Should the elected treasurer in Adams County have to pay the cost of defending herself from a lawsuit her own county commissioners filed against her accusing her of incompetence?

It’s an intriguing enough question that the Colorado Supreme Court has decided to weigh in, perhaps sensing a larger constitutional issue at play. On Aug. 10, the state’s high court ordered both Adams County and a district judge to “show cause” as to why the county isn’t responsible for covering the cost of Lisa Culpepper’s legal defense.

The justices set Sept. 7 as the deadline for a response from the county and Adams County District Judge Mark Warner, who on Aug. 1 ruled that he’d “decline to specifically order payment of attorney fees at this time.”

“I can say the Supreme Court was concerned enough that they asked the county and judge to explain themselves,” said J. Kirk McGill, an attorney with Hall Estill, a Denver-based law firm that is representing Culpepper. “It would appear they see the danger to the treasurer’s office.”

Adams County sued Culpepper nearly a year ago, alleging the office under her leadership committed shoddy bookkeeping and failed to account for more than $200 million in taxpayer funds. Early this year, the county’s finance director said problems at the treasurer’s office were hampering her ability to complete a required annual audit, without which state officials could withhold millions in property tax proceeds and “possibly bring county operations to a halt.”

The county requested that a receiver be appointed to set things right in the department, though Warner himself determined in May that he lacked the authority to do so.

While the county did pay for Culpepper’s defense starting last fall, it stopped doing so in April of this year, McGill said. Unpaid legal bills, he said, are approaching a quarter of a million dollars, as pieces of the complex and convoluted case have woven their way through district court, the court of appeals and the Supreme Court several times over with no resolution thus far.

But the more salient issue behind the lack of payment, McGill said, is its impact on the concept of separation of powers between elected offices in Colorado and the potential erosion of the checks and balances system that exists to ensure no one branch of government holds undue sway over another.

Culpepper’s nominal legal counsel as treasurer is the county attorney’s office in Adams County, but as that office sued her on behalf of the county commissioners last October, it can’t represent both sides. That compels the county, McGill argued to the Colorado Supreme Court in a recent motion, to pick up his client’s legal tab.

“The (board of commissioners’) abuse of the power of the purse denies the treasurer’s (office) the ability to defend themselves from the very lawsuits the (commissioners) initiated against them,” he wrote. “This, in turn, renders those proceedings a farce because, having neutered their opponents’ ability to defend themselves, the (board of commissioners) has ensured that the outcome is a fait accompli.”

Absent intervention by the Supreme Court, McGill wrote, “Colorado’s constitutional framework for the separation and diffusion of power within local government is a dead letter in Adams County.”

Adams County wouldn’t address the issue of legal fees when asked to do so by The Denver Post, with county spokesman William Porter saying he could not comment on “pleadings that are in the process of being drafted.”

Porter did say that the county has had little success in gaining access to financial data from the treasurer’s office, which he said “has caused major impacts to county operations,” including an “inability to reconcile bank balances and accurately track revenue amounts and payments, and delays in completing required year-end reporting.”

There is still nearly $270 million in unreconciled and unposted funds at the treasurer’s office, which Porter said could negatively impact Adams County’s credit rating.

Culpepper, he said, has failed to comply with Judge Warner’s order that she adopt measures recommended in an audit, including reconciling all the county’s bank accounts to its software system, depositing and processing all outstanding payments to the county and issuing all outstanding payments authorized by the county.

“We agree with the district court’s order and are in the process of vigorously ensuring county funds are fully and accurately accounted for,” Porter said.

Lessons from Tina Peters?

But McGill said the audit Adams County refers to is nothing more than a paid report, released in February, from consultancy Eide Bailly LLP. Formal audits of the county, performed by accounting firm CliftonLarsonAllen LLP, showed no red flags in Culpepper’s office, he said.

“The 2019 and 2020 audits were clean as to the treasurer’s office,” McGill said.

In the audits for those two years reviewed by The Post, CliftonLarsonAllen determined there were no “material weaknesses,” no “significant deficiencies” and no “noncompliance material to financial statements” in Adams County’s finances. Culpepper took office at the beginning of 2019.

McGill said the $270 million Adams County cites as unreconciled is, in fact, in the bank, simply awaiting proper paperwork from the various county departments to which the funds are due.

“It’s not missing money, it’s not money that has not been accounted for,” he said.

But his client’s ability to plead her case, he said, is hamstrung by her inability to afford a defense against a deep-pocketed county government that refuses to pay her attorneys.

“The Board of County Commissioners has created absolute power by not allowing the people who are supposed to have some of that power to use it,” McGill said. “We do not allow any one person or group of people to have all the power.”

Attempts last week to get law professors from both the University of Colorado’s and the University of Denver’s law schools to comment on the situation in Adams County were unsuccessful. But Mesa County Treasurer Sheila Reiner, who also serves as president of the Colorado County Treasurer and Public Trustee Association, said she would expect her legal defense to be covered were she sued by her county.

“I would hope that my representation in a case like that would be covered with county funds,” Reiner said.

Perhaps the best parallel to Culpepper’s situation in Adams County arises out of Reiner’s own county, where Mesa County Clerk and Recorder Tina Peters has made headlines for months after facing lawsuits from both the county and the Colorado Secretary of State’s Office over allegations of election equipment tampering and official misconduct. Peters also has been criminally indicted.

Stephanie Reecy, a spokeswoman for Mesa County, said county administration was clear with Peters from the start that it would not be covering her legal fees.

“We asserted that since her acts were intentional and outside the scope of her employment, the county would not fund her attorney,” Reecy said.

Peters initially tried to get Mesa County to pay her lawyers, Reecy said, but both sides “agreed to move the issue down the road to another time and we haven’t heard anything since.”

“We are not sure if the issue will arise in the future,” she said.

An attempt to reach one of Peters’ attorneys, Harvey Steinberg, was unsuccessful last week. Her other attorney, former Colorado Secretary of State Scott Gessler, declined to speak about his client’s case on the record.

As for the Colorado Secretary of State’s Office, spokeswoman Annie Orloff said since Peters is not an employee of her office, “we have no duty to pay for any of her legal expenses.”

“She could write me a check tomorrow”

Back in Adams County, nothing can move forward with Culpepper’s case until the Supreme Court makes a ruling about her defense costs and who should pay them. The justices in their Aug. 10 show-cause order declared that “all further proceedings are stayed until further order of this court.”

An attempt by Adams County to vacate the stay order was rejected by the justices on Thursday.

In the meantime, Culpepper’s immediate political future looks bleak. She failed to make the ballot during the county Democratic assembly in March, and is running as a write-in candidate for treasurer this fall.

The ironic thing, McGill said, is that his client could pay him and his colleagues right now from the millions of dollars in county funds she oversees. But without authorization from the commissioners to do so, he said, she won’t.

“She has the cash — she could write me a check tomorrow but she’d be violating the law,” he said.

Lynn Baca, chair of the Adams County commissioners, declined to comment last week, saying the issue was being handled by the county’s legal team.

McGill hopes the state’s high court addresses the larger issue of how to handle internecine legal battles between elected officials within Colorado counties when it finally speaks on the matter. Otherwise, he said, only the super wealthy who can pay for a team of lawyers, or those willing to reflexively rubber-stamp what commissioners tell them to do, will run for county offices.

“By taking away the ability from any elected person to defend themselves, we’re back to might makes right,” he said.