charity per quarter.
Was Kolker’s role with the group required to be disclosed? That part is uncertain. By the language in both the form and the statute – “all offices [and] directorships” – it would seem to be required, yet nothing about the form spells out the requirement. Some other elected officials have disclosed their roles with various nonprofits; others have not.
Second, Kolker neglected to list his role as a financial adviser in the form’s final, and arguably most important, section. At the bottom of the form’s third page, filers are prompted to “List any business with which you or your spouse is associated, and which does business with, or is regulated by, the State of Colorado (e.g., attorney, real estate, medical profession, etc.)” Kolker listed his wife’s teaching job in the section but did not list his own role as a financial adviser despite that profession being licensed and regulated by the State of Colorado. Kolker, however, is a registered investment advisor under the Securities and Exchange Commission at the federal level, not at the state level, making the disclosure requirement uncertain in his case.
Neither of these disclosure hiccups is a capital offense. Neither of them is even a clear violation, due to how little official legal consideration the ambiguous wording of the requirement has generated over the years.
Sen. Rachel Zenzinger (D-Arvada) has also wrestled with the form’s ambiguities, particularly when accounting for her husband’s business activities. Like many couples, Zenzinger and her husband do not mingle their finances. The disclosure form, however, asks filers to disclose assets, income, and business interests for their spouse. Due to her husband’s work as a consultant, much of Zenzinger’s disclosure form is occupied by her spouse’s work rather than her own.
Steve Caulk, Zenzinger’s husband since 2019, is a communications and media consultant, and a former journalist at the erstwhile Rocky Mountain News. Because of his line of work, a number of his past clients qualify for mention in the last section of Zenzinger’s disclosure forms, about associations with businesses regulated by, or conducting business with, the state.
When in doubt, Zenzinger seems to have erred in the direction of over-disclosure. In her 2020 financial disclosure, she disclosed Caulk’s company, ProConnect Public Relations, as a source of his income, and listed a number of his then-clients in the form’s final section: primarily wealth management and financial advisor companies for whom he had done work. “I didn’t know if they were regulated by the state,” Zenzinger said in an interview with the Colorado Times Recorder, referring to the clients she listed on the form, “I just assumed they might be.”
Caulk’s association with one other company is less clear. EmergentArt, which according to its website specializes in NFTs and wall art, was registered by Caulk with the Colorado Secretary of State in 2020. The company is owned by Caulk’s son, Robert, who lives in France. Caulk serves as both the Chief Financial Officer and the registered agent of the company. Though the company has never been disclosed as a source of income for Caulk on Zenzinger’s financial disclosures, it’s unclear whether or not it needs to be: even she is unsure if Caulk’s potential income from the company is attributable to his consulting company or not.
“It’s not his main business. It’s just a hobby,” Zenzinger said. When asked if any income for Caulk from the company would flow through ProConnect, his consulting company, Zenzinger’s reply was, “I have no idea – but probably.”
The other flaw in the system which gives rise to common, seemingly accidental omissions is not a flaw of the form, but of the law itself.
As a refresher, the financial disclosures filed by candidates and elected officials in Colorado are governed by three areas of the law: Article XXVIII of the Colorado Constitution, section 1-45-110 of the Colorado Revised Statutes, and section 24-6-1&2 of the Colorado Revised Statutes. Section 24-6-202 is the Public Official Disclosure Law, to which the other laws refer for specific disclosure requirements.
Though replete with tangled legalese, the Public Official Disclosure Law includes at least one perfectly clear requirement: an elected official must disclose “the names of any source or sources of any income, including capital gains, whether or not taxable, of the person making disclosure, his spouse, and minor children residing with him.”
But is it perfectly clear? Questions such as, “What counts as income?” are the rightful territory of judges and law professors, those who attempt to iron out the ambiguity in legislative language for the sake of putting laws into practice. It is unclear, though, if the question has ever been answered in the context of Colorado’s disclosure laws–another effect of the critical system being treated as little more than an afterthought.
In the minds of some elected officials filling out the disclosure forms, the answer remains unclear.
