CHARLESTON, W.Va. (Legal Newsline) - Critics of West Virginia Attorney General Darrell McGraw say the state's top lawyer should take heed, pointing to New Hampshire Attorney General Michael Delaney's own appearance before a legislative council this week.
Concord Patch reported Delaney was scheduled to appear before Gov. John Lynch and the state's Executive Council Wednesday, seeking approval to use funds from New Hampshire's portion of the nationwide mortgage settlement.
McGraw, who is seeking reelection in November, has spent a chunk of West Virginia's share of the settlement without any legislative approval.
In May, McGraw used some of the funds to open a satellite office in Martinsburg, a city in the state's fastest-growing region.
The office is funded for three years by the deal with mortgage servicers Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp.
The nationwide settlement, reached in February between federal officials, 49 state attorneys general and the banks, is worth $25 billion but only covers those mortgages held by the five banks, not Fannie Mae or Freddie Mac.
West Virginia received more than $33 million in funds from the deal to help struggling homeowners.
McGraw then decided in June to dole out $1 million from the settlement to Legal Aid.
The move allows the nonprofit organization -- the sole provider of no-cost legal assistance with housing, income security and safety issues for the state's low-income or "vulnerable" citizens -- to continue to operate its office in Logan and Mingo counties for the next three years.
West Virginia Citizens Against Lawsuit Abuse, a legal reform group that is often critical of the attorney general, calls McGraw's continued spending of settlement funds without any legislative oversight or approval "disturbing."
"While attorneys general in states such as New Hampshire must typically seek approval to spend state settlement funds, McGraw continues to unilaterally spend West Virginia's money as if it were his own personal slush fund," Richie Heath, executive director of the group, said Wednesday.
"Earlier this year, McGraw decided on his own to 'donate' a whopping $1 million in state funds to one of the attorney general's pet projects. And McGraw also spent state settlement funds on a 'satellite' office that state lawmakers have previously refused to fund."
Heath said some state lawmakers are starting to take notice, and question, McGraw's actions.
Back in June, state Sen. Corey Palumbo, D-Kanawha, told the West Virginia Record that any settlement funds should be turned over to the Legislature first.
"I think that Legal Aid is a good cause and is worthy of support," the Senate Judiciary Committee chairman said at the time.
"But the question is whether that money should be appropriated by the Legislature, since it is money coming back to the state through that lawsuit."
He continued, "It's the constitutional duty of the Legislature to appropriate funds, and that's what we should be doing."
However, Palumbo noted he understands that court orders sometimes are specific in their direction of settlement money.
In this case, West Virginia's share of the nationwide mortgage settlement -- like the other 48 states -- is earmarked to help struggling homeowners, Deputy Attorney General Jill Miles told the Record in June.
"There is a provision in the court's order that the money be used for housing-related issues," she said. "It's not within our province or the province of the state Legislature (to use it for other purposes). It has been mandated by the federal district court of the District of Columbia."
But Heath contends the attorney general is spending money on "pet projects" to simply boost his political prospects.
"West Virginia Citizens Against Lawsuit Abuse's latest research shows Attorney General McGraw has unilaterally spent more than $430,000 of state settlement funds on advertisements that conveniently promote the attorney general's name at the same time he is running for reelection," he said Wednesday.
"It's an insult to West Virginia workers and their families that McGraw continues to waste state funds for seemingly his own political prospects, and not for the greatest benefit of all West Virginians."
Heath argues that the attorney general can't be trusted to spend state funds responsibly and that lawmakers need to take action to hold him accountable and make sure monies are appropriated properly.
"McGraw's actions are out-of-step with how attorneys general typically function, and continue to give West Virginia a bad reputation," he said.
Patrick Morrisey, McGraw's GOP opponent in the state's Nov. 6 election, agreed.
Morrisey, also taking note of the New Hampshire attorney general's actions, called McGraw's methods "wrong" and vowed to put a stop to them.
"There's bipartisan agreement across the country that it's wrong for Darrell McGraw to treat this settlement money as his personal slush fund," the Eastern Panhandle attorney said in a statement Wednesday. "As attorney general, I'll give that money to the Legislature and the taxpayers, where it belongs.
"Unfortunately, McGraw sees settlement money as a way to boost his lagging political support in an election year."
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.