ELLEN F. ROSENBLUM

MARY H. WILLIAMS

Attorney General

Deputy Attorney General

DEPARTMENT OF JUSTICE
CRIMINAL ruSTICE DIVISION

DATE:'

February 8,2013

TO:

Darin E. Tweedt, Chief Counsel

FROM:

Bumjoon Park, Senior Assistant Attorney General
Shannon M. Kmetic, Senior Assistant Attorney .General

SUBJECT:

Declination Memorandum Regarding DOC/OCE

I.

SUMMARY

On October 8, 2012, the Criminal Justice Division opened an investigation into.
allegations of misconduct occurring in the Director's Office of the Oregon Department of
Corrections (DOC). Special Agents (SA) Jodi Shimanek, Micah Persons, Kim Hyde and Robert
Culley and Senior Assistant Attorneys General (Sr. AAG) BumjoonPark and Shannon Kmetic
were assigned to the case. After conducting a thorough investigation, DOJ did not find sufficient
evidence to prove criminal misconduct beyond a reasonable doubt. This memorandum
summarizes the allegations, the investigation, and the analysis .
. The allegations were made by longtime Oregon Corrections Enterprises (OCE)
Administrator Robert Killgore. Killgore provided DOJ with a three ring binder he had prepared .
with spreadsheets documenting expenditure requests made by DOC which Killgore questioned.
Killgore also provided some e-mail correspondence regarding expenditures, hiring of personnel
and other requests. Killgore was interviewed several times during olir investigation. Killgore
alleged that the Director's Office of DOC had misused OCE funds over the last 10 years.
Killgore alleged, in substance:
•

•

•
•

DOC abused its power over OCE by asking OCE to pay for a number of "goodwill
gestures" and improper personnel expenditures for the benefit of DOC.
These "goodwill gestures" and personnel expenditures had cost OCE approximately
$5 million since 2002.
The primary justification for the "goodwill" gestures was viewed as sales and
marketing ofOCE programs within DOC. DOC has received virtually all of.OCE's
marketing over the years although DOC makes up only approximately 20% ofOCE's
business according to Killgore.
OCE's management was afraid to deny requests from DOC out of fear of retaliation
from the DOC Director's Office.
Over the years the Director's Office of DOC has allowed a culture in which DOC
used OCE to ma1ce expenditures not allowed by the DOC budget.

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Declination Memorandum Regarding DOC/OCE
Page 2 of 19
•

•

II.

DOC Deputy Director Mitch Morrow recommended his son, Zak Morrow, be hired
for an OCE position. Killgore indicated he was afraid there would be retaliation if
Zak Morrow was not hired. Killgore also alleged there was preferential treatment of
Zak Morrow after he was hired by OCE.
DOC management received personal recognition within DOC for items paid for by
OCE.

THE TWO INSTITUTIONS AT ISSUE
A; OREGON DEPARTMENT OF CORRECTIONS

Oregon Department of Corrections (DOC) is the prison system for the State of Oregon.
DOC manages 14 state prisons throughout Oregon and houses over 14,000 inmates who have
been convicted of felonies and sentenced to serve at least a year in the penitentiary. According to
the Oregon Constitution, all inmates at the DOC must work. Article 1, Section 41 of the Oregon
Constitution states two principles: (1) Whereas the people of the state of Oregon find and declare
that inmates who are confined in corrections institutions should work as hard as the taxpayers
who provide for their. upkeep; and whereas the people also find and declare that inmates confined
within corrections institutions must be fully engaged in prodUctive activity if they are to
successfully re-enter society with practical skills and a viable work ethic.
Article 1, Section 41 gives the Director of DOC great discretion to create inmate work
programs and employment rules.! Inniate work programs are not subject to regular labor laws
because the rules are set at the discretion of the Director. 2 Income from inmate work programs
can only be used for furthering prison work programs. 3 The DOC Director has virtually .
unlimited discretion to use the income from the inmate work programs to further prison work
programs.
B. OREGON CORRECTIONS ENTERPRISES
Oregon Corrections Enterprises (OCE) is a quasi-state agency created by statute that uses
prisoners to produce products such as furniture, garments and embroidery, road signs, and
structures in parks. OCE inmate labor also provides laundry services, call-ctmter services

I Section (2) of Article 1, Section 41. All inmates of state corrections institutions shall be actively engaged full time
in work or on-the-job training. The work or on-the-job training programs shall be established and overseen by the
corrections director, who shall ensure that such programs are cost-effective and are designed to develop motivation,
work capabilities and cooperation.
2Section (7) of Article 1, Section 41. The corrections director may (a) install and equip plants in any state
. corrections institution, or any other location, for the employment or training of any of the inmates therein; or (b)
purchase, acquire, install, maintain and operate materials, machinery and appliances necessary to the conduct and
operation of such plants.
3 Section (9) of Article 1, Section 41. All income generated from prison work programs shall be kept separate from
general fund accounts and shall only be used for implementing, maintaining ami developing prison work
programs ... The state programs si:lall be run in a businesslike fashion and shall be subject to regulation by the
corrections director. (Emphasis added.)

610 Hawthorne Ave: SE, Salem, OR 97301
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Declination Memorandum Regarding DOC/OCE
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printing, mail fulfillment, and document scanning. OCE sells these products and services to a
.
variety of customers, including private entities and government agencies.
Income ~enerated by OCE can only be used to implement, maintain, and develop .prison
work programs. The head of OCE is called the Administrator. OCE's Administrator is 'hired by
the DOC Director and works "at the pleasure of the Director of the DepartmentofCorrections"S
The OCE Administrator has broad statutory discretion to do whatever promotes the public
welfare ofOregonians. 6 However, these broad powers are always subject to limitations on the
authority of the Director. 7
.
The OCE Administrator has broad discretion to enter into contracts or agreements in
order to market the products or services of OCE. 8 This can be with both private and public
entities. 9 There is an advisory board for OCE, but there is no oversight entity that monitors OCE
activities. The advisory board has no authority or oversight powers of any kind over OCE. la All
of OCE's businesses are located within DOC institutions. DOC cannot receive any of the profits
ofOCE's business. Robert Killgore, OCE's Administrator, estimates that DOC makes up about.
20% ofOCE's business. OCE's ability to operate and function daily is dependent on DOC due to
the fact that DOC provides the workforce, security, and locations for OCE.

