Days before Gov. Sarah Palin is scheduled to leave office, the former vice presidential candidate is facing yet another legal distraction: An independent investigator found evidence she may have violated ethics laws by trading on her position as she sought money for lawyer fees.

A report obtained Tuesday by The Associated Press says Palin is securing unwarranted benefits and receiving improper gifts through the Alaska Fund Trust, set up by supporters.

An investigator for the state personnel board says in the July 14 report that there is probable cause to believe Palin used or attempted to use her official position for personal gain because she authorized the creation of the Alaska Fund Trust as the "official" legal defense fund.

The practical effect of the ruling on Palin will be more financial than anything else, although the fate of the tens of thousands of dollars in the fund is unclear, said Palin attorney Thomas Van Flein. The report recommends that the complaint be resolved without a formal hearing before the board. That allows her to resolve the issue without a formal ethics reprimand.

Palin posted an entry on Twitter in which she said the "matter is still pending," a statement echoed by Van Flein.

The fund aims to help Palin pay off debts stemming from multiple ethics complaints against her, most of which have been dismissed. Palin says she owes more than $500,000 in legal fees, and she cited the toll of the ethics probes as one of the reasons she is leaving office on Sunday.

Kristan Cole, the fund’s trustee, said organizers have frozen the fund pending the personnel board’s review. Many federal politicians, including Hillary Clinton, former U.S. Alaska Sen. Ted Stevens and others are routinely allowed to have such funds to pay off legal bills, but quirks in Alaska law can present ethics issues.

Van Flein said the potential loss of money from the fund had absolutely no bearing on Palin’s decision to resign.

He said Palin received the report 11 days after her July 3 announcement that she was leaving office. He also noted that the investigator recommended the governor seek reimbursement from the state for the cost of fighting ethics complaints that have been dismissed.

"It’s cheaper for the people of the state of Alaska to have the bills paid for through the trust fund," Van Flein said. "But if that can’t be done, then it looks like the state of Alaska could pay."

The investigator, Thomas Daniel, suggested that Alaska lawmakers may need to create a law that reimburses public officials for legal expenses to defend complaints that end up being unfounded.

Palin’s friends and supporters created the Alaska Fund Trust in April, limiting donations to $150 per person. Organizers declined to say how much it has raised, and had hoped to raise about $500,000. A Web-a-thon last month brought in about $130,000 in pledges.

In his report, Daniel said his interpretation of the ethics act is consistent with common sense.

An ordinary citizen facing legal charges is not likely to be able to generate donations to a legal defense fund, he wrote. "In contrast, Governor Palin is able to generate donations because of the fact that she is a public official and a public figure."

The ethics complaint was filed by Eagle River resident Kim Chatman shortly after the fund was created, alleging Palin was misusing her official position and accepting improper gifts.

"It’s an absolute shame that she would continue to keep the Alaska Fund Trust Web site up and running," Chatman told the AP.

At least 19 ethics complaints have been filed against Palin, most of them after she was named the running mate for GOP presidential candidate John McCain. Most of those have been dismissed, although one was resolved when Palin agreed to reimburse the state more than $8,000 for the costs associated with nine trips taken with her children.

John Coale, a Washington lawyer who helped set up the fund, called the probable cause finding "crazy," adding that if upheld, it would mean that no governor could ever defend themselves against frivolous ethics complaints.

"Anybody can keep filing ethics complaints and drive someone out of office, even if you’re a nut," Coale said.

Unlike other states, he said, Alaska has no legal counsel’s office devoted to defending the governor from allegations brought against her in her official capacity.


Associated Press reporter Matthew Daly in Anchorage contributed to this report.

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