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WSI chief faces criminal charges again

BISMARCK -- The North Dakota Supreme Court reinstated two felony criminal charges Monday against the state's former workers' compensation chief, Charles "Sandy" Blunt, saying a district judge should not have required prosecutors to show Blunt personally profited from the spending.

The court reversed South Central District Judge Robert Wefald, who dismissed the case following a preliminary hearing last August.

"We conclude the district court erred in dismissing the criminal complaint against Blunt, and we reverse and remand for further proceedings in accordance with this opinion," the court said.

Burleigh County State's Attorney Richard Riha, whose assistants prosecuted Blunt and appealed Wefald's dismissal, said the case will now pick up where it left off, with the scheduling of an arraignment at which Blunt is to enter a plea.

"We're very happy with the decision," he said.

Nothing can be scheduled until the court administrator's office gets the file back from the Supreme Court and a local judge is assigned, a secretary at the South Central Judicial District's office said Monday.

Asked for a comment, Blunt's attorney, Michael Hoffman of Bismarck, issued only an e-mail saying if he petitions the high court to re-hear the case, he will make a copy of the petition available.

Every Supreme Court opinion is subject to a two-week delay before it becomes final, during which the unsuccessful party can ask the court to re-hear the case. Such petitions are rarely granted.

Blunt did not respond to an e-mailed request for comment.

Blunt was executive director and CEO of Workforce Safety and Insurance from May 2004 to Dec. 6, 2007, when he was ousted by its board.

Following a state auditor's performance audit in late 2006, Blunt was charged with two counts of misapplication of entrusted property.

One count related to spending from WSI funds for gift certificates to restaurants, gas stations, shopping malls and movie theaters given to certain WSI employees; food, beverages, flowers, balloons, decorations, costume rentals, ornaments, and gifts for WSI meetings and costs for legislators' lunches and trips to insurance conventions.

State auditors said they found $18,000 of such spending, which violated the state constitution, state law and state budget policy.

The second count alleged improper bonuses paid to three high-ranking WSI executives.

Wefald had ruled following a preliminary hearing in August that prosecutors failed to show a loss to the state from Blunt's actions and that Blunt was acting with the approval of the WSI board.

"Without any evidence of self-dealing in these public funds, there is no evidence that Blunt knew these meeting expenses and bonuses involve a risk of loss or the government," Wefald wrote.

That reasoning was uncalled for, justices said in a unanimous decision authored by Justice Dale Sandstrom.

"The (district) court essentially engrafted an additional element onto the offense," the high court said.

The law's purpose is to protect the property and has nothing to do with whether the defendant received personal benefit from misusing it, the justices ruled. In short, they said, "A public officer entrusted with public funds has no right to give them away."

The justices also said Wefald wrongly opined there was no evidence Blunt knew the spending was improper. That, the court said, showed Wefald has "a misunderstanding of the legal standard to be employed at the preliminary hearing."

He also had written that expenditures resulting in happier, more productive public employees is a legitimate public purpose, and the justices also rejected that reasoning.

The high court also sided with prosecutors who argued that $7,200 in lump sum payment to three WSI executives amounted to bonuses that are barred by state law. Among other requirements, state agencies must have written bonus policies in order to grant bonuses.

Blunt and a former fraud unit director at WSI, Romi Leingang, also had additional felony charges last year that alleged they improperly used state drivers' license photos for an internal investigation at the agency. But Riha's office asked in October that those charges be dismissed, saying they had discovered a "mistake in law" while re-interviewing a witness. Those charges also had arisen from a finding in the state auditors' 2006 performance audit.

The WSI board had put Blunt on paid leave when all the various charges were filed against him in April 2007. After the drivers' license charge was dismissed in October, the board reinstated him.

On Dec. 6, however, less than an hour after the WSI board chairman met with two of Gov. John Hoeven's chief aides, the board voted to discharge Blunt for good, with a nine-month severance package worth more than $142,000.

Blunt still lives in Bismarck.

See the opinion at