4

Oregon Constitution Article 1, Section 41, Section 9.

"There is established Oregon Corrections Enterprises, a semi-independent agency. The Director of the Department
of Corrections shall assign or appoint an administrator who shall serve at the pleasure of the director." ORS 421.344.

5

6 "Oregon Corrections Enterprises shall carry out the public purposes and missions stated in section 41, Article 1 of
. the Oregon Constitution, and in this section in the manner that, in the determination of OCE, best promotes the
public welfare of the people of the State of Oregon." ORS42 1.354 (4).

"Subject to the authority a/the director, OCE may authorize, create,eliminate, establish,operate, reorganize,
reduce or expand any program, system, facility or other unit of operation in furthering the missions ofOCE." ORS
421.305 (l)(L) (Emphasis added).

7

8 Subject to the authority of the Director of the Department of Corrections over care, custody and control of inmates and of corrections institutions, in carrying out the powers and duties generally described by ORS 421.354, Oregon
Corrections Enterprises may: "(l)(c) Make aniand all contracts or agreements, enter into any partnerships, joint
ventures or other business arrangements, create and participate fully in the operation of any business structure,
including but not limited to the development of business structures for inmate work program systems and networks
with any public, private, government, non-profit or for profit person or entity that ill the judgment of Oregon
Correctiolls Enterprises is necessary or appropriate to accomplish the marketing o/products or services produced
by inmates or the production o/goods, ware or services by inmates." ORS 421.305(1)(c) (Emphasis added).

9 "Oregon Corrections Enterprises may enter into contracts or agreements with private persons or government

agencies for the purpose of: (a) Accomplishing the production and marketing of products or services produced or
performed b)i inmates." ORS 421.354(2).
.
I a "The administrator of Oregon Corrections Enterprises shall establish, by the issuance of a policy directive or
order, an advisory council consisting of not fewer than three members to provide policy input concerning Oregon
Corrections Enterprises operations and its discharge of the functions and duties prescribed by section 41, Article 1 of
'the Oregon Constitution." ORS 421.347([1).
.
.

610 Hawthorne Ave. SE, Salem, OR 97301
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Declination Memorandum Regarding DOC/OCE
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III.

KILLGORE'S ALLEGATIONS

Our investigation determined that Killgore's allegations fell into four general categories
of transactions between DOC and OCE. The categories are: (1) infrastructure and security
improvements to DOC facilities;ll (2) supplies for DOC;12 (3) donations and goodwill gestures
from OCE to DOC and (4) additional personnel costs incurred by OCE at DOC's request.
Following are more specific examples of the four categories of Killgore's allegations of
improper or questionable expenses OCE made at the direction of DOC.

A. INFRASTRUCTURE AND SECURITY
Killgore alleged that after he was .hired as the Administrator of OCE, Deputy Director
Mitch Morrow asked OCE to buy some security devices for DOC. When Killgore agreed,
Morrow told Killgore that was a "test." After that, Killgore alleged OCE had a pattern of
acceding to questionable spending requests from DOC.

B. SUPPLIES FOR DOC
Killgore also noted various requests from DOC to OCE for supplies for DOC's benefit.
For example, ·Killgore alleged Deputy Director Mitch Morrow told Betty Bernt of OCE that OCE
needed to "donate" large amounts of inmate uniforms to DOC. According to Killgore, Killgore
refused and told Bern.t to have Morrow call him about this, which Morrow never did.
Killgore also alleged that Morrow told Lisa Hall of OCE that he wanted OCE to buy two
42" TVs for the Director's Office. When Hall was asked about this she said that Morrow was in
a meeting with her and several other people and he was talking about the procurement process
that DOC must follow and that OCE is exempt from it. Hall said he gave the example of OCE
could go and buy two 42" TV's from any store and DOC would not be able to do that. ,

C. DONATIONS AND GOODWILL GESTURES
The third category of allegations includes donations and goodwill gestures from OCE to
DOC. According to Killgore, these donations and goodwill gestures were made to ensure the
smooth running of OCE operations in DOC institutions. Examples of such expenditures include
snacks during Corrections Officers Week for corrections· officers that DOC asked OCE to pay for
as a "goodwill gesture" towards DOC. Killgore was also concerned that GCE gave furniture to
DOC at no cost, which allowed DOC to economically benefit without reporting the expenditure
as part of DOC's budget.

11
12

See Appendix A for examples
See Appendix A for examples
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Declination Memorandum Regarding DOC/OCE
Page 5 of 19
Killgore was also concerned about a public relations video DOC asked OCE to fund.
According to Killgore, the video cost some $20,000. According to Oregon law, OCE spending
must be related to developing, maintaining and implementing prison work programs. Killgore
was bothered that the video was not directly related to aCE inmate work.
Killgore also told DO] special agents that OCE paid for funeral expenses of a corrections
officer who had been murdered while off duty. Killgore said that aCE paid for lodging for the
victim's family, rental of the facility for the service, transportation for attendees and
refreshments for the DOC Honor Guard. According to Killgore, these arrangements were made
between Betty Bernt and Morrow. Killgore stated he knew nothing about OCE paying for these
items until after the offer was extended to DOC. Killgore provided e-mail correspondence
between Bernt and Morrow that supported his allegations. Killgore was concerned because these
expenditures had nothing to do with maintaining, implementing, or developing prison work
programs.

D. PERSONNEL COSTS
Killgore listed several personnel decisions made by DOC involving OCE which caused
him concern. Killgore alleged OCE was asked to hire a correctional officer who had lost his
corrections officer certification as a result of being convicted of the misdemeanor offenses of .
Driving Under Influence of Intoxicants and Resisting Arrest. According to Killgore, Deputy
Director Morrow requested OCE hire this correctional officer and Killgore created a position for
him in one of the laundry facilities. Killgore also alleged that Morrow wanted OCE to hire a
correctional employee who had allegedly solicited a prostitute,13 a former DOC employee with
an eye condition, another correctional officer who was atTested for Driving Under the Influence
of Intoxicants and another who had been arrested for assaulting his own son. 14
' .