That ambiguity is why Sen. Bob Rankin (R-Carbondale) never disclosed the $1.7 million worth of income he earned from selling his home in 2017 – a sale that netted three times the average Colorado home value. While it may beggar belief for some that the senator could innocently fail to disclose a nearly $2 million windfall, it’s possible to see how the sale of a home could fall through the cracks in someone’s understanding of “income.”
Instead of Rankin receiving a check for work he performed, he received a check for an asset he sold. Both the disclosure form and the disclosure law refer to “income” and “assets” separately from one another, and separately from “property.” In this instance, Rankin earned income from selling a property asset, which cuts across the lines neatly laid out in statute.
Rankin, who has a bipartisan reputation in the state Capitol for being sharp and detail-oriented, showed no signs of evasion when asked about his failure to disclose the sale.
“I don’t recall that requirement,” Rankin told the Colorado Times Recorder, acknowledging that he never included the sale – or the income from the sale – on any of his financial disclosures. “It [the requirement] could be there, but it’s been awhile since I looked at that in detail,” Rankin said. “It’s not something that came to my attention at the time.”
He’s not wrong. The statute does not say “disclose income from the sale of property.” It says to disclose “any source or sources of income,” while listing other requirements pertaining to property. Nevertheless, the money from the sale does qualify as income, and it’s likely that an auditor would have flagged the omission and asked Rankin to file an update.
Except there’s no one whose job it is to do that.
If the disclosure requirements were taken seriously, though, such mistakes would be caught long before they reached the desk of a hypothetical auditor, either by legislative staff or the senators themselves.
Much of the state Capitol ecosystem functions on the premise of making sure elected officials know what they need to know and do what they need to do, but the disclosure requirements don’t seem to top anyone’s to-do list. The staff, leadership, and mechanisms necessary to train legislators on the process, to ensure that they understand the requirements so that they may fulfill their legal obligation to the people of Colorado, already exist. They are put to a great many uses – just not this one.
In the course of reporting this series, the Colorado Times Recorder spoke to roughly a dozen state senators. Every single one of them said that they are left to their own devices to file the annual reports. On one hand, that seems fine: if adult elected officials cannot be left to their own devices, there are probably more urgent problems to discuss. Their younger, underpaid staffers should not be on the hook for ensuring that they comply with the law.
On the other hand, the apparent total lack of attention paid by staff and leadership to the disclosure requirements is a testament to what an afterthought the system truly is. In a building where no dead horse can be beaten enough, where no problem is too small, few people seem to have the time to consider one of the legislature’s simplest and most important commitments to the populace: transparency.
Though the system is both flawed and complex, it is worth noting that compliance is not impossible. Amazingly, the senator who submitted the most thorough, detailed, and accurate disclosure of all did not even realize that the form would ever be public.
“I didn’t even know it was public info,” Sen. Rob Woodward (R-Loveland) told the Colorado Times Recorder in an interview. “I figured I sent that to the Secretary of State, and it went into a folder.”
Woodward, who owns a vast chain of retail stores and residential properties, arguably has the most complex holdings of any member of the senate. For that reason, his filings include several pages worth of addenda listing LLCs, corporations, properties, and various assets.
According to Woodward, his process is simple: he keeps a spreadsheet of his holdings, and once a year the non-Capitol staffer he hires to do his campaign finance compliance helps him convert the contents of that spreadsheet into the personal financial disclosure form, adding extra pages whenever needed. “It’s not that I’m smarter than anybody, I just do what I’m told,” says Woodward.
For many of the rest, no one seems to have told them anything at all.
The largest class of violators, then, are not those who are intent on benefiting improperly from their office – hunched over a statute book, a disclosure form, and a stack of business documents, trying to thread a dastardly needle without detection – but those who simply don’t give it much thought. While the people of Colorado have a right to be frustrated by the fact that many of their elected officials hold so lightly the duty of disclosure as to not understand the law that binds them, it should be some dose of comfort that they are largely neglecting that duty out of confusion and ignorance rather than malice aforethought.
It should be some dose of comfort, in other words, that they haven’t realized what they could get away with.
