Secretary of State Kevin Shelley resigns amid investigations

By: JIM WASSERMAN - Associated Press | Friday, February 4, 2005 9:08 PM PST ∞

SACRAMENTO -- Secretary of State Kevin Shelley fought back tears Friday as he announced his resignation amid investigations into mishandling federal election funds, accepting tainted campaign contributions and sexual harassment allegations.

Shelley, 49, said he would leave his $131,250-a-year post March 1, after he is scheduled to testify at a legislative audit committee hearing about how he spent millions of dollars in federal elections funds.

"While I have made errors that I deeply regret, I have never, ever done so with the intent of subverting the law or benefiting myself," Shelley said during a news conference outside his San Francisco home, with his wife, Dominique, at his side.

Struggling to hold back tears, Shelley said he always tried to do the right thing and that resigning was the hardest decision he ever made.

"It has become clear to me that the tides of this storm are overtaking this office's very ability to function effectively," he said.

Shelley said he was confident he would cleared of wrongdoing in several ongoing state and federal investigations.

While not being charged with breaking state or federal laws, Shelley found himself embroiled in controversy over mishandling $46 million in Help America Vote Act funds and charges by ex-employees of temper tantrums and a hostile work environment.

Shelley, the son of former San Francisco Mayor and U.S. Rep. Jack Shelley, was once a rising star in the Democratic party. His move paves the way for Gov. Arnold Schwarzenegger, a Republican, to name a replacement.

Schwarzenegger said he would move quickly to fill the position. His choice could be blocked by the Democrat-controlled Legislature.

Republicans in the Legislature said they still want him to testify Feb. 22 before the Joint Legislative Audit Committee, setting up a potential battle with Democrats who said he could avoid testifying if he resigned.

The committee's chair, Assemblywoman Nicole Parra, D-Hanford, said the resignation does not end the committee's interest in hearing from him, but said she and others would make that decision next week after consulting with attorneys.

Senate Republican and Democrat leaders said they favored former Republican Sen. Ross Johnson of Irvine. Assembly Republican leader Kevin McCarthy of Bakersfield suggested U.S. Rep. Mary Bono, a Republican from Palm Springs.

Shelley, a former state assemblyman is the first statewide elected official to quit since June 2002, when Insurance Commissioner Chuck Quackenbush, a Republican, resigned after accusations that he tapped millions of dollars in earthquake funds to further his political career.

"I do believe he looked into his heart and made the right decision," said state Senate Majority Leader Gloria Romero, D-Los Angeles.

Shelley is the second official to tumble after an all-Democratic sweep of California's eight constitutional offices in 2002. The first, former Gov. Gray Davis, was recalled by voters a year later.

The state Board of Personnel criticized Shelley's hiring practices as possibly illegal and a throwback to the "spoils system." Shelley likewise faced federal, state and local investigations for accepting $125,000 in campaign funds from recipients of state grant funds for a San Francisco neighborhood center that was never built.

A December audit that Auditor Elaine Howle called one of the more serious reports issued by her office, charged Shelley with poor management of the federal funds and poor oversight of staff and consultants.

Howle found that Shelley paid consultants for federally funded voter outreach that included attending partisan Democrat events and fund-raisers and promoting Shelley's political profile.

Until the revelations last year, he had been considered a future candidate for governor.

Shelley was sworn in Jan. 6, 2003, replacing Republican Bill Jones.

He maintained his innocence throughout the investigations, saying he didn't know about the campaign contributions and had returned them. Shelley acknowledged problems with the federal funds, but said other states would fare no better under similar scrutiny.

He also denied allegations of an abusive workplace and accusations that he made sexually charged remarks to women.

Shelley apologized Friday to his supporters and staff.

"In too many cases, my intense drive to accomplish good things has been tarnished by my impatience and I have allowed myself to direct that impatience at individuals when it should have been directed elsewhere," he said. "I have no one to blame for this but myself."

In 2003, Shelley won widespread praise for his smooth handling of an unprecedented gubernatorial recall election featuring 135 candidates that began only months after he assumed office.

Last year, electronic voting activists praised him for tightening security requirements on touch-screen voting to prevent fraud.

"While serious questions remain about his management practices, there is no question that Kevin Shelley provided much-needed leadership to reform California voting systems at a crucial point in the modernization process," said Kim Alexander, president of the California Voter Foundation.

Excerpts from Secretary of State Kevin Shelley's resignation speech

SAN FRANCISCO -- California Secretary of State Kevin Shelley resigned from office on Friday, citing the myriad investigations into his handling of federal election funds and questionable campaign contributions, as well as complaints about his personal behavior. Here are excerpts from his resignation speech:

"Like my father before me I sought elected office to help make my city and my state a better place. With my heart and all of my soul, I set out on a course of public service to create laws and policies that would benefit all the people."