Killgore also alleged Morrow had met him for lunch and asked Killgore to create a
position for Betty Bernt, who was Morrow's Executive Assistant at the time. Killgore said that
as a result ofMorrow's request OCE created a customer relations manager position for Bernt.

According to Killgore, the previous DOC Director, Max Williams, also asked OCE to
hire specific people. For instance, Williams suggested OCE look at Bruce Potts, who had
previously worked for Nike. Williams specifically told Killgore he was not looking for any
favors for Potts, but felt he would be a good addition to OCE. Potts was hired for a temporary
position in OCE. Approximately a year later, Potts applied for a full-time position, but was
rejected by the hiring committee. Killgore said that he was later approached by Morrow and was
told to hire Potts for a full-time position because the Director was tired of his wife talking to him
about it. As a result, Killgore created a position for Potts within acE.
13 Investigation revealed that this person was arrested for this offense but nothing appears on his criminal history;
.
only that this incident w~s routed to DOC for a possible diversion.
14 All of these individuals were hired by aCE, but there are no documents to establish that the request was made by
Morrow.

..

610 Hawthorne Ave.SE, Salem, OR 97301
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Declination Memorandum Regarding DOC/OCE
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Killgore was also concerned about Deputy Director Morrow' sinvolvement with OCE
and the hiring of Morrow's son, Zak. Killgore spoke to Morrow suggesting he look at his son's
application. Killgore stated he felt like he had no choice but to hire Morrow's son and pay his
moving expenses because Morrow stated that he had the DOC Director Max Williams' backing.
Killgore also alleged Morrow later communicated to OCE that he was not happy with his son's
. salary or the initial moving expenses. According to Killgore, OCE doubled Zak Morrow's
moving expenses and increased his salary because of Morrow's complaints.
According to Killgore, OCE could not afford these personnel expenses. In order to cover
the additional personnel costs OCE increased the amount of money it charged DOC for laundry
services. Killgore indicated he didn't remember but it was someone at DOC's idea to raise the
laundry costs to cover these additional personnel costs.
Killgore stated that thereason he felt he had to hire personnel and pay for expenditures
for DOC was that he feared retaliation from Deputy Director Morrow. Killgore stated that
Morrow had an "exit strategy" for people Morrow did not like which involved moving them to a
position that would eventually be eliminated. Killgore stated that he feared for both his position,
and his wife's, who was a corrections officer at DOC. Killgore also stated that Mitch Morrow
ran the day-to-day operations of DOC from the Director's office.

IV.

KILLGORE'S ACTIONS REGARDING THE QUESTIONABLE
EXPENDITURES DURING HIS TIME AS THE OCEADMINISTRATOR

Prior to. bringing these allegations to DOJ, Killgore took some steps throughout the. years
to question some of the requests by DOC he thought were questionable. One such step was .
asking DOJ's General Counsel Division for legal opinions regarding whether OCE could legally
make certain expenditures.

In 2002, Killgore asked DOJ to opine whether OCE could legally fund crime prevention
programs-such as Head Start- in the local community. DOJ advised that OCE could not
constitutionally, nor statutorily, fund such a program since such an activity would not be related
to prison work programs in any way .
. In 2005, Killgore sought DOJ advice on whether OCE could assist in the funding of a
Children of Incarcerated Parents project for Oregon. DOJ advised that while support of such a
program may be within the broad statutory authority of DOC, funding such a program was not
within the Oregon Constitution or the statutory authority of OCE. This IS because this program
was not related to implementing, maintaining, or developing prison work programs. This
program does not work directly with inmates but rather works with the children of inmates to
.
help them better cope with their situation.
In addition to asking for such legal opinions, Killgore also met with the former Director
of DOC Max Williams to voice his concerns. Killgore alleged that he met with Max Williams
on January 20,2012, and told Williams he was concerned that OCE was being used as "DOCs
slush fund." (When Williams was interviewed by DOJ special agents, he said those were
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Declination Memorandum Regarding DOC/OCE
Page 7 of 19
Killgore's words and he may have parroted those back to Killgore.) Several days later Williams
asked Killgore to meet with him and Morrow, who was at the time the Interim Director of DOC,
to share these concerns with him. Killgore stated he hoped that when the new DOC Director
came in that the improper expenditures would be stopped.
As a result of the meeting between Morrow and Killgore, on January 29,2012, lV1orrow
sent out an e-mail to DOC superintendents and DOC policy group outlining OCE's support and
generosity to DOC. The e-mail also indicated that due to limited finances OCE's . .
contributions/donations to DOC would be limited and there would be a formal process to make
requests.
Another action Killgore took was to contract a business practice review of OCE. OCE
has been under contract with PSU for years for such services as far back as 2005. Killg~re met
with Portland State University (PSU) in late 2011 and requested that they review OCE's business
practices and make some recommendations. Killgore entered into a $150,000 contract with PSU
for this review, which included looking at OCE moving some of its operations to Oregon Youth
Authority and potentially becoming a non-profit. Killgore felt that Morrow was supportive of
the PSU contract and looking at options for OCE. In March of2012, there are e-mail
communications indicating that DOC was still supportive of the PSU contract.
Killgore indicated he met with the DOC Director Colette Peters on February 22,,2012,
and brought to her his concerns about the DOC expenditures and his contract with PSu. He also
suggested an audit of OCE. Killgore said that Peters was not interested in the PSU audit and felt
that a Memorandum of Understanding and some changes in policies would correct thy
expenditure issues. Shortly after this meeting, Peters changed the organizatIonal chart, moving
OCE under DOC, instead of beside it as a quasi-state agency. In September of2012, Killgore
was sent an e-mail from Morrow informing Killgore that he and several other OCE .executives
would have their offices moved from the main OCE offices to the Dome building, where DOC
central management is housed. Killgore felt that this was due to his concerns about OCE funds
being misused and his contract with PSU.

