The IRS has partnered with the FBI in the broad-ranging federal investigation of former Gov. John Kitzhaber and his fiancee, Cylvia Hayes, The Oregonian/OregonLive has learned.
Michael Jordan, the state's chief operating officer, said Wednesday that he was questioned two weeks ago by agents from the FBI and IRS.
Jordan's revelation is the first public sign the IRS is part of the public corruption investigation. An IRS spokesman said the agency doesn't comment about ongoing investigations.
The Oregonian/OregonLive was the first to report that Hayes' federal tax return for 2012 didn't appear to reflect all her income from her environmental consulting business. The income could have been reported on her business tax return, but Hayes and her attorneys have not responded to repeated requests for those returns or for comment. Hayes hired a criminal defense attorney to deal with her tax situation.
Michael Jordan
Jordan, who runs the state Department of Administrative Services, also disclosed in an interview Wednesday that state technicians swept through offices of the governor after Kate Brown took office to gather up computers and other electronics used by Kitzhaber staffers. They told Jordan they did so after discussions with the office of U.S. Attorney Amanda Marshall.
Marshall's office didn't return a call seeking comment, and Brown's office declined comment.
Kitzhaber has repeatedly denied wrongdoing, while Hayes has declined repeated requests for comment.
Jordan volunteered for the interview to follow up on the report by The Oregonian/OregonLive Monday that he initiated a criminal investigation to determine who leaked Kitzhaber's personal emails. Jordan said he wanted to flesh out the minimal responses provided by his staff for that story.
Two days after asking police to investigate, Jordan put two managers from his agency on administrative leave while a separate internal investigation got underway.
Some observers thought that the first move looked like overkill done to avenge Kitzhaber while the second cast suspicion that the two managers were the leakers. Jordan said the two were not placed on leave in connection with the leak probe. He said he did not punish them for preserving evidence, either.
Jordan also said he wasn't using the criminal probe as a way to punish the leaker. He said his job is to protect the state's records. He requested the Oregon State Police investigate because the agency has forensic experts and because he had concerns about the agency's computer security.
The two managers, he said, were placed on leave primarily to combat a situation he felt was "out of control" - including an apparently unauthorized move by one of them to seize computers and cell phones from the governor's staff as evidence for the federal probe.
In the interview, Jordan recounted the events leading to the leak investigation. Brown, in office just a week, has taken considerable public heat after it appeared her administration was trying to find whistleblowers.
"I've been doing this for 30 years now," he said. "This is the most bizarre set of circumstances I've lived through as a manager."
Jordan said in December Kitzhaber called, asking to confirm that the state data system was archiving emails from a gmail account he established for state business. Jordan said the call was sparked by questions from The Oregonian/OregonLive about Kitzhaber's use of non-state email accounts for public business.
Jordan said he assured Kitzhaber his emails had indeed been preserved.
The matter became complicated earlier this month as the agency processed a Feb. 2 request from The Oregonian/OregonLive for the governor's emails, Jordan said. Agency officials then realized emails from two private accounts kept by the governor for personal business had also been archived by the state.
Three days later, a Kitzhaber friend and staffer, Jan Murdock, called the agency, asking that the personal emails be "removed" or deleted from state archives. State workers and managers of the state data center feared the move would result in the illegal destruction of records. They refused, backed up by Michael Rodgers, acting director of the center. Federal investigators have demanded documents about the incident.
Jordan said he supported the decision when he found out about it the next day.
The following week, Jordan said he was at home in Canby following a stressful day with rampant rumors Kitzhaber would resign. There was a knock at the front door.
Two agents - one FBI, one IRS -- questioned Jordan for an hour. He said they focused on three questions. Two were about Hayes' work for Demos, a nonprofit that was one of her consulting clients. They asked about emails showing that Kitzhaber urged Jordan to hire a man connected to Demos.
Jordan said he told the agents he didn't feel pressure to hire the man and that he didn't know at the time Hayes was being paid by Demos.
Jordan said he also answered agents' questions about whether Kitzhaber's emails were being preserved. They were, he said.
The next morning Jordan said he was leaving his office to walk to the Capitol when he encountered "my two buddies" -- the agents. They climbed out of their parked car and handed him the federal subpoena demanding email correspondence sent and received by Kitzhaber, Hayes, and 15 employees - including Jordan.
After arriving at the Capitol, in an 11 a.m. meeting, Kitzhaber announced to Jordan and other senior staffers that he was resigning.
The following week, on Feb. 17, Jordan said a Kitzhaber aide tipped him that there might have been a leak of Kitzhaber's personal emails. The following morning, those emails were the basis of a story published in Willamette Week that cited, among other topics, attorney-client communications.
Jordan said he called State Police Supt. Rich Evans to ask for an investigation because he felt potential evidence should not be leaked during a probe. He said he wasn't sure a crime had occurred.
Thoughts of Kitzhaber or retribution against the leaker never crossed his mind, he said.
He said Kate Brown hadn't formally taken office at the time he called Evans. Jordan said deciding to seek the investigation was within his authority.
Jordan described how on the next day Marshall Wells, an executive in the state's data center, took a technical worker with him to the governor's office.
Wells secured computers apparently belonging to some of the people named in a Feb. 12 subpoena issued by a federal grand jury. He also took possession of some state-owned cell phones and iPads that had been used by Kitzhaber's staff.
That collection effort continued into the next day, Jordan said.
Wells has said he gathered the equipment after speaking to prosecutors in the U.S. Attorney's office, according to Jordan. However, Jordan says that office denies encouraging the move.
Jordan immediately placed Rodgers and Wells on administrative leave pending a personnel investigation. Jordan did not explain why he placed Rodgers on leave or what became of the seized equipment.
He said he sought the expertise of state Chief Information Officer Alex Pettit to review security concerns at the data center. He placed Pettit in charge of the center, which has had a history of internal discord with employees complaining of retaliation, discrimination and other unfair treatment.
Rodgers and Wells referred questions to the department.
Jordan said he was motivated to launch the personnel investigation over concern his managers weren't following the chain of command, triggered by the seizure of computers.
"We did enough interviewing with enough folks preliminarily to determine that there was no one within the structure of our leadership that had given permission to do that," he said.
(Jeff Manning contributed reporting for this article)
-- Nick Budnick and Laura Gunderson
nbudnick@oregonian.com lgunderson@oregonian.com
503-294-5083 503-221-8378
@nickbudnick @LGunderson