CHARLESTON – The state's Chief Deputy Attorney General says four attorneys recently appointed as Special Assistant AGs were recommended by the state Auditor's Office.
"We appointed someone at request of the auditor," Fran Hughes said Wedesday. "The Auditor's office has jurisdiction in this investigation. The Auditor's office and their general counsel, Lisa Hopkins, specifically requested those attorneys."
Last week, The West Virginia Record reported that McGraw had appointed four Special Assistant AGs to investigate whether the Variable Annuity Life Insurance Company misled state teachers to invest in its low interest fixed-rate annuities. They were Charleston attorneys Jim Lees, Anthony Majestro and James Peterson as well as Jonathan Turak of Moundsville.
State Auditor Glen Gainer told the Charleston Gazette that the VALIC investigation has been going on for months.
The Special Assistant AG appointments have drawn criticism from West Virginia Citizens Against Lawsuit Abuse and Dan Greear, the Republican opponent of Attorney General Darrell McGraw in this fall's general election. They contend that three of the four appointments were made because the attorneys contributed to McGraw's re-election campaign.
Majestro, Peterson and Turak each have contributed $1,000 to McGraw's campaign. Also, members and family from Peterson's firm gave a total of $5,000 to the McGraw war chest. People at Turak's firm gave a total of $2,000.
Over the years, members of Peterson's firm have given more than $20,000 to McGraw's election efforts. Turak and Majestro's firms have also given to McGraw in the past.
Hughes denied the contributions had anything to do with the appointments.
"We don't look at the campaign contribution list that everybody else seems so obsessed with," she said. "We don't look to see who has given money to the Attorney General's campaign. Our office wouldn't be as successful as it has been recovering funds on behalf of the state of West Virginia if we just selected attorneys based on those who made campaign contributions.
"State law requires that they be Special Assistant Attorneys General. Most of our attorneys are doing the day-to-day legal work in state government. We don't have the manpower or budget to get involved in more significant litigation all of the time."
Hughes also noted that when Special Assistant AGs are deputized, the AGs office still is deeply involved in the cases and investigations.
"Our office is totally involved in cases," she said. "It's a partnership between us and the private counsel.
"They don't independently go out and exercise the authority of the state. We are very closely and very intimately involved in every consumer case."
Hughes also criticized The Record, which is owned by the U.S. Chamber of Commerce.
"I find it hard to believe that there is a personal newspaper devoted to the demise the attorney general," Hughes said. "You're just not reporting anywhere near accurate information. I don't read your so-called newspaper. It is what it is. It's propaganda for the National Chamber.
"Your publication is not a legitimate newspaper. If you consider yourself a legitimate newspaper, then you have some responsibility and duty to print the truth, to print facts and not selectively decide which facts are important and which facts are omitted."
WV CALA and Greear both have criticized the appointments.
"McGraw receives contributions from a number of trial lawyer firms and in return hires those same contributors rewarding them with lucrative employment at taxpayers' expense," Greear said Monday. "If you review McGraw's campaign finance reports and the corresponding appointments he has made during his tenure you will easily spot the parallel.
"I absolutely refuse to believe the only capable attorneys in this state are those who contribute to Darrell McGraw. This is yet another example of the arrogant practices of our current Attorney General. He continues to abuse the powers of the Attorney General's office and most notably, it is always at taxpayers' expense."
WV CALA echoed Greear's comments.
"Perhaps the Legislature will soon rein in Darrell McGraw's abuse of power with a Sunshine law to make him accountable for his questionable ethics in hiring cronies," WV CALA Executive Director Steve Cohen said. "Voters could well decide this fall that replacing him will help improve West Virginia's reputation for legal fairness so our state will be attractive for jobs."
Greear has said he will limit appointment of Special Assistant AGs if he wins in November.
"Since day one of my campaign, I have stated our office will only appoint Special Assistant Attorney Generals when absolutely necessary," Greear said. "If there is ever a need for an expertise in a specific area of law, I will implement a fair and open bidding process, open to all attorneys of West Virginia. This will ensure that West Virginians get the best possible legal representation for their dollar."
Last month, Bell & Bands and The Webb Law Firm, both in Charleston, filed a class action in Marshall Circuit Court against VALIC, alleging sales representatives duped Teacher Defined Contribution participants into investing in safer annuities rather than in riskier stocks and bonds.
Earlier this year, Gov. Joe Manchin tapped Lees to be a special advisor to help the state resolve teacher pension issues. Lees represented Teachers Defined Contribution enrollees who successfully sued to block a 2005 plan that aimed to merge that program completely with the Teachers Retirement System.