On Aug. 13, 419th District Judge Orlinda Naranjo of Austin dismissed a suit between the Texas Ethics Commission (TEC) and Sharon Keller, presiding judge of the Texas Court of Criminal Appeals.
The dismissal comes after the criminal-court judge on Aug. 8 paid $25,000 to the TEC under a settlement agreement that also required Keller to admit she violated the law by omitting assets from personal financial statements.
In exchange, the TEC agreed to release all of its claims related to TEC v. Keller, says the Settlement Agreement and Full and Final Release of All Claims. The suit alleged that Keller's 2006 and 2007 financial statements omitted 97 items, including eight interests in real properties worth an estimated $2.44 million in 2006 and $2.87 million in 2007, according to the Nov. 22, 2011, Texas Ethics Commission's Second Amended Statement of Claims.
The TEC in April 2010 assessed a $100,000 civil penalty, but in June 2010 Keller appealed by filing the suit. During the litigation, the parties disagreed about the civil penalty that the Texas Government Code allowed against Keller. In court filings, the TEC argued the law authorized a penalty of up to $485,000 in the case, but Keller argued it only allowed up to $11,000.
Keller's attorney, Joe Nixon, says Keller has consistently acknowledged there were "inadvertent mistakes" in the financial statements.
"Let me be very clear, there is no finding at any time of any kind of unethical behavior — none. The question is: Did you fill out the form right?" says Nixon, partner in Beirne, Maynard & Parsons in Houston. He says none of Keller's decisions on the CCA, "have anything to do with . . . any of the errors on her financial statement."
Nixon says he and Keller are "pleased to have this resolved and behind us."
When asked for details about the settlement negotiations and the suit, Tim Sorrells, TEC's general counsel and director of Enforcement Division, replies, "I think that the pleadings in the case and the settlement agreement speak for themselves."
Disagreement About Penalty
The TEC alleged in its statement of claims that Keller's 2006 financial statement omitted 47 items, including: $61,500 in income from interest, dividends, royalties and rents; and interests in real property that appraisal district records valued at $2.44 million. It alleged her 2007 financial statement omitted 50 items including: $121,500 from interest, dividends, royalties and rents; and up to $2.87 million from interests in real property.
The statement of claims says that during the TEC's proceeding, Keller filed a sworn response indicating the omissions "were due to her lack of awareness of financial holdings held in her name but managed by her parents."
The TEC alleged, "Keller failed to properly review the financial holdings held in her name before filing with the Commission."
Keller denied all of the TEC's allegations in a Dec. 12, 2011, Defendant's First Amended Answer. Among other things, she argued the TEC didn't have statutory authority to seek the civil penalty that it wanted.
That question was litigated earlier in the case. [See " TEC's Authority to Levy $100,000 Fine Against Keller in Doubt," Texas Lawyer, Nov. 14, 2011, page 1.]
The TEC claimed that Naranjo wanted to issue final judgment based on a letter ruling she issued in November 2011 that said the law allowed a $5,000 penalty and $500 late fee for each financial statement, according to a Nov. 30, 2011, Objection to Entry of Judgment and Entry of Findings of Fact and Conclusions of Law.
But the TEC argued in its objection that the law permitted a $5,000 penalty for each of Keller's 97 alleged omissions, which could total up to $485,000.
Keller thought differently.
"Defendant respectfully request the Court enter judgment in an amount between $1,000 and $11,000," says a Dec. 2, 2011, Defendant's Motion for Entry of Judgment.
Nixon says although the TEC objected to Naranjo's letter ruling, "The judge never recanted or changed her position on that."
When asked to compare Keller's $25,000 settlement with past TEC penalties against other elected officials, Sorrells says, "[I]t's one of the larger penalties that the commission has issued."