The Worst Case Scenario
When it comes to transparency and disclosure in Colorado, it’s easy to miss the forest for the trees. With a step back for context, it should not be surprising that senators’ financial disclosures are so flawed: no one has ever enforced their accuracy. When someone is juggling a dozen priorities at any given time, like legislators are, the one that will never result in consequences will rarely rise to the top of the list. This is the best case scenario under the current system: legislators accurately, if disinterestedly, filling out their annual form and submitting it to the Secretary of State’s office, where it will never be audited.
The worst case scenario, however, could be catastrophic.
After months of research and weeks of reporting, the main finding of the Colorado Times Recorder’s audit of the financial disclosure system is that a bad actor could defraud the public for years, stealing large sums of taxpayer money with virtually no risk of detection. In any given year, any of the state’s hundred legislators could manipulate the system for personal gain.
There are two general ways for a legislator to improperly profit from his or her office: the easy way and the hard way.
The easy way is simple: you choose not to recuse yourself from votes which could (or may, or almost certainly would) benefit you financially. As was covered in the second part of this series, recusal is fully at the discretion of the legislator in question. No one can force a senator to abstain from a vote. If you were willing to be so brazen, you could own the ACME Corporation, report your ownership of the ACME Corporation on your annual disclosure form, and still vote in favor of the bill “Tax Cut for ACME-Like Corporations.” No one could stop you, and you could reap a nice little windfall.
Some variation of this almost certainly happens every session. It is to be expected, under a system of self-recusal, that some people will not recuse themselves. That has been more or less the principle behind the concept of “law enforcement” since Hammurabi.
The gains would be small in most cases, but they would be gains nonetheless. If, for instance, you owned a chain of restaurants in the state and voted in favor of the COVID-related sales tax exemption bill in 2020 – which allowed qualifying bars, restaurants, and other eateries to deduct up to $70,000 monthly from state net taxable sales for up to five sites for a several month period – you could conceivably pocket hundreds of thousands of dollars.
In theory, recusal exists for exactly such circumstances: if you stand to gain financially from a piece of legislation, you should not cast a vote on it. Being able to ensure that legislators are not benefiting improperly from their votes is the concept at the core of transparency. As has already been reported in this series, though, there is no way to stop just this kind of self-dealing: no one audits the disclosures and recusal is self-enforced.
The more difficult – but potentially much more lucrative – way to benefit improperly from your role as a member of the state legislature involves actively manipulating the process by which grant money is made available to businesses based on legislation. Defrauding the grant system would require more effort on your part than simply declining to recuse yourself from conflicted votes, but it also has the potential for a much larger payoff.
While there is no evidence that any current members of the state legislature have engaged in such a scheme, it is important to understand what the system could allow a bad actor to get away with. During the past two years, opportunities for graft have increased as huge sums of COVID relief funds have slushed through state and federal coffers with little oversight. If a legislator had been intent on profiting from those waves of stimulus, they very well could have done so. With a shell company (registered in Colorado but wholly owned by a parent company in some exotic tax haven like the Caymans or Montana), some gumption, and a little bit of luck, a motivated bad actor could take endless bites at the apple and it’s unlikely anyone would ever know. How could they? If a legislator were possessed of extraordinarily bad luck, maybe they could accidentally trigger a federal investigation into their self-dealing. Outside of that, there are no state-level systems in place to stop it.
Perhaps the people of Colorado have gotten lucky, and no legislators have ever engaged in such schemes. Perhaps the unenforceable honor code has worked as intended.
If that is – incredibly – the case, how long can Colorado expect its luck to last?
Fixing It
The system is broken. The problem is not that it needs little tweaks – a nip here, a tuck there – but that it is wholesale useless. Worse than useless, Colorado’s systems for transparency and disclosure serve no role but to provide the appearance of transparency and disclosure, lacking any mechanisms to ensure the delivery of the real thing, weighed down by shallow Potemkin trappings.
The thing about broken systems, though, is that they can be fixed. Government transparency did not spring from the ground as a fully formed principle in nature. It was created by people, and it can be recreated by people.
If Coloradans do not want to press their luck, do not want to hope that their legislators will refrain from taking the money and running, then the systems governing transparency and ethics in the state government need to be dismantled and rebuilt from scratch. While creating an effective system for transparency may seem like a gargantuan task, it is one that forty-plus states have accomplished to a greater degree than Colorado, per the Center for Public Integrity’s rankings.
