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Wednesday, December 12, 2007

Statement of the Attorney General’s Office
and Statement of CIETC and its Member Governments

Statement:

The State of Iowa and CIETC have resolved the dispute over repayment of $1.3 million demanded by the United States in April 2007 to repay the federal government for disallowed costs related primarily to alleged excessive compensation paid to CIETC’s top three executives. The settlement follows multiple criminal indictments against individuals implicated by the allegations.

CIETC Member Governments include the City of Des Moines, and Boone, Dallas, Jasper, Madison, Marion, Polk, Story and Warren Counties. The settlement agreement is tentative and is subject to approval by the CIETC board and the governing bodies of its Member Governments.

Under the terms of the settlement CIETC and its Member Governments will share the cost of repayment 50/50 with the State of Iowa. The State will advance $800,000 in state funds; CIETC and its Member Governments will contribute $500,000; and CIETC will assign contingent assets to the State of Iowa to pursue recovery. [Go to settlement.]

The Iowa Attorney General’s Office has agreed to pursue recoveries from those who might be responsible for misspent funds, including wrong-doers and CIETC’s insurance company. The State will then distribute any recoveries according to a formula established by the settlement agreement, and the parties will "settle up" at the end of the recovery effort so that each shares equally in the cost of the repayment.

The parties reached the compromise settlement in order to avoid spending additional public money litigating which group of taxpayers should repay the misspent money to the federal government, and in order to focus resources on pursuing recoveries. If approved by the governing bodies of CIETC and its Member Governments, the settlement will alleviate the need for an administrative law judge hearing on the matter which had been set for February 11, 2008.

A copy of the tentative Settlement Agreement is being made public with the issuance of this Statement.

END