McGraw keeps legal fees funneling to AG office

By Steve Korris | Dec 29, 2005

West Virginia Attorney General Darrell McGraw

CHARLESTON – When tobacco companies agreed to pay West Virginia Attorney General Darrell McGraw more than $700,000 for his costs in suing them a few years ago, he could have handed it over to the state treasurer.

Instead, McGraw found a way to keep every penny in his office.

When the companies agreed to settle tobacco suits in 48 states with a single settlement, they agreed to pay legal fees.

McGraw tallied up his staff time and expenses, to a total of $714,634.65.

He arranged for the companies to split the bill into three annual payments. That kept each payment small enough to escape an automatic reversion to the general fund.

McGraw arranged the three-year payment plan to circumvent West Virginia Code, according to a report Legislative Auditor Aaron Allred released in 2002.

Allred's report focused on $30 million in fees that tobacco companies paid to private law firms that McGraw appointed as special assistants. Allred found nothing in the code to authorize or prohibit the fees.

In a separate section, Allred examined McGraw's fees. Allred found that McGraw had deposited the first payment, $238,211.53, in a special Antitrust Enforcement Fund.

Allred found that at the close of fiscal year 2001, the special fund held $601,539. According to code, Allred wrote, anything in excess of $300,000 should have transferred to the general fund.

He recommended immediate transfer to the general fund.

Allred also found that at the close of the 2000 fiscal year, the fund held $343,770. According to code, he wrote, anything in excess of $250,000 should have transferred to the general fund.

He wrote that the Legislature might consider a retroactive "sweep" of the fund.

Allred also criticized McGraw's three-year plan for reimbursement of staff time and expenses. He advised McGraw to ask for the last two payments immediately.

McGraw did not follow the recommendation.

Managing Deputy Attorney General Frances Hughes wrote to Allred that immediate payment would defeat the intent of the master settlement.

Immediate payment, she added, "would result in the laying off of staff who are currently engaged in antitrust and consumer enforcement efforts on behalf of the citizens of West Virginia."

She objected to the statement that McGraw circumvented the code. The term, she wrote, "carries an inappropriate negative connotation, given that no statutes were violated."

After Allred released the report, state officials shifted the Antitrust Enforcement Fund from the control of the Attorney General to the control of the Treasurer.

The fund holds about $270,000, according to Nelson Sorah, deputy treasurer in charge of communications.

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