Michigan AG under fire for ‘clear ethics violation’ in handling of cases tied to wife and Democrats

The Democratic Michigan attorney general is under fire from Michigan statehouse Republicans for a “clear ethics violation” over her handling of cases tied to her wife and to a powerful former Michigan Democratic Party official when the AG was supposed to be separated from the inquiries by an “isolation wall.”

Dana Nessel, the two-term Michigan Attorney General who has left the door open to a run for higher office, has been slammed by the Michigan state GOP after a Michigan House investigation dug into her handling of two inquiries: one linked to her wife through a group called Bipartisan Solutions providing significant financial backing to a Fair and Equal Michigan ballot proposal measure with which her wife was involved, and another centered on allegations of financial impropriety carried out by Traci Kornak, a former Michigan Democratic Party treasurer.

Michigan House Oversight Committee Chair Jay DeBoyer, a Republican, led a months long investigation into Nessel, and announced some of the findings on Tuesday.

Kornak did not return calls for comment from Just the News.

Close personal relationships at issue

“There has definitely — definitely — at minimum been a clear ethics violation by Attorney General Dana Nessel. In fact twice — on two cases that specifically involve individuals that she has a close personal relationship with,” DeBoyer said. “One being an individual that actually worked on her transition team and also a former treasurer of the Democratic Party of Michigan, as well as Dana Nessel’s spouse.”

DeBoyer added: “We have information here that is clear and blatant that two firewalls put in place for very specific reasons, very clear reasons, were violated by Attorney General Nessel. … The facts at this point on face value demonstrate that the power of her office was used to influence the direction of potential criminal cases.”

There were numerous allegations made that the Bipartisan Solutions group had violated the Michigan Campaign Finance Act when it funneled hundreds of thousands of dollars to efforts by Fair and Equal Michigan to get a petition on the ballot.

Bipartisan Solutions has denied wrongdoing. In the separate inquiry, Kornack has also denied any wrongdoing.

Nessel has also denied any wrongdoing, and her office did not immediately respond to a request for comment.

Nessel's spokesperson, Kimberly Bush, pushed back on the allegations against her on Tuesday. “The attorney general never influenced these investigative or prosecutorial efforts over which isolation walls were in place and at no point did the attorney general violate any standard of professional conduct prescribed for prosecutors or attorneys,” Bush told local Michigan news outlets. “And none of the selective communications exhibited during [Tuesday’s] committee meeting showed otherwise.”

“The Department of Attorney General offered to make the relevant division chiefs, each experienced prosecutors with direct knowledge of the investigations in question, available to appear before the committee [Tuesday]. The committee declined to speak with these prosecutors, preferring instead to present conclusions from their own staff, based on their selective review of documents drawn from the complete production provided by our office earlier this year,” Bush said.

Michigan GOP says impeachment on the table for Nessel

DeBoyer described the twin allegations against Nessel on Tuesday. “The first case is an investigation into Traci Kornak, who was a conservator for an individual, Rosalene Burd, and it appears that there may have been some fraudulent activity that occurred. That information was provided to the attorney general’s office,” DeBoyer said. 

“The attorney general’s office did not, under any reasonable expectation, interview any of the pertinent individuals with regard to the case. The only individual they spoke to was Traci Kornak, the potential individual who committed a crime, then only to close the case, by the way after the attorney general violated the firewall,” DeBoyer continued.

DeBoyer also discussed Nessel’s link to the inquiry into Bipartisan Solutions, arguing that “if you read the closing document that the Michigan attorney general’s office used to close that case, it reads like a defense attorney’s position.”

WZMQ, a local CBS affiliate, reported this week that the Michigan House Oversight Committee “voted to advance a recommendation that Nessel be held in contempt of the Legislature and issued additional subpoenas seeking unredacted documents.” The Michigan House Judiciary Committee on Wednesday also sought to advance three bills which would limit the power of the state attorney general.

DeBoyer on Tuesday suggested that impeachment might be on the table for Nessel, saying that “I would say that it certainly could be on the table for certain. We’re not gonna rule such a thing out.”

Nessel told the press in July that “I've made no determinations about what my future is at this point” related to a possible run for Senate or Michigan governor, but that “I haven't ruled out anything.”

