The state auditor of Iowa is not a “sexy office,” former Assistant Attorney General Rob Sand told me earlier this fall. “But it’s a huge opportunity for public service, because I think that the way that it’s run right now, there’s a lot of low-hanging fruit for improvement.”

Sand kicked off his candidacy this morning with a website and Facebook page. He’s been tweeting for some time at @RobSandIA. His opening video is here. At the end of this post I’ve enclosed Sand’s campaign committee, including activists and elected officials from many parts of the state as well as Iowa Attorney General Tom Miller and former Attorney General Bonnie Campbell.

Sand discussed with Bleeding Heartland how he would approach the job and why he is running against Republican incumbent Mary Mosiman, a certified public accountant who has served as state auditor since 2013. Although this office is not the obvious choice for an attorney, Sand considers his experience prosecuting white-collar crime “my biggest qualification” and a key reason he could improve on Mosiman’s work. Moreover, he’s not afraid to call out a “historically irresponsible” state budget.

“POLITICS WAS SUPPOSED TO BE MUCH MORE ABOUT PROBLEM-SOLVING THAN ABOUT PARTISANSHIP”

Raised in Decorah by registered independents, Sand was exposed to civic engagement not connected to a political party from a young age. Both his parents were active local volunteers. Habitat for Humanity was a focus for his mother, while planting trees was his father’s passion. “And so to me, growing up, politics was supposed to be much more about problem-solving than about partisanship.”

Sand recalls hearing President Bill Clinton tout a federal budget surplus in one of his State of the Union addresses. As a high school student, he felt good that his cohort would not be “busting our tails to pay off red ink from past generations.” But when he was old enough to vote, he registered as an independent, like his parents. Before long, he became a Democrat, realizing you need to be able to vote in primaries to “maximize your own impact” politically.

His first foray into political activism wasn’t connected to any election, though. He and his skateboarder friends didn’t have many options in Decorah’s small downtown and kept getting kicked out of places they liked to skate. So during his junior and senior year of high school, he worked on persuading local residents, the Parks and Rec Board, and city council members to support a public skate park. By the time they poured the concrete, he had graduated from high school, “But it was a really eye-opening project for me in terms of attracting me to public service.”

Sand has been volunteering for Democratic campaigns since 2004, when Paul Johnson, who was from Decorah, challenged U.S. Representative Tom Latham in what was then Iowa’s fourth Congressional district. While in law school at the University of Iowa, he supported Barack Obama before the 2008 caucuses.

Because he is “very curious about people,” Sand has a particular affinity for door-knocking. “With most folks, if you talk to them long enough, you learn a little bit about something about either about the world or about how they view the world, which is usually pretty interesting.” He does some canvassing before every general election and then some. He volunteered in Fairfield for Curt Hanson’s Iowa House special election campaign in 2009 and was back there this summer, knocking on doors for House candidate Phil Miller. Just last week, he was chasing absentee ballots for his friend Josh Mandelbaum in the Des Moines City Council Ward 3 race.

Sand has also applied his legal skills as a volunteer, taking a few weeks of unpaid leave from the Attorney General’s office in the fall of 2016 to do election protection and voter integrity work for Hillary Clinton’s campaign.

“THERE’S A BIG WINDOW FOR A POSITIVE IMPACT”

First-time candidates often set their sights on a local office or state legislative seat. Not many people think about running for state auditor, Sand acknowledged. What made this job attractive to him?

What I have found in seven years of working at the AG’s office is that my universe is very small. And I think this is partially the nature of the practice of law. I get handed a case. I can work on that specific case, that story, that set of facts. I work on an investigation. OK, well, we further that investigation, we grow it, we look into all possible leads and avenues. But fundamentally, it’s still a very limited universe in terms of what we can do. There’s not a lot of room for bigger thinking, there’s not a lot of room for creativity.

Prosecutors charge criminal conduct, and most of the time, the legal process produces “a good result.”

I think we have a good judicial system. But we’re still, for the most part, only affecting that one case. Now, that’s important work to do. We have to have people doing that work. It’s essential to having order in our society.

But it is limiting in the sense that what I can do every day when I go to work in the AG office, really, is mitigate darkness. And there’s a, there’s a happy, positive side of me that I’ve always had, that wants to do more than that. That wants to work on promoting actual improvements in the way the government operates, as opposed to just responding to a crime that someone else has committed in trying to make the situation as good as we can make it.

But fundamentally, you know you can’t. If someone has been misled and lied to by an investment adviser, you can’t give them their trust in other people back. If someone’s been sexually abused, you can’t take away their fear. If someone’s been murdered, you can’t bring them back to life. There’s a limit to what we can do there.