V.

INVESTIGATION SUMMARY

Initially, SA Shimanek and SA Persons requested and obtained consent to seize
computers from Mitch Morrow, Robert Killgore and Betty Bernt. After review of the materials
provided by Robert Killgore, investigators prepared Attorney General subpoenas for e-mails of
the previously mentioned persons and former DOC Director Max Williams. The following .
individuals were interviewed by SA Shimanek and SA Persons:
1) Robert Killgore, (OCE Administrator) October 11,2012
2) Lisa Hall, (Assistant Superintendent of Correctional Rehabilitation at Coffee Creek .
Correctional Facility. OCE employee currently onjob rotation for DOC.) October 15,
2012
.
3) Betty Bernt, (Customer Relations Manager for OCE) October 15,2012
4) Nick Armenalds, (Retired. Former OCE Deputy Administrator.) October 15,·2012
5) Max Williams, (Retired. Former Director of DOC.) October 18, 2012
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Declination Memorandum Regarding DOC/OCE
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6) Colette Peters, (Current Director of DOC) October 22 and 26,2012
7) Mitch Morrow, (Current Deputy Director of DOC) October 22 and 26,2012
8) Dave Caulley, (Retired. Former Contracts Manager of OCE.) October 30, 2012
9) Tami Dohrman, (Assistant Director General Services of DOC) November 5,2012
10) Gary Kilmer, (Deputy Administrator ofOCE, Business Operations) October 31,2012
11) Laura Osborn, (Deputy Administrator ofOCE) October 29,2012
12) Neil Bryant, (Attorney at Law, former advisory council to aCE) October 23, 2012

VI. LEGAL ANALYSIS
A. CRIMES CONSIDERED
Based on Killgore's allegations, our investigation focused on determining whether any of
the following crimes had been committed:
• Theft by Extortion
• Coercion
• Official Misconduct in the First Degree
• .Official Misconduct in the Second Degree
• Bribe Giving and Bribe Receiving
Our analysis of each of these crimes follows.

B. THEFT BY EXTORTION AND COERCION
We first analyzed the crimes of Theft by Extortion and Coercion due to Killgore's
allegations that he feared retaliation if he did not go along with various requests from DOC.
Theft by Extortion is defined in ORS 164.075, which states:
A person commits theft by extortion when the person compels or induces another to
deliver property to the person or to a third person by instilling in the other a fear'that, if
the property is not so delivered, the actor or a third person will in the future:
(a) Cause physical injury to some person;
(b) Cause damage to property;
(c) Engage in other conduct constituting a crime;
(d) Accuse some person of a crime or cause criminal charges to be instituted
against the person;
(e) Expose a secret or publicize an asserted fact, whether true or false, tending to
subject some person to hatred, contempt or ridicule;
. .
(f) Cause or continue a strike, boycott or other collective action injurious to some
persons business, except that such·conduct is not considered extortion when the
property is demanded or received for the benefit of the group in whose interest the
actor purports to act;
(g) Testify or provide information or withhold testimony or information with
respect to anothers legal claim or defense;
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Declination Memorandum Regarding DOC/OCE
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(h) Use or abuse the position as a public servant by performing some act within or
related to official duties, or by failing or refusing to perform an official dllty, in
such manner as to affect some person adversely; or
(i) Inflict any other harm that would not benefit the actor.
(2) Theft by extortion is a Class B felony.
The crime of Coercion is set out in ORS 163.275, which states:
A person commits the crime of coercion when the person compels or induces another
person to engage in conduct from which the other person has a legal right to abstain, or to
abstain from engaging in conduct in which the other person has a legal right to engage,
by means of instilling in the other person a fear that, if the other person refrains from the
conduct compelled or induced or engages in conduct contrary to the compulsion or
. inducement, the actor or another will:
(a) Unlawfully cause physical injury to some person;
(b) Unlawfully cause damage to property;
(c) Engage in conduct constituting a crime;
(d) Falsely accuse some person of a crime or cause criminal charges to be
instituted against the person;
. (e) Cause or continue a strike, boycott or other collective action injurious to some
persons business, except that such a threat is not deemed coercive when the act or
omission compelled is for the benefit of the group in whose interest the actor
purports to act;
(f) Testify falsely or provide false information or withhold testimony or
information with respect to anothers legal claim or defense; or
..
(g) Unlawfully use or abuse the persons position as a public servant by
performing some act within or related to official duties, or by failing or refusing
to perform an official duty, in such manner as to affect some person adversely.
(2) Coercion is a Class C felony.
Our investigation did not reveal the types of specific threats or coercive acts from DOC
towards OtE which are required for these two offenses. Killgore could not articulate one
example or instance of any threats by a DOC administrator to him or anyone else. We did not
find any instance of anyone at OCE being told that if OCE did not pay for the requested'
expenditures that something detrimental would happen to anyone at aCE or towards OCE itself.
We also were unable to corroborate Killgore's fear of retaliation from DOC officials ifhe
refused DOC requests . For instance, Killgore believed he and other aCE managers were moved
from the main aCE offices to the Dome building of DOC as retaliation for raising concerns
about OCE funds being misused. However we were told by Director Peters and Deputy Director
Morrow that this move was made in order to prevent the disconnection they felt was occurring
with ~embers ofOCE. We were also unable to corroborate Killgore's allegation that D'eputy
Director Morrow had an "exit plan" for people whom Morrow did not like.
The absence of any form of a threat or coercion eliminated the crimes of Theft by .
Extortion, or Coercion.
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Declination Memorandum Regarding DOC/OCE
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C. OFFICIAL MISCONDUCT IN THE FIRST DEGREE
We next focused on Official Misconduct under ORS 162.405 and 162.415. For reasons
that follow, we have determined there is insufficient evidence to prove these crimes.
Official Misconduct in the First Degree is defined by ORS 162.415:
(1) A public servant commits the cdme of official misconduct in the first degree if with
intent to obtain a benefit or harm another:
(a) The public servant knowingly fails to perform a duty imposed upon the public
servant by law or one clearly inherent in the nature of the office; or
(b) The public servant knowingly performs an act constituting an unauthorized
exercise in official duties.
(2) Official misconduct in the first degree is a Class A misdemeanor.
The Oregon Supreme Court has described the crime of Official Misconduct in the First
Degree under ORS 162.415(1) (b)lS as consisting of the following elements:
(1) The defendant must be a "public servant." (2) He or she must knowingly perform an
act. (3) The act must be performed "in" his or her official duties; that is to say, in the
defendant's official capacity, exercising the powers or opportunities available by virtue
of his or her official position. (4) The act must be an unauthorized exercise of his official
capacity, power, or opporturIity. (5) The act must be done "with intent to obtain a benefit
or to harm another.
State v. Florea, 296 Or. 500, 503-4, 677 P2d 698 (1984) (emphasis added). 16 These five
elements are required for a prosecution under ORS 162.415(1) (b). We applied the law relating
to Official Misconduct in the First Degree to each of the four types of transactions and
determined there is no Official Misconduct in the First Degree in this case.
1. INFRASTRUCTURE AND SECURITY