From a policy standpoint, creating a new system would be easy: it would require somewhere between one and three pieces of legislation to implement the four reforms necessary to bring Colorado’s transparency and ethics system into the 21st century and up to par with dozens of other states.
The first reform is likely obvious by this point: the personal financial disclosures filed by elected officials in Colorado must be audited for accuracy and completeness every year. Implementing this measure would require either the creation of a new government office empowered with the authority to audit the forms, or legislation mandating and authorizing an existing government office to perform the audits. While this may sound like a large government expansion, the workforce needed to perform the audits over the course of a year would likely only be one or two full-time employees. The difference it would make, however, would be enormous. If legislators understand that the forms will be audited, the public can safely assume that they will pay more care and attention to the disclosure requirements than they seem to under the current system – as in quantum physics, the act of observation could change the reality.
Second, the personal financial disclosure forms should be located online for easy access by the public. As it currently stands, the forms must be requested from the Secretary of State’s office as a public record and then emailed to the requestor. Given that the contents of the document are inherently public information, there can be no real justification for hiding them from direct public view. The Secretary of State already hosts massive databases of business and campaign finance documents; adding financial disclosures to that mix is unlikely to require additional funding or staff.
Third, the state’s Independent Ethics Commission must be given teeth. As it currently exists, the body does not have the authority to initiate investigations of its own accord, and must instead wait for a third party to file a complaint. Legislation should be passed to authorize the IEC to initiate investigations, empanel hearings, and levy fines of its own accord. Only then will it truly be an independent ethics commission, serving as an actual watchdog.
Fourth and finally, the legislature must institute systems to monitor and ensure recusal. In some ways, this should be easier than the other reforms: since recusal is governed only by the rules of the legislature, no legislation would be needed to make this change. In practice, the system should require a member of each chamber’s nonpartisan staff to keep a list of each elected official’s areas of potentially conflicted interest. When legislation pertaining to certain interests is brought to the floor, members with potential conflicts should be flagged by caucus leadership and asked to consider recusing themselves from the vote. When there is disagreement about whether a member should recuse from a vote, all parties should err on the side of recusal until an ethics body has had an opportunity to weigh in.
The real challenge in implementing these reforms is not based in policy but in politics. In theory, some legislators would oppose the suggested reforms on the basis of opposing government expansion, while others would be worried about what an actual system for transparency may reveal.
In reality, though, the political problem would likely solve itself: if an actual bill existed, on actual paper, with actual sponsors, the act of opposing it would be a political minefield. First, there is the obvious problem of prompting the question, “What are you trying to hide?” – the sort of question most people try to avoid being asked. Second is the fact that there are hardly enough senators with unblemished records of financial disclosure to fill a committee. Even if a legislator were willing to risk the round of political Russian Roulette involved in openly opposing a transparency measure, how many would risk appearing in a committee hearing where their own financial disclosures – often incomplete or inaccurate – could be read back to them?
The political problem, like the disclosure system itself, is a facade. It falls over the moment you touch it.
The only thing standing in the way of a better system, then, is the willingness of lawmakers to create one, to shine a brighter spotlight into the corners of their own lives and bind themselves meaningfully to the duty of transparency.
At a time when trust in government is near an all-time low, when the only thing people mistrust more than each other are their elected officials, and when the threads of the republic often feel as if they are unraveling, Good government legislation is one of the few things that could help to stanch the bleeding. Reforming Colorado’s system for transparency and disclosure would be a meaningful downpayment on a good faith attempt at rebuilding the relationship between the government and the governed.
The current system is ripe for the extraction of improper benefits for legislators at the expense of their constituents. Passing substantive reforms would be the opposite – something given to the governed at the expense only of their governors – and a much-needed antidote to the corrosive cynicism born of corruption. The legislators willing to sponsor those bills, to fight for those reforms, would truly earn their keep as public servants.
Until then, Coloradans just have to hope their luck holds — unless of course we’ve already gotten unlucky and don’t know it.
