State Treasurer Dennis Milligan apologized Friday for giving a first cousin a job in his office with an annual salary of $63,000 in violation of state law.
Milligan's first cousin, Sam Swayze, started work for the treasurer's office Jan. 14 as the investment manager assistant. Swayze was allowed to resign after it was discovered his employment violated Arkansas Code Annotated 25-16-1001 through 1007 and the Office of Personnel Management Policy 30.15, said Milligan spokesman Brent Wallace.
Swayze's last day was Feb. 13, Wallace said.
Milligan realized he wasn't allowed to hire Swayze after reviewing Swayze's personnel papers and his Statement of Financial Interest and a subsequent review of state law and Office of Personnel Management policy, Wallace said.
Milligan, who was sworn in as treasurer Jan. 13, said Friday that "a mistake" was made in the hiring.
"For my part in that mistake, I want to humbly apologize to my family and especially to the people of Arkansas," the Benton Republican said in a written statement.
"I have reported the violation to the attorney general and director of the Office of Personnel Management, and my office will do all that is necessary to cooperate in this matter," Milligan said.
He said he had been "unaware of the extent to which relationship was defined in the state nepotism law."
"I thought the policy applied to the immediate family -- mother, father, brother, sister, wife, son or daughter," Milligan said in his written statement.
In a letter dated Feb. 19 to Republican Attorney General Leslie Rutledge, Milligan wrote that "upon entering the office of treasurer of state, I instructed my staff to interview Sam Swayze."
"[Chief of Staff] Jim Harris subsequently interviewed and offered Sam a position as the investment manager assistant in the Investment Division of the office. Sam Swayze reported to Ed Garner, deputy chief investment officer, who reports to Autumn Sanson, chief investment officer, who reports to Jim Harris," Milligan said in his letter to Rutledge and copied to Office of Personnel Management Administrator Kay Terry.
"Sam Swayze is my first cousin. I was unaware at the time I recommended him that the state nepotism law included a first cousin. I was under the impression it was focused on immediate family (mother, father, brother, sister, wife, son or daughter)," Milligan wrote in his letter to Rutledge. "Sam Swayze's employment was terminated upon our discovery and effective February 13, 2015."
Under Arkansas Code Annotated 25-16-1004, "a person commits an offense if the person approves an account or draws or authorizes the drawing of a warrant or order to pay the compensation of another person employed in violation of 25-16-1002." The offense is a Class A misdemeanor.
Under ACA 25-16-1005, a public official who knowingly violates 25-16-1002 (A) "shall be subject to a civil penalty of one thousand dollars ($1,000)," and the attorney general may file suit in Pulaski County Circuit Court to collect the penalty.
Asked whether there is any chance that Rutledge would file suit to collect the penalty, Rutledge spokesman Judd Deere replied, "We are reviewing it."
Asked whether the treasurer's office is required to have Swayze repay what he was paid by the treasurer's office, Deere said, "We are reviewing it."
A copy of Swayze's personnel file was not available Friday.
"As for the FOI request for Sam Swayze's personnel file, we are in the process of notifying Mr. Swayze of your request," Wallace said in an email to the Arkansas Democrat-Gazette. "He has 24 hours to object to the request. After we hear from him, we will follow up with you."
In his Statement of Financial Interest for 2014 filed Jan. 30, Swayze reported income from working as a campus supervisor for the North Little Rock School District, from Social Security and from rentals. He could not be reached for comment by telephone Friday afternoon.
In 2004, then-Democratic state Treasurer Gus Wingfield of Delight was fined $750 and reprimanded by the state Ethics Commission for giving promotions and pay raises to members of his family.
In July 2003, Wingfield promoted his daughter, Valerie Wallace, from investment accounting manager to chief operating officer and gave her a raise from $55,995 to $73,143 a year. At that time, he also promoted his other daughter, Margaret Gutierrez, from executive secretary to treasurer assistant, raising her pay from $40,666 to $53,344.
Wingfield maintained that he promoted his daughters because of their experience and training and work on his successful campaign for treasurer against Republican Randy Bynum of Little Rock in 2002.
In September 2004, Democratic Prosecuting Attorney Larry Jegley said that his office wouldn't file charges against Wingfield after investigating a complaint that Wingfield broke state law by giving "special privileges" to his daughters.
"Basically, we don't see the sufficient evidence that there has been a a violation of the criminal laws of Arkansas," Jegley said at that time, but he added that Wingfield's actions "stink."
Republican Gov. Mike Huckabee, Democratic Secretary of State Charlie Daniels and Democratic Auditor Jim Wood also had relatives on their staffs. Harris, who is Huckabee's brother-in-law, worked for Huckabee.
In 2005, the Legislature enacted Act 2262 to bar constitutional officers, lawmakers or heads of state agencies from hiring or promoting relatives.
The law has a grandfather clause, exempting those employed as of Aug. 12, 2005.
Wingfield's successor as state treasurer, Newport Democrat Martha Shoffner, had legal problems of her own.
She was caught on camera accepting bribes from bond broker Steele Stephens, who worked for St. Bernard Financial Services.
Shoffner resigned as the state's treasurer May 21, 2013. Shoffner was convicted in March on 14 extortion and bribery charges.
During Shoffner's trial, Stephens testified that he secretly gave Shoffner $36,000 in cash over a 2½-year period, during which his employer's share of the state's bond business increased exponentially.