Knecht & Lawrence: Audit the Las Vegas Convention and Visitors Authority

Ron Knecht, Nevada’s State Controller

(Ron Knecht & Geoffrey Lawrence) – The Nevada Controller is the state’s Chief Fiscal Officer, and we take very seriously the duties of the office.

Among them are the responsibilities to ensure that all public funds are spent appropriately and within the bounds of existing legislation, bond covenants, grant restrictions, federal rules and other guidelines.  We also design and monitor internal controls to prevent people from stealing or misusing taxpayer assets.

That’s why we were appalled recently when we heard of the profligate waste at the Las Vegas Convention and Visitors Authority.  The LVCVA is a public agency funded primarily by room-tax dollars and gaming fees assessed in Clark County.  We believe the LVCVA, as a taxpayer-funded entity, should be subject to the same guidelines and ethical standards as every other public agency in Nevada.  But the LVCVA defiantly disagrees.

Geoffrey Lawrence, Nevada’s Assistant State Controller

An investigation by the Las Vegas Review-Journal revealed last week that the LVCVA has reimbursed its officers for nearly $700,000 in bar tabs over the past three years and paid $85,000 to hire showgirls for agency-sponsored events.  Eight senior staffers filed expense reports in excess of a quarter-million dollars over the past three years on top of the obscene salaries paid out by the agency.  The agency’s director last year received $768,000 in salary, bonus and benefits.

After examining more than 32,000 pages of receipts, the Review-Journal investigation found that Clark County taxpayers had reimbursed outrageous extravagances, including a $6,900 steak dinner in Toronto featuring Okinawa ribeye steaks that cost $328 apiece, lobster and 11 bottles of wine for 15 people.  Employees used agency funds to purchase Tiffany bracelets for themselves.  The agency director bought himself a $3,685 ring to commemorate his own work anniversary.

LVCVA board members, who are elected officials charged with the fiduciary duty of managing the agency’s taxpayer resources, also got in on the act.  Board chairman Lawrence Weekly had the agency purchase him $1,000 in concert tickets that he openly admits had no business purpose.  He also got $33,000 in travel to places like China and South Africa, a Bluetooth speaker, a Fitbit and other goodies.

If this agency were a private corporation, those kinds of perks for board members would likely be deemed constructive dividends by the IRS and taxed as income while the SEC would investigate for fraud against investors.  But the LVCVA is a public agency and, theoretically, should be subject to even stricter controls since taxpayers have no choice about funding it.

State ethics rules expressly prohibit state dollars from being used to purchase alcohol.  They also prohibit the diversion of state dollars for personal benefit.  If any state agency submits a claim for those kinds of expenditures, we place a “Stop Payment” order on any checks associated with the expense and commence a fraud investigation.

But because the LVCVA is funded with local tax dollars instead of grants made through state accounts, we have no authority to take these actions.  That’s why this week we called on Governor Brian Sandoval and the Nevada Legislature to make immediate changes.  All local taxes in Nevada must be jointly authorized by the governor and legislature, and they also have the power to amend the charter of any local government, including the LVCVA.

So far, however, the governor and lawmakers have pretended otherwise.  Sandoval issued a statement saying, “All LVCVA governance and budgetary issues are exclusively within the jurisdiction and control of the Board and are subject to Board review, decision and comment.”  Assembly Minority Leader Paul Anderson sent a memo to lawmakers warning them not to speak about the issue and claimed, “We have no authority over this, and it’s not part of our caucus priorities.”

That’s all hogwash.

As Assemblyman Al Kramer told the press, “The Legislature has authority over everything that happens in the state.”

The truth is the LVCVA awards a no-bid contract worth nearly $30-million annually to a public relations firm that also manages and funds the political campaigns of many people saying there’s nothing to see here.  Politicians in Carson City know their bread is buttered by that contract, so they don’t want any scrutiny of the LVCVA’s corrupt practices.

However, we will continue to seek to bring all relevant facts to light.

Ron Knecht is Nevada’s State Controller.  Geoffrey Lawrence is Nevada’s Assistant State Controller.