A question has arisen: is what Randy Novak did actually illegal?
The facts are these: he voted, at least 40 times, to fund contracts at a time when he was actively doing business with, and accepting payments from, the contractor, and he kept those payments secret.
This is a different question from whether the no-bid contracts themselves were illegal. That question is settled: the State Board of Accounts ruled that they were.
The more serious question is of Novak’s personal conduct.
So what laws might Novak have broken? Let’s count them, from least serious to most serious:
LaPorte County Ethics Ordinance
In lieu of its own ethics ordinance, LaPorte County joined the Shared Ethics Advisory Commission (SEAC), and adopted its rules. The rules require elected officials To refrain from using official positions to secure unwarranted privileges or advantages for myself or others; To remove myself from every decision-making process in which I, my business, my associates or my family may benefit and upon removing myself from decisions, I will show self-restraint and not voice my opinion on the question; To make full public disclosure of the nature of any conflict of interest prior to any considered action.
Novak’s conduct is a clear violation of the rules. The penalties for violations are unclear, but the odds are low that SEAC would do anything because LaPorte County’s delegate to the SEAC is, you guessed it, Randy Novak.
Conflict of Interest, Ind. Code § 35-44.1-1-4
The law reads as follows:
A public servant who knowingly or intentionally: (1) has a pecuniary interest in; or (2) derives a profit from; a contract or purchase connected with an action by the governmental entity served by the public servant commits conflict of interest, a Level 6 felony. (emphasis added).
The law also defines “pecuniary interest”:
(3) "Pecuniary interest" means an interest in a contract or purchase if the contract or purchase will result or is intended to result in an ascertainable increase in the income or net worth of: (A) the public servant; … (emphasis added)
Were the votes connected with the commissions? Yes, obviously.
They were connected in time, volume, and frequency. 40 votes, 7 real estate transactions, interleaved in time and frequently in close proximity. The level of coordination between Novak and the contractor had to be extensive.
So yes, this one is a pretty clear violation of law, and it’s a felony.
As an aside: disclosing the relationship, by itself, is not a get-out-of-jail card. But it doesn’t matter because Novak failed to do even that.
Indiana Bribery, Ind. Code § 35-44.1-1-2
The law reads:
Sec. 2. (a) A person who: … (2) being a public servant, solicits, accepts, or agrees to accept, either before or after the person becomes appointed, elected, or qualified, any property, except property the person is authorized by law to accept, with intent to control the performance of an act related to the person's employment or function as a public servant; … commits bribery, a Level 5 felony.
This one is pretty broad. The real estate commissions clearly qualify as “any property”. The votes clearly qualify as “an act related to the person’s employment or function as a public servant”.
The key phrase, though, is “intent to control”. This is narrower than the “connected with” language above. A conviction would require a prosecutor to show some kind of intent, either that Novak intended to get more real estate business by being a friend to the contractor on the Council, or the contractor intended to get more business with the County by throwing Novak some business personally.
Courts have carved out two exceptions. The first is the gratuity theory: if the public servant accepts cash after the official act, then it’s a gratuity, a little thank-you for a job well done. The relevant case here is Snyder v. United States. That exception doesn’t apply, because there were many transactions interleaved in time, not just one.
The second exception is “general influence”. It’s not bribery if the cash is to influence a public servant generally, and is not connected to a specific act. The relevant case here is Wurster v State. That exception doesn’t apply, because the votes to fund the contracts were specific and identifiable.
But what about intent? If there happened to be an FBI wiretap that showed an explicit, or even implicit, agreement to exchange votes for deals, a quid pro quo, then yes, it’s bribery. But we don’t have a wiretap.
We don’t actually need one. Bribery cases can be established through circumstantial evidence, and we have mounds of it.
In McDonnell v. United States, 579 U.S. 550 (2016), the Court held that the agreement need not be explicit and that a jury may consider a broad range of evidence, including the nature of the transaction, in determining whether a quid pro quo existed:
“The agreement need not be explicit.”
McDonnell therefore supports using repeated transactions, their timing, their value, and the surrounding official conduct as evidence from which an agreement may be inferred.
No-bid contracts materially intensify the analysis
The no-bid contracts are especially important. They may provide evidence of:
preferential treatment;
departure from ordinary procurement procedures;
Novak’s ability to confer valuable benefits;
a specific “quo” for private compensation;
coordination between Novak and the contractor; and
potential damages to the county if competition was bypassed or prices were inflated.
Moreover, there are an estimated 300-400 real estate agents in LaPorte County, and the contractor selected Novak over of all of them. This provides additional evidence that Novak was provided preferential treatment.
So is it bribery under Indiana law? A prosecutor would have to prove intent, and they’d (probably) have to do it with circumstantial evidence. Likely, but not a slam-dunk.
Federal Bribery, 18 U.S.C. § 666
Federal law applies, because a number of the no-bid contracts involved federal funds well over the $10,000 threshold.
The law says:
Whoever … (B) corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving any thing of value of $5,000 or more; … shall be fined under this title, imprisoned not more than 10 years, or both.
The analysis here is the same as above. Intent must be proven. And, as above, it probably can be.
Other Laws
Official Misconduct, Ind. Code § 35-44.1-1-1. In this case, it wouldn’t be a primary offense, but it could be an add-on if the main charges are proven.
The no-bid contracting and federal funding create additional concerns. Federal grant rules generally require documented procurement procedures and competition, except in limited circumstances. 2 C.F.R. §§ 200.318–200.3270. If federal funds were obtained, converted, misapplied, or distributed through a corrupt agreement, federal program-bribery and fraud statutes may apply. 18 U.S.C. § 666; 18 U.S.C. §§ 1341, 13432/3
A separate possible theory is honest-services wire or mail fraud under 18 U.S.C. §§ 1343, 1346 or 18 U.S.C. §§ 1341, 1346, if the evidence shows use of interstate wires or the mails to further a bribery or kickback scheme. The Supreme Court has limited honest-services fraud to bribery and kickback schemes; bribery would have to be proven under § 666.
Conclusion
Novak’s conduct is in clear violation of Indiana’s Conflict of Interest law, and would be in clear violation of state and federal bribery law if prosecutors could prove intent. Intent could likely be proven through the available circumstantial evidence.
So yes, what he did was illegal.