Detroit, Michigan Democrats, Michigan Republicans — October 14, 2013 at 7:03 am

Dem candidate for Michigan AG: Bill Schuette broke the law and behaved unethically in Detroit bankruptcy


Where are your actual loyalties, Mr. Schuette?

In a Detroit Free Press article yesterday, two legal experts suggest that Michigan Attorney General Bill Schuette’s claim that there is no conflict of interest between his representation of the State of Michigan at the same time he’s defending the rights of retired pensioners in the Detroit’s bankruptcy. Indeed, many people (including me), were dubious that Schuette’s sudden interest in protecting retired Detroiters, particularly in light of next years’ election. Here’s what I said about it in July:

Given that illustrious history during his tenure as Michigan’s Attorney General, there’s little to make me believe he will truly be an honest defender for Detroit city retirees as the city’s bankruptcy process plays out. Given that he’s up for reelection next year, his sudden interest in “the people” strikes me a strictly political move.

Here’s a flavor of what the legal experts said:

“It seems obvious that the legal interests of the former workers is in conflict with the legal interests of the City of Detroit and the governor in pursuing the bankruptcy proceeding,” [University of Detroit Mercy School of Law professor Larry] Dubin said.

It’s not uncommon for the attorney general to represent two state agencies on opposing sides of a lawsuit. It has happened many times under Schuette and his predecessors, Mike Cox, Jennifer Granholm and Frank Kelley, who took office in 1961.

What’s different in the Detroit bankruptcy case is that Schuette is not just an attorney for a state agency, but a named party on behalf of city retirees and the state constitution.

That creates a conflict of interest best resolved by U.S. Bankruptcy Judge Steven Rhodes appointing an independent special assistant attorney general to represent Snyder and other state officials, [Wayne State University law professor Robert] Sedler and Dubin told the Free Press.

Sedler said, “Only when the attorney general is not a party” to a case may he represent opposing state agencies. “I consider this to be a conflict of interest,” he said.

Schuette says that Governor Snyder signed a conflict of interest waiver so he’s in the clear. The two experts interviewed by the Detroit Free Press disagree sharply.

It’s also interesting that, while the governor can sign a conflict of interest waiver letting Schuette off the hook, apparently the pensioners about to lose the only income they have, income they earned through years of work for the city of Detroit, don’t have a say in the matter.

Attorney Mark Totten who is running an aggressive campaign to be the Democratic candidate for Attorney General in 2014 issued the following no-holds barred statement in an email titled “AG Violates Law & Ethics Rules in Detroit Bankruptcy”:

Schuette was the legal mastermind behind Gov. Snyder’s plan to bail out Wall Street banks instead of honoring pension commitments to Detroit retirees, and filed as the lead lawyer for the Governor.

He only filed to defend the Michigan Constitution and retirees after I organized a series of stories calling him out for putting banks first. Michigan law and legal ethics, however, rightly forbid him from standing on both sides of this case.

Schuette is like a pyromaniac who starts a fire, continues to dump gas on it, and then asks the firefighters to trust him to put it out. Please join me in calling on the federal judge to disqualify Schuette and appoint an independent counsel to defend our Constitution and retirees.

It’s a powerful accusation but one that appears to be supported by the opinions of legal experts and by other past actions from Schuette that makes this move seem more politically motivated than his history in government would suggest. I look forward to hearing Schuette’s response. It should be very entertaining.

[CC photo credit: Corvair Owner | Flickr]