We cannot prove any person involved with this case committed Official Misconduct in
the First Degree under ORS 162.415(1) (b) regarding the expenditures for infrastructure and
security for two reasons. First, we cannot prove any person knowingly performed an act which
constituted an unauthorized exercise of their official capacity, power, or opporturIity. In fact, we
determined OCE's expenditures to be lawful because these devices were needed due to the
increased security needed for the inmate work program at the various DOC institutions. .Thus,
OCE's infrastructure and security expenditures were meant to develop and maintain the OCE
programs at the DOC institutions as required by Article 1, Section 41 of the Oregon Constitution.

15 Analysis ofORS 162.415(1) (a) is unnecessary because our investigation did not reveal any evidence ofa failure
to perform a duty imposed on a public servant in this case.

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Declination Memorandum Regarding DOC/OCE
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Second, we did not find evidence that the expenditures in this category were made with
the intent to obtain a benefit or harm another. Instead, our investigation showed the actions in
question were done with the intent to benefit DOC or OCE rather than the requestor or another
individual.
It is ~mportant to note we were not able to corroborate Killgore's allegation of Morrow's
"test" of Killgore when Killgore was first hired. Likewise, we were unable to identify anyone
person within DOC who was responsible for all the expenditures in this category as Kill'gore
alleged. Rather, we found that various lower level DOC managers and personnei have ordered
or requested that OCE pay for various items throughout the years. By the time the DOC requests
came to Killgore's desk for approval, OCE had usually already paid for the item as part of its
routine practice.

2. SUPPLIES FOR DOC
We were unable to corroborate Killgore's allegation that Deputy Director Morrow told
OCE to "donate" large amounts of inmate uniforms to DOC. We also determined Killgore's
allegation of Lisa Hall of OCE at the time, wanting OCE to buy TV's for the Director's office
was not factually true.

3. DONATIONS AND GOODWILL GESTURES
We cannot prove any person involved with this case committed Official Miscon~uct in
the First Degree under ORS 162.415(1) (b) regarding OCE's donations and goodwill gestures to
DOC because OCE has broad constitutional and statutory authority to malce goodwill gestures
and donations if they are intended to implement, maintain or develop OCE programs. In
addition, we were not able to find any prohibition on DOC receiving such goodwill gestures or
donations.
That said, our investigation revealed a culture within DOC of requesting OCE to pay for
items that have limited, or no, direct benefit to OCE as a business enterprise. Deputy Director
Morrow and others told us OCE must make gestures of goodwill to DOC because the Director's
Office cannot malce the institutions that comprise DOC cooperate with OCE. In other words,
they believe OCE would fail without the cooperation of the DOC institutions which house
OCE's businesses and provide OCE labor. No one we interviewed was able to satisfactorily
explain why the DOC Director could not simply 'order the institutions to cooperate with OCE and
expect that such cooperation would be forthcoming.

4. PERSONNEL COSTS
We cannot prove any person involved with this case committed Official Misconduct in
the First Degree under ORS 162.415(1) (b) regarding OCE's added personnel costs because OCE
has broad authority to create positions and hire employees. In addition, Robert Killgore's
allegation of DOC increasing its laundry contract to OCE in order to cover the additional
personnel costs is unsubstantiated. E-mails reviewed show that OCE needed to raise the laundry
costs due to inflation and the costs associated with running the latmdry (fuel for trucks picking
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Declination Memorandum Regarding DOC/OCE
Page 12 of 19
up laundry, electricity rates, maintenance on laundry facilities and machines) and that there had
not been an increase for years.
.
During the investigation it became clear that Deputy Director Mitch Morrow told
Killgore to "take a look at" his son Zak Morrow for a job position and also made follow up calls
to make sure that his son was paid more than typical moving expenses when he had to relocate.
We scrutinized Deputy Director Morrow's conduct. While we believe a reasonable person
would find Morrow had some improper influence in his son being hired, his actions do not rise to
the level of Official Misconduct in the First Degree. We determined that Zak Morrow had
applied to OCE prior to Mitch Morrow contacting Killgore about him. Deputy Director'
Morrow's conduct was to highlight and point out the fact that his son was an applicant.
Furthermore, Zak Morrow applied for a position with OCE, not DOC. OCE has their own
personnel department and their own set of hiring practices and criteria. There is no ~vidence
Deputy Director Morrow called or attempted to directly influence the personnel department of
OCE other than telling Killgore his son had applied and asking Killgore to take a look at him.
We believe .it was improper for Deputy Director Morrow to recommend his son for employment
since Deputy Director Morrow was in a position of power over OCE and Killgore at the time;
however, Deputy Director Morrow's actions do not constitute a crime.