"Throughout the past six months, my office has been embroiled in controversy. During the past several weeks and days, it has become clear to me that the tides of this storm are overtaking this office's very ability to function effectively for the people of California. Therefore , it is with my deepest regret that I resign the office of secretary of state effective March 1."

"I have tried to persevere and keep pressing forward despite the issues surrounding me. I agreed to testify before the Joint Legislative Audit Committee to assist in bringing clarity to the decisions made by my office in handling the Help America Vote Act. However, it has become apparent to me that my persistence in fighting to explain the actions of my office has been in reality an obstacle in bringing closure and allowing the state to move forward in implementing the very important and essential elements of HAVA."

"Those of you who know me know this decision is the hardest I've ever faced. I am not one to go lightly. If I could have anything right now it would be the ability to continue to serve as California Secretary of State. I am honored and blessed to have held this high office."

"While I made errors I deeply regret, I have never, ever done so with the intent of subverting the law or benefiting myself. Throughout my life I have always tried to do what is right. That is what my father taught me and what I have tried to teach my sons.

I know I have done nothing wrong in the eyes of the law. I am confident that the investigations now under way will ultimately reveal that very truth, but that can take months and the job of this office is too important to wait for that."

"I want to say something extremely important to all my friends, supporters and staff: I want to say that I'm sorry. In too many cases, my intense drive to accomplish good things has been tarnished by my impatience and I've allowed myself to direct that impatience at individuals when it should have been directed elsewhere. I have no one to blame for this but myself. I personally apologize to any person who felt anything less than respected and valued by me."

"In a broader sense, I want to say I'm sorry to the people of this state. I believed and I still believe that a vital secretary of state can make California a better place to live."

"I would like to thank my wife, Dominique, my two sons, my mother and sister, and my many friends who showed me their deep love and support during this difficult period in my career and my life."

"I leave now as secretary of state, but I encourage every voter and resident of this great state to always participate in the electoral process and public discourse. This is what I value in our democracy and will miss the very most. Thank you very much."

Investigations facing Secretary of State Kevin Shelley

Secretary of State Kevin Shelley, who announced his resignation Friday, faces scrutiny on several fronts. Here's a look at investigators, agencies and committees reviewing his work:

State investigations:

The 14-member Joint Legislative Audit Committee is investigating Shelley's handling of $46 million in federal voting funds spent by the state. A state audit alleged the money was poorly managed and that funds went to consultants who attended partisan events and promoted Shelley. It also claimed the office violated the state's competitive bidding rules when entering into contracts.

The state Attorney General is looking into findings by the Board of Personnel that Shelley bent hiring rules to help friends and allegations that complaints of sexual comments and innuendo by two employees were missing.

Federal actions:

The FBI and a federal grand jury in Sacramento are investigating $125,000 in campaign contributions given to Shelley's 2002 campaign for secretary of state. Shelley received the money from recipients of a $168,000 state grant that he helped steer, as an Assemblyman, toward a San Francisco neighborhood center that was never built. Shelley has returned the money to the state's general fund. Under state law, it is illegal to hide the source of a campaign donation and illegal to use taxpayer funds for political campaigns.

The U.S. Election Assistance Commission, which oversees federal election funds, is auditing $27 million in funds sent to California in 2003.

Comments from governor, legislative leaders on Shelley resignation

Reaction from the governor and legislative leaders on the resignation of Secretary of State Kevin Shelley:

Gov. Arnold Schwarzenegger: "The office of secretary of state is one of the most important in state government, entrusted with protecting the work of our democracy. I will move quickly to fill this constitutional office and ensure that the important duties of the office ... (will) be carried out in a manner that instills public trust and confidence."

Senate President Pro Tem Don Perata, D-Oakland: "I respect Secretary Shelley's decision. My thoughts are with him and his family on a difficult day for them and the people of California. The Senate remains committed to making sure California receives all the funding we are entitled to under the Help America Vote Act and that California elections are safe, secure and reliable."

Senate Minority Leader Dick Ackerman, R-Tustin: "It is a regrettable day for California when an elected official must resign his post. That being said, we must not lose the resolve of getting to the answers that California taxpayers deserve. The (Joint Legislative Audit) Committee must be allowed to continue its investigation, provide its recommendations to the Legislature and act ... to ensure that this does not happen again."

Assembly Speaker Fabian Nunez, D-Los Angeles: "We respect the decision made this afternoon by Mr. Shelley. During this difficult time it is important to put politics aside and offer our thoughts and prayers to the Shelley family. As we move forward, Democrats will continue to act in the best interest of all Californians. We will continue to fight to ensure that California receives our fair share of federal Help America Vote Act funds, and we will do so in the most expeditious way possible."

Assembly Minority Leader Kevin McCarthy, R-Bakersfield: "Assembly Republicans acknowledge Mr. Shelley's time of service in public office. We expect to continue the ongoing (committee) proceedings to determine his involvement with the misappropriation of HAVA funds."

Associated Press Writer Rachel Konrad in San Francisco contributed to this report.