Michigan House GOP has investigated Nessel for months

The Michigan House Republicans announced in July that they had approved, in a bipartisan fashion, two subpoenas to Nessel “regarding a pair of allegations that appear to have not been sufficiently investigated and have presented potential conflicts of interest.”

The state GOP's press release specifically focused on the fact that “in 2023, the Secretary of State sent a criminal referral to the Attorney General’s office with allegations that an organization called Bipartisan Solutions used a fraudulent dark money scheme to fund a ballot initiative co-chaired by a close member of Nessel’s family.” 

The press release also said that a GOP state representative “noted that Nessel is currently seeking criminal penalties against a Republican Party-associated political fundraiser for nearly identical charges after refusing to conduct a full investigation into the Bipartisan Solutions issue for potential crimes.”

The Bridge Michigan reported that “the committee’s eleven Republicans and five Democrats voted to approve the subpoena,” while two Democrats abstained.

The July subpoena — sent to the office of the Michigan attorney general — called on Nessel to hand over “all internal communications within the Michigan Department of Attorney General” regarding the April 2023 “criminal referral concerning the Michigan Campaign Finance Complaint in the matter of The Foundation for Accountability and Civic Trust v. Bipartisan Solutions.”

The subpoena also asked for “any Notice of Isolation Wall that exists regarding the above criminal referral and any resultant investigation.”

The Michigan House GOP in August said DeBoyer “said the committee’s unanimous approval to subpoena Attorney General Dana Nessel will deliver answers and provide people throughout Michigan with sorely needed government transparency.”

“No one in Michigan should be above the law,” DeBoyer said at the time. “The Attorney General has thumbed her nose at the House Oversight Committee’s responsibilities to the people and its subpoena power. Her office previously responded to our committee’s request for documents by saying that she’d provide them on her own timeline with no firm, certain date for when they’d be coming.”

The press release noted that the two committees had “issued subpoenas to Nessel in July for information on two matters.” The GOP said one subpoena “focused on her decision to not file charges in a case referred to her by the Secretary of State’s office involving an alleged campaign finance violation by Bipartisan Solutions and an organization that included a member of Nessel’s family.”

“The other request made by the committee in July sought documents from the Attorney General about her department’s investigation into Traci Kornak, a lawyer and former treasurer of the Michigan Democratic Party. Kornak is a friend of Nessel’s who served on the AG’s transition team when she was elected in 2018,” the state GOP said in August. “In 2022, Kornak was accused of using the account of an elderly client to fraudulently bill an insurance company, and emails obtained through the state’s Freedom of Information Act raised questions about what role the Attorney General played during the investigation.”

Subpoenas yield new insight into Nessel’s actions

The Michigan House Oversight Committee hearing on Tuesday resulted in the release of dozens of pages of internal records from Nessel’s office which had been obtained through subpoenas issued to the Michigan A.G.'s office.

The internal records show that, in April 2020, a message was sent to “notify all staff that pursuant to the Michigan Rules of Professional Conduct, the Department of Attorney General has established an Isolation Wall between Attorney General Dana Nessel and the rest of the Department of Attorney General concerning the Fair and Equal Michigan Ballot Proposal.”

Despite this, it appears that Nessel was nonetheless looped in on actions tied to the Bipartisan Solutions inquiry. The internal records also indicate Nessel’s office sent the criminal referral received by the Michigan Secretary of State’s office back to Benson’s office in August 2023, and that Benson’s legal counsel disagreed with that decision at the end of that month.

Daniel Hagaman-Clark, Nessel’s criminal bureau chief, replied in late February 2024 that “I was informed the AG reached out directly to the Secretary and the Secretary agreed to take this matter back for further review.”

Report: "Inappropriate and unauthorized invoicing"

Separately, journalist Charlie LeDuff wrote a July 2022 piece for The Detroit News which stated that “a Grand Rapids nursing home is accusing a powerful Michigan attorney of ‘inappropriate and unauthorized’ invoicing for services for an elderly, brain-damaged woman over whom she holds power of attorney” and that “Kornak is the treasurer of the Michigan Democratic Party, and her political connections intimidated the nursing home for months. But now the operator is speaking out about what he sees as an elaborate maneuver to improperly bill an insurance company.”

