In tight race, Republican candidate calls current State Treasurer unqualified

By Nancy Dallas, Nevada News Bureau: Republican Steve Martin, whose neck-and-neck race with incumbent state Treasurer Kate Marshall will be decided Tuesday, recently answered some questions about his candidacy in an e-interview with the Nevada News Bureau.

After being appointed by the Governor to fill the remaining term of deceased Controller Kathy Augustine, you ran for that position in 2006 and lost.  What, if anything, are you doing differently in the race for State Treasurer?

The dynamics of this race are different this time.  A clear distinction can be drawn between candidates. I am a CPA, Certified Fraud Examiner, Certified Valuation Analyst, with a Master’s degree in accounting. My opponent is a lawyer, without financial qualifications. Getting this message out to the independents and other voters is essential to avoid “none-of-the above” votes at the polls.

Also, I assumed the Controller position five months before the November election. Many feel that picking up the reins in the Controller’s office and shutting down my own CPA firm took away crucial campaign time, just before the election. However, at this juncture, I see having held the Controller’s office as an advantage, which gave me a background in state finances, the Board of Finance, the Internal Audit Committee, and the State Board of Transportation.

Why are you running for this position?

As a member of the State Board of Finance, appointed in 2009, I saw the poor performance in the Treasurer’s office including the loss of the $50 million, lack of disclosure on the Millennium Scholarship funding problems, the problems in the Unclaimed Property Program revealed by the audit, and problems with the Prepaid Tuition Program. The office needs a qualified professional for one of the chief financial positions in the State.

Does it appear you have a solid backing from all factions of the Nevada Republican Party?  Are you sufficiently funded?

I have solid backing from Republicans as well as from many independents and democrats. Three governors and four former state treasurers support me. They understand the need for full disclosure in the office. I am the only candidate with accounting qualifications, as my opponent is a lawyer. Funding is difficult in this economy, but there have been many new small and large donors that have made contributions.

Campaign decisions have had to be made daily where the most benefit can be gained by the expenditure of money. In some cases, it has meant less travel, which has meant I could not attend all of the events around the state that I wanted to make.

You have often questioned the qualifications of the current Treasurer.  What are your qualifications and how do they differ from those of the incumbent?

The short answer is that I am a CPA, and the incumbent is a lawyer. That is why three former governors and four former state treasurers support my candidacy.

However, there is much more to it. As a Certified Public Accountant, with 30 years of accounting experience, I regularly evaluate business performance and what is required to improve that performance. As a CPA, I have done analyses of shareholder and contract disputes, bankruptcy, receivership and insolvency matters, commercial litigation, professional malpractice actions, assessments of damages in wrongful death and personal injury actions, as well as antitrust issues.

As a Certified Valuation Analyst, I understand the issues key to making sound investment decisions and the associated complex investment issues. The current Treasurer lost $50 million in investments, and there are many issues involving the disclosure of how and what happened, and some of the long term effects.

As a fraud investigator, I have performed accounting and fraud audit functions regarding civil and criminal fraud investigations for the Securities and Exchange Commission (“SEC”), counties, and others.

The Treasurer should understand the total state finances. In 2006, as State Controller, I was responsible for the annual state financial report.  I also coordinated the redesign of the computer back-up system for the State’s accounting system, which did not work at the time I became Controller.

The treasurer’s office manages the College Savings Plan, the Millennium Scholarship, and the Prepaid Tuition Plan. The office needs a professional who understands education. I have a Masters degree in Accounting and was an Adjunct Professor of Accounting. When the Millennium Scholarship is broken, we need to fix the problem, not hide it.

In 2009, Governor Gibbons appointed me to the State Board of Finance which monitors the investment performance of the Treasurer’s office. The office deserves someone that can step in and make an immediate impact on the office operations.

The people of Nevada need to be confident that the office is above reproach. I have been married to my wife, Gail, for 38 years. As a Marine for twelve years, I advanced quickly from enlisted man to officer, attaining the rank of Major. During the time in the Marine Corps, a Top Secret Clearance was approved.

You have noted a lack of transparency in the handling of Treasurer’s office business.  What are your specific concerns and what do you propose to do to increase transparency within the office?

First, let me address the means to increase transparency. There is a need to put transparency and financial accountability into the State, as well as into the Treasurer’s office.  We need to put the State’s checkbook on line for all to see. The cost is minimal compared to the return. This would allow anyone who had a question about how money was spent to look up the information. It would also help prevent fraud.

The Treasurer has not allowed adequate information to be published regarding the $50 million loss by the office. The Treasurer has tried to block an open discussion through the use of an Attorney General opinion, and then by canceling a Board of Finance meeting, and then rescheduling the meeting seven days after the November 2 election.

Any mention of the loss has been excluded from key financial reports as well. I have attached a list of the funds that lost money. They include: the Millennium Scholarship, The Prepaid Tuition Plan, Veterans, Low Income Housing, Wild Horse Bequest, Blind Enterprise Fund, and 170 other funds.

A true accounting of the Millennium Scholarship was delayed, until I forced the issue through a press release stating that there was a shortage.

The true unfunded liability of the Prepaid Tuition Plan is also suspect because of the use of inflated and overstated rates of return on investment, and an understatement of the annual tuition increases. As a Certified Valuation Analyst, I understand these issues.

You have raised issues regarding the incumbent’s handling of the Unclaimed Property Program.  What are your specific concerns and proposed solutions?

To a great extent, the audit speaks for itself. Only one half of the required audits were done, raising the question of how much more money could have been transferred to the General Fund if the audits were done. 73% of the deposit samples were deposited into the bank late, causing a loss of interest. Internal and external records did not match, leaving the program open to fraud. Securities that should have been sold were not. Audits were not designed to optimize the use of employees.

As a CPA trained in auditing, I regularly design audit programs that maximize the use of personnel to achieve the maximum benefit in the audit process. We need someone in the Unclaimed Property Program with audit experience who can identify problems, not wait three years for outside auditors to identify problems.

The office needs a review to ensure all steps are taken to minimize fraud and to ensure that all internal records in Unclaimed Property are in agreement with other state records. As a Fraud Investigator and former computer systems analyst, I understand these issues, which currently exist in the program, as identified by auditors in April 2010.

Survival of the Millennium Scholarship program appears to be an issue.  What can be done to keep this fund solvent?

The Millennium Scholarship requires revision from the current form. Currently, any student with a 3.25 GPA is eligible, which has caused grade inflation. Also the Tobacco Settlement, which funds the scholarship, is decreasing annually.

The program should be revised to allocate the money based upon need and achievement in the classroom. Other funding should be developed, such as philanthropic giving or setting up a fund into which those who received the scholarship can make contributions, such as an alumni fund.

Do you agree with the investment policies of the incumbent?  What would you do differently?

There are limitations on how state money can be invested, so this cannot be controlled. Timing in the market can be controlled, however. Putting funds at risk during questionable economic times can be dangerous, as noted by the $50 million loss in one transaction by the current Treasurer in 2008.

Explain what part the State Treasurer plays in the management of the state debt and what you would do differently from the incumbent.

The interest rate that the State pays on bond issues depends on the strength of Nevada’s credit rating. My opponent has supported federal and State tax increase, with no mention of cutting costs. An increase in taxes only hurts Nevada and its credit rating.

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The Nevada News Bureau offered an interview opportunity with similar questions to current Treasurer Kate Marshall. We received no response.