D. OFFICIAL MISCONDUCT IN THE SECOND DEGREE
We also analyzed the facts i'n light of Official Misconduct in the Second Degree, which is
defined in ORS 162.405:
(1) A public servant commits the crime of official misconduct in the second degree -if the
person knowingly violates any statute relating to the office of the person.
(2) Official misconduct in the second degree is a Class C misdemeanor.
Official Misconduct in the Second Degree is violated when a public servant knowingly
violates any statute relating to the office of the person. There is no case law regarding Official
Misconduct in the Second Degree. We analyzed the four categories in terms of whether these
expenditures were used to implement, maintain, and develop prison work programs.
1. INFRASTRUCTURE AND SECURITY

As previously stated, we determined OCE's infrastructure and security expenditures were
lawful because they were really meant to develop and maintain the OCE programs at the DOC
institutions. These devices were needed due to the increased security needed for the inmate work
program at the various DOC institutions.
2. SUPPLIES FOR DOC
We determined that OCE' s supply expenditures to be lawful because they arguably
develop, maintain and implement OCE programs at DOC institutions by making it easier to
maintain the work programs at DOC institutions or because they are part of a marketing program .
610 Hawthorne Ave. SE, Salem, OR 97301
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Declination Memorandum Regarding DOC/OCE
Page 13 of 19
for OCE good and services. For example, we determined the OCE furniture at the Dome
Building was part ofOCE's marketing,program in that DaC officials would give credit to OCE
in the construction of the furniture to visitors at the Director'sbffice.

3. DONATIONS AND GOODWILL GESTURES
Article 1, Section 41 of the Oregon Constitution gives OCE broad latitude to implement,
"mainta,in and develop its prison work program. This broad latitude generally extends to OCE's ,
donations and goodwill gestures to DOC.
As we have previously stated, however, our investigation revealed a culture within DOC
of requesting aCE to pay for items that have limited, or no, direct benefit to aCE as a business
enterprise. The justification given for this is that OCE's donations and goodwill gestures were
necessary. to ensure DOC's cooperation with OCE. As stated previously, no one we interview.ed
was able to satisfactorily explain why the DOC Director could not simply order the institutions
to cooperate with OCE and expect that such cooperation would be forthcoming.
We are particularly concerned in this regard about OCE's donation to Officer Herron's
funeral. It was clear from our interviews with DOC personnel, notably Deputy Director Morrow,
that DOC and aCE officials believed covering the funeral expenses was outside the permissible
uses of OCE funds. We are very concerned that DOC and OCE officials authorized the
expenditures despite their belief the expenditures were not permissible.
.
That having been said, there is an argument that aCE's contributions to the funeral
, generated tremendous goodwill in the institution in which Officer Herron had worked and in the
community, thus helping OCE to maintain its program in that institution while at the same time
possibly opening doors to new sales in the community. Viewed in that light, the funeral
expenditures are authorized under Article 1, Section 41.
'

4. PERSONNEL COSTS
We analyzed the nepotism statutes to determine if anyone associated with the hiring of
Zak Morrow had violated a statute related to their office for the purposes of Official Misconduct
in the Second Degree. It should be noted that the nepotism statutes are not criminal offenses, but
ethical rules.
According to ORS 244.175(4), "relative" mean .... any children of the public official.
ORS 244.177(1) (a) states that:
a public official may not appoint, employ or promote a relative or member of the
household to or discharge, fire or demote a relative or member of the household
from, a position with the public body that the public official serves or over which
the public official exercises j1:ll"isdiction or control, unless the public official
complies with the conflict of interest requirement of this chapter.
'

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Declination Memorandum Regarding DOC/OCE
Page 14 of 19
ORS 244.177(1) (b) states that:
a public official may not participate as a public official in any interview,
discussion or debate regarding the appointment, employment or promotion of a
relative ****As used in this paragraph, participate does not include serving as a
reference, providing a recommendation or performing other ministerial acts that
.
are part of the normal job functions of the public official.
There is no case law regarding this statute and statute itself does not define "employ."
Our investigation revealed Deputy Director Morrow did not expressly order his son to be
hired. Thus, while Deputy Director Morrow does have, de facto, considerable influence over
OCE, he did not "appoint, employ or promote" for the purposes of ORS 244.177(1) (a). In
addition, we believe Morrow did not "participate" in a discussion regarding his son's
employment for the purposes of ORS 244.177(1 )(b). Instead, we believe Morrow provided an
informal recommendation, which is allowable under 0 RS 244.177 (1 )(b) . Consequently, Morrow
did not commit violate the nepotism statutes.

E. BRIBE GIVING AND BRIBE RECEIVING
According to ORS 162.015 (1), a person commits the crime of Bribe Giving if the person
offers, confers or agrees to confer any pecuniary benefit I 7 upon a public servant with the intent to
influence the vote, opinion, judgment, action, decision or exercise of discretion of the public
servant l8 in an official capacity and (2) Bribe giving is a Class C Felony. "The elements of the
offense of bribe giving are (1) offering, conferring, or agreeing to confer any pecuniary benefit;
(2) on a public servant; (3) with an intent to influence the public servant's vote, opinion,
judgment, action, decision or exercise of discretion in an official capacity." State v. Lynch, 230
Or App 23 at 27,28,213 P3d 853, rev den 347 Or (2009)19 In regard to case law for Bribe
Giving, the mental state of this crime only requires the wrongful intent on the part,of the offeror
as opposed to both the offeror and the offeree having the requisite mental states. 20
. ' ,

17 0RS 162.005 states: "Pecuni'ary benefit" means gain or advantage to the beneficiary or to a third person pursuant
to the desire or consent of the beneficiary, in the form of money, property, commercial interests or economic gain,
but does not include a political campaign contribution reported in accordance with ORS chapter 260 (2)(a)."
18 ','Public servant" means a public official as defined in ORS 244.020 (\4); any person who, when an aIleged
violation of this chapter occurs, is serving the State of Oregon or any of its political subdivisions or any other public
body as defined in ORS 174.109 as an elected official, appointed official, employee or agent, inespective of whether
the person is compensated for his services.
19 In State v. Lynch, 230 Or App 23, 213 P3d 853, rev den 347 Or _ _ (2009), the defendant was convicted of bribe
giving. On appeal, he chaIlenged his conviction on the grounds that the state failed to prove venue and failed to
prove intent. The court affirmed the convictions. The case does not provide much analysis of the statute, but has a '
nice summary. of the elements.
20 The Court of Appeals in State v. Martin, 95 Or App 170, 769 P2d 203 (1989) affirmed the defendant's conviction
for bribe giving, but contains little analysis. The case briefly discusses the mental state for bribe giving ... "the mens
rea requirement in the bribe giving section is framed in terms of 'with the intent.' The thrust of this requiremerit is to
avoid the necessity of proving a 'meeting of the minds' crucial to an agreement or understanding. The subjective
wrongful intent of the bribe offeror is the gravamen of bribe giving." Id. at 175 n 1.