Officials in the Michigan attorney general’s office had said in September 2022 that its financial crimes division had opened a file and begun an investigation into Kornak and acknowledged that investigators “requested that a wall be established between the AG and the investigation.”

The “attempts to investigate” Kornak outlined by Nessel’s office included the following: “Interviewed Kornak, who stated her ward was injured in a car accident and so, no-fault insurance — through State Farm — covered the ward's expenses at Heather Hills. Kornak also stated that the expenses referenced in LeDuff’s article were for respite care during the COVID-19 pandemic when Heather Hills was understaffed.”

Cracks in the "isolation wall"

Internal records suggest that “the Department of the Attorney General has established an Isolation Wall between Attorney General Dana Nessel and the Financial Crimes Division” concerning the Kornak inquiry. Despite this, the internal records indicate that Nessel was kept informed about the status of the inquiry.

Nessel herself sent a December 6, 2022, email stating that Kornak had reached out to her directly and admitted that she had spoken with her.

“Ms. Kornak has contacted me regarding this matter. Mr. [Redacted]’s allegations are apparently holding up a potential judicial appointment for her in Kent County. She has requested the documents from our investigation. Will she need to FOIA them? I think [she] wants to be able to assert that the claims made by [Redacted] were never substantiated, and the case is closed,” Nessel told officials in her office. “Please advise what our process should be […] There is some urgency to the matter in that she needs to supply the information by the week’s end.”

MLive reported that “Nessel’s office said even though the case wasn’t closed when the AG inquired about the case files for Kornak, the investigation had been completed and there was no violation of ethical rules.” The outlet added that Bush said that “the case was closed in large part because the whistleblower didn’t return attempted communications from the AG’s office.”

Assistant Attorney General Matthew Payok on December 19, 2022, wrote that “I recommend that this matter be closed because the alleged victim — The Village of Heather Hills, an assisted living facility — through its new parent company does not wish to make a criminal complaint or pursue a case against Traci Kornak.”

Michigan Democratic Party treasurer still under the spotlight

While Kornak was not hit with any state-level charges, there have been reports that she is still under criminal investigation by different investigators.

MLive reported that, in January 2023, “the Kent County Sheriff’s Office and Michigan Department of Health and Human Services’ Adult Protected Services began investigating the case.” The outlet said that “the sheriff’s office later recommended charges against Kornak of embezzlement of a vulnerable adult over $100,000, false pretenses involving more than $50,000 but less than $100,000, and identity theft.”

Kent County Prosecutor Chris Becker reportedly said as of this week “that no charging decision has yet been made and that the matter is still under active investigation” and that “he said he hopes to get the final report soon to make a decision in the case.”

Bipartisan Solutions under the microscope

The Michigan Department of State in early and late July 2021 twice determined that Fair and Equal Michigan had failed to obtain the proper number of signatures to get their petition onto the ballot, and twice recommended that the Bureau of Elections decline to certify the petition.

A spokesman for Fair and Equal Michigan objected to this, but the Bureau of Elections rejected the petition due to the lack of signatures.

The Bridge Michigan also reported that “Nessel’s wife, Alanna Maguire, co-chaired Fair and Equal Michigan, which attempted — but ultimately failed — to put an LGBTQ anti-discrimination proposal before voters in the 2020 or 2022 elections.”

MLive reported that Nessel’s spokesperson “said that Nessel’s wife was a volunteer with Fair and Equal Michigan for a period of time in 2020.” The outlet said Bush told them that “neither Nessel nor her wife ever had any association with Bipartisan Solutions” and that “because there was no conflict of interest […] no firewall was erected to isolate Nessel from the criminal referral.”

The outlet added that “Bush said the decision to refer the case back was due to the AG’s office determining that Benson’s office hadn’t adequately fulfilled the process outlined in law for resolving the campaign finance complaint.”

Dennis Lennox filed a September 2020 complaint with the Michigan Secretary of State, arguing that “Secretary Benson can close the dark money loophole in the MCFA by imposing this simple remedy: Multiple direct and/or in-kind contributions to a ballot question committee triggers a presumption that BS — the dark money group who is disclosed as a multiple contributor — has been raising funds for itself to make additional contributions to the ballot question committee Fair and Equal Michigan.”

