Former North Dakota Workers Compensation Director Convicted

North Dakota’s former workers compensation director has been convicted on the more serious of two felony charges that he misspent public funds. It carries a possible 10-year prison term.

Sandy Blunt’s attorney, Michael Hoffman, said his client will appeal. He argued the presiding judge in the case should have dismissed the charge during Blunt’s five-day trial.

Blunt, 44, who was chief executive officer of Workforce Safety and Insurance for almost four years, stared impassively at South Central District Judge Bruce Romanick as he watched the judge read the verdict late Friday. Blunt declined comment afterward.

Romanick ordered a presentence investigation for Blunt, who remains free on his promise to show up for future court appearances. His sentencing has not been scheduled.

Blunt had faced two felony charges of misapplication of entrusted property. Jurors found him guilty of the more serious charge, which carries a maximum penalty of 10 years in prison and a $10,000 fine.

Jurors concluded Blunt was responsible for paying more than $10,000 in illegal expenses. Prosecutors claimed Blunt improperly endorsed $26,401 in payments, including extra moving costs and sick leave for a healthy WSI administrator, gift cards for employees, and refreshments and trinkets for regular meetings of WSI workers.

Blunt continued the spending even after other state officials and his own employees warned him the expenses were questionable, trial testimony indicated.

Blunt was acquitted of a separate felony charge that he paid $7,509 in illegal bonuses to his secretary, two agency executives and its top attorney. The charge carried a maximum penalty of five years in prison and a $5,000 fine.

Blunt, who did not testify during his trial, described the payments as retroactive salary increases.

Jury members declined comment Friday as they left the Burleigh County courthouse. One wiped away tears and the eyes of a second juror brimmed with tears. Jurors debated the case for almost nine hours over two days.

Cynthia Feland, an assistant Burleigh County state’s attorney, said Blunt at minimum should be required to repay the misspent funds.

Asked if Blunt should serve time in prison, Feland replied: “I think that anybody who uses public funds in the fashion that Mr. Blunt used them clearly is putting themself in a position where they could be looking at doing some time.”

Hoffman, Blunt’s attorney, said his client does not deserve prison time. “He’s an exemplary citizen and he has no record. Why would you put somebody like that in prison?” Hoffman asked.

During Blunt’s trial, Hoffman argued that his client’s actions were endorsed by a board of directors that oversaw his work.

“I don’t think there was a crime committed here. (The verdict) does surprise me. This case has been basically surreal,” Hoffman said.

Romanick should have dismissed the charge for which Blunt was convicted, he said.

During a meeting with lawyers in his chambers on Wednesday, Romanick ruled that a $15,279 safety training grant paid to the North Dakota Firefighter’s Association was not a crime, Hoffman and Feland said. Jurors were directed not to consider it during their deliberations.

Romanick’s ruling was tantamount to an acquittal of Blunt on the dispute about payment of the firefighters’ grant, and Blunt should have been found not guilty of the felony charge then, Hoffman said.

Feland disputed Hoffman’s analysis, saying Romanick’s ruling was not an acquittal. She compared it to the exclusion of a single piece of evidence against Blunt.

The criminal case against Blunt grew from an October 2006 state audit of Workforce Safety and Insurance, which questioned the agency’s spending and management practices.

He was charged in April 2007 with two felony counts of misspending public funds, and a third charge of conspiring to use confidential state driver’s license photos as part of an investigation.

Prosecutors later dropped the conspiracy charge, and South Central District Judge Robert Wefald threw out the other two, ruling that prosecutors had not shown Blunt benefited personally from the disputed expenses.

The North Dakota Supreme Court reinstated the two charges last June, ruling unanimously that prosecutors did not have to show Blunt was enriching himself. Prosecutors never claimed Blunt kept any of the allegedly misspent money.

Workforce Safety and Insurance provides medical, rehabilitation and wage benefits to workers who are injured on the job. The agency has more than 230 employees and a two-year budget of $53.2 million.

North Dakota law gives WSI monopoly status as the state’s only provider of workers compensation insurance, which businesses are required to buy. The agency covers more than 19,000 businesses and handles more than 21,000 claims annually.

Blunt, a former Ohio workers compensation executive, was hired as WSI’s chief executive officer in April 2004. He was dismissed by the agency’s board of directors in December 2007, eight months after the criminal charges were lodged.