Even though many people wouldn’t consider the state auditor’s job exciting, Sand sees a lot of potential. Having observed how the state auditor’s office currently operates, “I think there’s a big window for a positive impact.”

FINANCIAL CRIME AS “A PARTICULARLY INSIDIOUS FORM OF DARKNESS”

“No one else has prosecuted more of Iowa’s public corruption or major financial crime over the last decade,” begins the “about” page on Sand’s campaign website. How did he get interested in that area of the law?

It was really something that I felt passionate about, and in part, because it’s about holding people who have power accountable, right? White-collar criminals are not desperate. They’re not drunk, they are not in a fit of passion when they’re committing their crimes. They are thinking about it over and over and over again, and choosing over and over and over again, on a weekly or monthly basis to steal money. And that to me is a particularly insidious form of darkness. There’s really no excuse for it.

You have someone who has this access to money. And usually, that access to money means that they are employed. So they actually have a job. And yet they’re abusing that power and privilege that they have as an insider, in order to enrich themselves at the expense of the public. And that motivates me a lot more than other forms of crime.

And I’ve prosecuted pretty much, you name it. Robbery, murder, attempted murder, sexual abuse. Any upper-grade felony in the state, save a couple, I’ve had at least one [case] over the last seven years. It all needs to be prosecuted. But I particularly have a passion for holding people accountable when they have positions of power and they abuse that power to help themselves or their friends.

While in law school, Sand did an unpaid summer internship at the Iowa Attorney General’s office, mowing lawns and “mucking out collapsed basements for a landlord in Des Moines in my off time.” A good review led to an offer to join a project for the AG’s office during Sand’s final year at the University of Iowa. He did that job for free, because his position as editor in chief of the law journal didn’t permit any paid legal work. By a stroke of luck, the state lifted the hiring freeze imposed during the “Great Recession” around the time Sand graduated.

The Film Office tax credit scandal was underway, and the Iowa Department of Economic Development had provided money to hire someone to help clean up the mess. Deputy Attorney General Thomas H. Miller interviewed Sand and learned of his desire to prosecute white-collar crime, just as they were looking for someone to work on such cases. Sand later moved to Area Prosecutions and became the lead financial prosecutor for the state. He left that position in September.

A lottery fixing scheme was the best-known case Sand prosecuted. “It’s hard to beat a nationwide investigation that results in seven fixed lottery tickets over five states, that ends with an eight-party plea agreement between six states and two defendants. That story kept getting crazier and crazier the more that we dug.”

Another one though that I think we really broke real ground on was the case against David William Johnson, who’s currently sitting in prison for lying to longtime family friends as an investment adviser, in order to steal their money and support his own family instead of investing for them.

That “bizarre” case grew out of a Ponzi scheme in Papua New Guinea, a land of many pyramid schemes during the last two decades. A self-proclaimed king and separatist group leader on the small island of Bougainville established his own bank and a currency called the kina.

Because it was a gold-backed currency, he claimed it was a gold backed currency, it found its way to a lot of the political extremists in the United States, who are, who may be sovereign citizen types. David Johnson was one of them. And so he essentially solicited these people that he had known, many for his entire life, to invest and then just turned around and spent all the money they gave him–hundreds of thousands of dollars–to support himself, his family, and his ten kids.

Johnson had been a licensed financial adviser, so should have realized that a 36 percent annual return on investments in “kina” was a red flag for a Ponzi scheme. Instead, he took advantage of people who had known him and his family for decades. They trusted his promises of “pie in the sky returns,” and many had their savings wiped out. As far as Sand knows, no one else outside Papua New Guinea has prosecuted fraud connected to this particular fake bank in Bougainville. An Australian academic and expert witness for the State of Iowa on this case was not aware of any comparable criminal investigation.

Sand is also proud of the Film Office prosecutions, which resulted in “a lot of felony hconvictions.” Those cases were difficult to prove because the “incredibly poorly” designed tax credit program “was so lax.” In a nutshell, filmmakers inflated expenses “to absurd levels” (“$250 to rent a shovel for six weeks, $1,350 to rent six orange road cones for six weeks”) for transferable tax credits they could sell to people with a tax liability.

“IT’S SUPPOSED TO BE ABOUT QUESTIONS THAT BIG”

In early conversations with Iowans about his possible candidacy, Sand noticed that many asked questions unrelated to “financial issues, or promoting a good and efficient government, which is really the focus” of the state auditor’s job.