Bipartisan Solutions says it's not a political committee

James C. Lamb, a lawyer for Bipartisan Solutions, sent a February 2021 letter to the Michigan Department of State, contending that “Bipartisan Solutions is not a political committee, and it has not engaged in any activity that requires it to file a statement of organization as a committee or file disclosure reports with the Bureau of Elections.” 

The lawyer said that “Bipartisan Solutions simply made donations to a ballot question committee in furtherance of its 501(c)(4) social welfare purpose. It did not solicit or receive any contributions for the purpose of making an ‘expenditure’.”

“Bipartisan Solutions did not solicit or receive any specific or earmarked funds for the purpose of making contributions to Fair and Equal Michigan,” the lawyer said. “There is no reason to believe that a violation has occurred, and we respectfully request that the Department dismiss this matter.”

Adam Fracassi, part of the Bureau of Elections at the Michigan Department of State, wrote to Lennox in July 2021 that “the Department finds that the evidence is insufficient to conclude that a potential violation of the Act has occurred and dismisses your complaint.”

Arguments about what a political committee is

The Foundation for Accountability and Civic Trust sent a July 2022 letter to the Michigan Department of State, which was more successful, arguing that “Bipartisan Solutions is a 501(c)(4) organization that is not registered as a ballot question committee. However … Bipartisan Solutions’ activity in 2020 demonstrates it should have registered as a committee and filed the required reports.”

“In the first three months of 2020, Bipartisan Solutions raised and contributed nearly $700,000 to a ballot question committee, Fair and Equal Michigan,” the complaint read.

“The interaction that unfolded between the two entities was as follows: Bipartisan Solutions made contributions, and directly thereafter, Fair and Equal Michigan made large payments to its vendors. The disparity between Bipartisan Solutions’ assets going into 2020 ($11,485) and the amount it contributed to Fair and Equal Michigan ($782,000), as well as the timing of Bipartisan Solutions contributions to Fair and Equal Michigan and then the subsequent payments Fair and Equal Michigan made to its vendors, demonstrate a level of coordination showing the entities were not independent of each other. In fact, because both occurred over such a short period of time, Bipartisan Solutions’ significant fundraising could not have been 'independent' from its simultaneous contributions to Fair and Equal Michigan.”

The foundation requested that “the Department investigate and find there is reason to believe that a violation of the MCFA occurred.”

Benson’s office sent a letter to Bipartisan Solutions in November 2022, concluding that “the Department finds that there may be reason to believe that Bipartisan Solutions violated the MCFA. Bipartisan Solutions may have taken actions that qualify the organization as ballot question committees under the MCFA.”

“From January to March 2020, Bipartisan Solutions contributed approximately $782,000 to Fair and Equal Michigan, comprising 77.8% of the funds Fair and Equal Michigan received in January 2020. Moreover, the contributions by your organization to Fair and Equal Michigan were often made within days of similarly sized payments to other entities,” Benson’s office wrote.

Benson’s office continued: “Given that contributions by Bipartisan Solutions to Fair and Equal Michigan were closely followed by expenditures Raise the Wage made to other entities totaling a similar value, it is clear that Bipartisan Solutions coordinated to some extent with Fair and Equal Michigan. While it is not a violation for Bipartisan Solutions to coordinate with Fair and Equal Michigan, it is a violation for Bipartisan Solutions to solicit funds solely for the purpose of making expenditures.”

The Michigan Secretary of State alleged that “because of the coordination involved in your organization’s contributions to Fair and Equal Michigan, and Bipartisan Solutions’ failure to file campaign statements, the Department concludes there may be reason to believe that a potential violation of the Act has occurred.”

Michael J. Brady, the chief legal director for the Michigan Secretary of State, sent an April 2023 criminal referral to Nessel’s office, saying, “Dear Attorney General Nessel: Please allow this letter to serve as a referral to the Attorney General of the above referenced campaign finance matter for the enforcement of any criminal penalties under the Michigan Campaign Finance Act.”

Nessel’s office did not pursue any charges.