610 Hawthorne Ave. SE, Salem, OR 97301 .
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Declination Memorandum Regarding DOC/OCE
Page 15 of 19
Accordingto ORS 162.025 (1), a person commits the crime of Bribe Receiving if a
public servant (a) solicits any pecuniary benefit with the intent that the vote, opinion, judgment,
action, decision or exercise of discretion as a public servant will thereby be influenced or (b)
accepts or agrees to accept any pecuniary benefit upon an agreement or understanding that the
vote, opinion, judgment, action, decision or exercise of discretion as a public serVant will thereby
be influenced. There is no case law on Bribe Receiving.
None of the four categories of questioned expenditures were conducted to offer <;>r solicit
with the intent to influence the public servant's vote, opinion, judgment, action, decision or
exercise of discretion. Rather the transactions were for the benefit of tpe institution of DOC
itself. There were no gains on any pers6nallevel for any of these individuals. There was no
offering or receiving of any pecuniary benefit of any kind towards OCE. Therefore, we
determined these statutes do not apply to any of these transactions or expenditures at issue in this
investigation.

VII. CONCERNS RAISED BY THE INVESTIGATION
Although we have determined that there is insufficient evidence of criminal conduct on
the part of DOC employees, this investigation raises several concerns about the'relationship
between DOC and OCE:
•

•
•

As noted, income generated by OCE can be used only to "implement, maintain and
develop" prison work programs, and the OCE administrator has broad discretion to carry
out its purpose and mission. The lack of clear statutory or constitutional mandate
regarding the meaning of these directives has led to repeated requests by DOC to OCE
for questionable hems-which requests have been granted--especially as they pertain to
donations and goodwill.
There is a distinct lack of oversight over the OCE Administrator, who regularly enters
into contracts with virtually no accountability.
There exists a culture within DOC that seems to depend upon inappropriate "gestures of
goodwill" between DOC and OCE because the Director's Office in DOC cannot' mak~
the institutions that comprise DOC cooperate with OCE. Cooperation between OCE and
the DOC institutions that provide the workforce for OCE must be forthcoming through
clear management oversight without reliance on these gestures.

We strongly recommend that our concerns about the relationship between these two
critical state entities be addressed. However, we recognize that dealing with these concerns
exceeds the scope of our investigation and we have referred these issues to the Chief Operating
'
Officer for his consideration. '

610 Hawthorne Ave. SE, Salem, OR 97301
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Declination Memorandum Regarding DOC/aCE
Page 16 of 19

APPENDIX A: SUMMARY OF EXPENDITURES REQUESTED BY DOC FROM OCE

The following summary is not an exhaustive list of all of the allegations of improper
expenditures, but is intended to show the approval process between aCE and DOC.

INFRASTRUCTURE/SECURITY

•

•
•

•

•

•
•
•

•
•
•

•

•

•

Security Cameras, Monitors and Other Systems at Two Rivers Correctional Institution
(TRCI)
$7341.98
DOC requested the purchase of this security system through an "Inside Oregon
Enterprises-Request for Capital Expenditure or Expendable Property" form dated May
17,2007.
Laura Osborn and Robert Killgore of aCE approve the request.
aCE paid $7341.98 for this system, which was half of the total costs.
$15,000
Cameras at Oregon State Correctional Institution (aSCI)
Anton Kowanda of DOC requested aCE to purchase security cameras at Oregon State
Correctional Institution (aSCI) workforce areas Nick Armenakis of aCE approved this
request on July 24, 2008 for $15,000.
.
The total cost was $30,000 and DOC paid the other $15,000 from the Prison Rape
Elimination ACT (PREA) funds. aCE paid the other half of $15,000.
$15,740.25
Heart Beat Monitor-TRCI
DOC requested that aCE split the cost of a MicroSearch Human Presence machine and
miscellaneous equipment for TRCI.
The request was approved by Laura Osborn and Robert Killgore.
On October 6, 2008, aCE paid $15,740.25, payable to Ensco Inc.
Heartbeat Monitor/aSCI
$15,000
Lisa Hall requested that aCE and DOC split the cost of a heartbeat monitor for aSCI. An
itemized price quote from Ensco dated December 8, 2010, was sent to DOC.
Laura Osborn and Robert Killgore of aCE both approved the expenditure.
aCE paid $15,000 on January 31, 2011, for MicroSearch G3 at the aSCI inspection gate '
which was half of the costs.
$29,622.23
Eastern Oregon Correctional Institution (EOCI) Gate Remodel
A manager of aCE wrote an e-mail dated May 16,2011, regarding concerns the staffhad
at Eastern Oregon Correctional Institution (EOCI) with the east gate and the time it takes
,
officers to manually open gates for aCE business.
Killgore provided numerous invoices and receIpts for multiple vendors from July through
December, 2011. All of the invoices are in aCE's name, for EOCI and som~ list the
garment factory.
There is no indication that DOC paid for any part of this or requested this purchase.
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Declination Memorandum Regarding DOC/OCE
Page 17 of 19

SUPPLIES FOR DOC

•

•

•

•
•

•

Conference Table/Chairs for the Dome Building
$16,673.00
Mitch Morrow requested various furniture for the Dome Building on June 6, 2006. An email from the Public Affairs Manager/Central Support DOC to Mitch Morrow stated that
Max Williams, the Director of DOC, let Colette Peters, who was in a position with DOC
public relations at the time of this request, know that he wanted to see Room 108 ·done,
get it painted and get furniture through OCE. The last sentence is "I'm asking you, since
it will be the Director's Office who pays, of course!"
E-mail from Killgore to Morrow and Betty Bernt, dated November 30,2006, states "Do
you have the funds to buy the materials and we build it?" Bernt, while employed at
DOC, orders chairs, tables and dry erase boards.
OCE Invoice shows furniture was a "promotional item" and there was no charge to DOC.
The furniture was valued $16,673.
Discount on Bunks/TRCI
$27,463.15
A DOC employee placed two orders; July 5, 2011, for 50 bunkslladders and October 26,
2011, for 15 bunkslladders.
.
The total for the July 5,2011, order was $44,750, but the invoice states that the raw
materials were already paid for by DOC and the rest were listed as promotional items and .
so there was no charge by OCE.
Attempts to verify the raw materials were purchased by DOC were made, but we were
told without knowing when the materials were purchased they would not be traceable.
Material is bought in large quantities and when market price is low.