Gubernatorial candidate Jon Neiderbach has remarked that “most people have no idea what a state auditor really does,” so as the Democratic candidate for that office in 2014, he used to ask voters broadly, “How do you think Iowa government is working?” When I mentioned Neiderbach’s anecdote, Sand agreed,

That is supposed to be what it’s about. If you look at the legislature’s mandate and what the auditor is supposed to do, it’s promoting good government. It’s promoting efficient government. It’s isolating best practices, not in terms of how you handle your cash, but how do you save taxpayer money? How do you treat every one of those dollars as part of the sacred trust that we all have with each other to rule ourselves?

And if you use it that way, [the office] can be about questions that big. It’s supposed to be about questions that big. How are we doing in state government, in terms of the fiscal issues? And that’s the thing that I think is most lacking right now.

The main Republican talking point against the Democrats running for state auditor in 2010 and 2014 was that a CPA is most qualified for the position. How would Sand respond?

So I’ve in the last seven years prosecuted more public corruption and more fraud than anyone else in the state. Probably than anyone else in the state in the last decade. I’m the first person in the Attorney General’s office that’s had a focus on financial fraud. And I’ve been the lead financial crime prosecutor there for the last five years.

When the auditor’s office issues a special investigation, chances are if there’s any one prosecutor that’s going to take it, it’s me. I’ve done a lot of work with the people in that office over the last seven years. I like the people that I work with there. But I think there are management and directional issues and priority issues that exist at the top that need to be changed.

“I THINK WE HAVE TO WAKE THE WATCHDOG UP”

A prosecutor can’t do anything about financial misconduct that doesn’t rise to the level of a criminal act. In contrast, the auditor can talk about better use of resources. Special investigations by the auditor’s office distinguish between “improper” spending (a crime), “unsupported” spending, and disbursements without a clear public purpose. Sand sees

a real missed opportunity in terms of promoting good government. When you read the code, the Iowa legislature wants the auditor to be the taxpayers’ watchdog. And right now, I think we have to wake the watchdog up.

They don’t promote, you know, the auditor–and this came up in the 2014 race. The auditor’s not particularly interested in promoting best practices for efficient use of taxpayer money. They talk about best practices, but when they do, it’s usually in regard to handling cash and accounting issues. But there’s so much room for improvement in terms of making sure that taxpayer dollars are used more effectively, which to me, whatever your issue is, you’ve got to care about that.

In a 2014 radio debate, Mosiman disputed that her office should be doing more to detect fraud or theft in its annual financial statement audits. Neiderbach countered that state code “makes it very clear the auditor should be a passionate advocate for making government more efficient and more effective, not just doing the basic CPA work.” He assailed “grossly inadequate audits that leave out lots of things that would save taxpayers money and improve services.”

Mosiman insisted that if her office did what Neiderbach was advocating, they would be duplicating work of the Legislative Services Agency and the Department of Management. Her comments to a Quad-City Times reporter in the late stages of that campaign were even more astounding.

“Most every entity in the state is required to have an annual audit,” Mosiman said. “That audit is not designed to catch fraud, but to ensure that the financial position of the government entities is correctly presented.”

Although some think the office is there to catch fraud, that is not the case, she said.

“In reality, frauds are sometimes caught by annual audit work in simple documents,” Mosiman said. “But mostly, frauds are brought forward by tips by individuals.”

You could almost see the steam coming out of Neiderbach’s ears.

Our tax money is at risk until a whistleblower steps forward, it is scary to think how much is being stolen while we wait…and being a whistleblower in Iowa’s smaller towns is really hard. BUT THERE’S MORE: Her comments mean that every potential embezzler now knows they have little to fear from annual audits, making theft more attractive. Think of the impact if the IRS announced its audits weren’t designed to find fraud.

“YOU HAVE A BUDGET THAT IS HISTORICALLY IRRESPONSIBLE FOR THE STATE OF IOWA”

Sand expressed regret that the Iowa Department of Natural Resources shut down its forestry division this summer.

That forestry division is important for protecting and conserving Iowa’s natural resources. But it’s closed now, because we haven’t been efficient in managing taxpayer dollars, and so we’ve had to make all these cuts.

Look at the cuts to education. There’s cuts all across the board. And we haven’t had someone in the auditor’s office who’s been interested in actually figuring out where to target cuts, versus what should we be protecting because it turns out to be a good investment of taxpayer money. And that’s, and that’s even aside from the bigger overarching issue, which I think is, this auditor’s endorsement of an irresponsible budget.

This spring, Neiderbach highlighted the folly of planned cuts to Child Support Recoveries in the Department of Human Services budget. According to Neiderbach, who used to work in that agency, child support enforcement brings in more money than it costs. I asked Sand about that.