DONATIONS AND GOODWILL GESTURES

•

•
•
•

•

Focus on Accountability - Print Job
$9779.3 i
DOC Public Affairs requested a print job for 2000 Focus on Accountability reports to be
printed on September 6, 2007.
This was done for no charge to DOC, coded promotional by OCE employees.
OSCI 50 Year Anniversary - Print Job
$5610.73
A DOC Superintendent made the request to OCE for printing 500 aSCI fifty year
anniversary books on April 2, 2009.
Lisa Hall of OCE noted this as a promotional job.
The cost of the book for OCE was $5610.73, but DOC paid nothing.
$5000
Boy Scouts of America Banquet
Max Williams requested that OCE pay for the banquet table at the Boy Scouts dtnner
honoring Governor Ted Kulongoski.
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Declination Memorandum Regarding DOC/OCE
Page 18 of 19
•
•
•

•

•

•
•

•

•
•
•

Robert Killgore approved this.
This sponsorship cost OCE$SOOO.
However,OCE hoped that the Boy Scouts would also become future customers. Killgore
said for several years OCE donated to the Boy Scouts, but the Boy Scouts never ordered
any goods/services.
.
Special Agent Kim Hyde contacted the Cascade Pacific Council of Boy Scouts to see if
OCE or Williams gained anything from sponsoring the table and was told that dinner was
provided and aCE was recognized as a contributor to the event. Williams did not sit at
the OCE table and did not receive anything besides the dinner itself.
OCE continued for years to do discounted or free print jobs for Boy Scouts, which was
requested directly by the Boy Scouts.
DOC Shield/Superintendent's Office OSCI
$1960.09
This was a DOC request for a bronze shield for the Superintendent's Office.
Laura Osborn of OCE writes in an email that she hopes the DOC Superintendent
understands the "value" of what they are providing. She adds that she hopes it buys good
will for Lisa Hall, who worked at OSCI as an OCE employee.
According to an OCE invoice they donated $1960.69 and OSCI paid for $SOO. The
invoice is dated December 6, 2009. This is the large shield on the sign at the;entrance to
OSCI.
Boy Scouts of America Banquet
$SOOO
There is a DOC request made by Betty Bernt for OCE on September 8, 2010 for .
sponsorship of table at Distinguished Citizen Dinner for $SOOO.
Robert Killgore approved this expenditure.
OCE also donated mailing and print services (over $3000) to the Boy Scouts from
September to December.

Military Coins
$2882.78
.
• . A DOC employee and representative of Homes for Our Troops appear to have signed
request for helping to purchase military coins.
.
• OCE's Request for Donation listed the expense as "Homes for Our Troops" and the
contact person was a DOC employee. The organization is a SOI(c) (3) and assists
severely injured servicemen and women in housing to fit their needs.
The coins made were worth $2882.78.

•
•

Computer Kiosks for DOC Central Distribution Center
$1344 & $2496
Two donation requests were made by a representative of the Governor's Re-Entry
Council for the kiosks to OCE. The description given for the donation request was that
the council works on identifying and minimizing barriers offenders have when
transitioning out of the correctional system.
The request was signed by Killgore on November IS, 2010.
The items are listed as charitable donations and the total for 20 computer kiosks was
$3840

610 Hawthorne Ave. SE, Salem, OR 97301
Telephone: (503) 378-6347 Fax: (503) 373-1936 TTY: (800) 735-2900 www.doj.state.or.us

Declination Memorandum Regarding DOC/OCE
Page 19 of 19

•
•
•
•
•

•
•

•
•

Officer Herron Funeral Expenses
$2484.63
Funeral expenses for a slain correction officer from EOCI, Buddy Herron.
Shuttle for family
$ 132.97
Honor Guard expenses
$ 302.81
Rental of facility
$ 420.00
Lodging for family
$ 1673.85
An e-mail dated November 29,2011, from Betty Bernt, an employee of DOC, to EOCI
Executive Assistant to the Assistant Superintendent of EOCI, and Mitch Morrow was
CC'd regarding OCE paying for rooms.
.
November 30, 2011, Bernt e-mails Killgore and tells him they are paying for hotel rooms
and funeral expenses. The last thing she writes is "Mitch says thanks."
A December 1,2011, e-mail from Bernt to Morrow appears to be a condolence message,
but also an invitation to pay for costs of things that may arise. Above that paragraph is a
line that says; "How's this? Short, sweet and to the point. Does it need ailything else?"
An e-mail back from Morrow states, "Perfect." The condolence e-mail is sent out by
Berntto the superintendent of EOCI and several people are CC'd. The subject line is
"OCE Assistance."
Bernt also sends an e-mail to Morrow asking ifthere,is something they can do to give to
the family a plaque or commemorative badge and Morrow declines.
A December 12,2011, e-mail from Morrow to Bernt asks, "Any more crap about the
money. OCE spent on the funeral stuff? Maybe I don't want to know." Bernt writes back
"No more crap on the money. I'm trying not to bring it up."

. Approved by:

Darin E. Tweedt
Chief Counsel

J~-

610 Hawthorne Ave. SE, Salem, OR 97301
Telephone: (503) 378-6347 Fax: (503) 373-1936 TTY: (800) 735-2900 www.doj.state.or.us