Right. And I think that’s supposed to be part of the role of the Auditor’s office. I mean, you look at Iowa Code Chapter 11.4 that talks about conducting audits. They’re supposed to promote efficiency. They’re supposed to eliminate duplication. They’re supposed to essentially be making sure that the best results are being gained for every dollar spent. So, if child support collection services pays for itself, then that’s good money to be spent. […]

But if you don’t have somebody talking about that, and considering that, which is the role of the auditor’s office, then we make bad cuts, because we’re not making informed cuts.

In June, Mosiman vouched for the state budget for fiscal year 2018 as “stable” and “responsible.” Sand’s take?

It’s fundamentally disappointing to me. I don’t really–I would love to have a sharp-eyed auditor that was really acting as the taxpayers’ watchdog and calling out bad budgets for bad budgets, regardless of party affiliation. Because that’s what they’re supposed to be doing. But that’s not the case right now.

I mean, you have a budget that is historically irresponsible for the state of Iowa. We’ve got a requirement to have a balanced budget and to set aside 10 percent every year. And yet here we are using emergency funds, when the economy is not in the tank, to cover ordinary expenses. I mean, calling that responsible is like having a two-income family where one of the adults, one of the parents quits their job and says, “Eh, we’ll just run up a credit card bill. That’s responsible.” That’s fundamentally what she’s saying. And that to me is just disappointing.

I don’t want to say that. I would love to say that she’s done a good job and that she’s right, it’s a responsible budget. Or I’d love to be saying that she called it what it was, that she called it irresponsible. But she seems to be siding with a partisan view of the budget than a fact-based one.

Since I recorded this interview, the state’s Revenue Estimating Conference lowered projected revenues for the current fiscal year, making spending reductions a near-certainty in early 2018. So much for a “stable” budget.

LIKE A FOOTBALL TEAM WITH QUARTERBACKS PLAYING ALL ELEVEN POSITIONS

What insight has Sand’s work given him on how state audits could be improved?

So, I like everyone that I’ve worked with at the auditor’s office. They’re passionate. They care a lot about protecting taxpayer dollars. But in terms of the management and the leadership of the office, I think there’s a myopic focus.

Anytime you want to get something accomplished, I think you want to have a good team with different people with different backgrounds on it, so you can make sure that you’re addressing things from every angle.

Part of the issue that I’ve noticed is that they have, I think, 30 CPAs in that office. They have accountants in addition to those CPAs. They don’t have a single person with criminal prosecution experience or financial prosecution experience. They also don’t have anyone with a law enforcement background in financial crimes.

The CPAs that they have are very good and talented people, but it’s like having a football team where because you really like quarterbacks, you have a quarterback play all eleven positions. So you have five quarterbacks on the offensive line, you have a quarterback playing quarterback and a quarterback being running back, and a quarterback playing tight end, and maybe two quarterbacks playing receiver, right?

They all might be really good quarterbacks, but your team is going to lose every game, because you need to have specialized players in those specialized positions to get the best results.

In some cases, where Sand prosecuted a defendant following a state audit, he didn’t use the analysis from the auditor’s office, because that document wasn’t created with “a court case in mind.” No one who had prosecuted financial crimes worked on it.

And so I’ve had to set it aside and then have my investigating officer–whether a Division of Criminal Investigation special agent or a local police officer–sort of redo the financial aspect of it to get to a much more barebones easy to understand, very plain and easily supported factual conclusion with no assumptions built in that can provide proof beyond a reasonable doubt.

That office would benefit from having someone who can look at those investigations and those reports while they are still in the process of being prepared, at the start of them–not after they’re finished, to help guide them.

Again, I reminded Sand that during the 2010 and 2014 campaigns, Republicans talked down the Democratic nominees for state auditor, because they weren’t CPAs.

I think that’s my biggest qualification. You have 30 CPAs in that office. Tell me how Iowa taxpayers benefit more from having a 31st CPA than from having a first, the only, person in the office with a background in prosecuting financial crime. It’s a different skill set that the office needs. It’s relevant to the work, right? They don’t have it right now.

Having a 31st CPA, I mean, it’s not like a punch card where you get a free audit now that you have your 31st CPA. It’s a question of value added. And in the office that’s supposed to be promoting value for taxpayers, we should get that value out of diversifying that team to make sure that the products that are coming out have been looked at from a lot of different backgrounds. […]

What good is a CPA who thinks that spending emergency funds to balance the budget is responsible? And this is just a common sense issue. You don’t need a CPA, you don’t even need a financial crimes prosecutor to look at that and know that that’s just wrong. And so I don’t think that there’s–I just don’t think that’s going to carry much water.

Sand has already done some traveling around the state and spoken at a few Democratic events. From now on, he’ll be campaigning full-time, talking to voters “in every corner of every county,” not just about criminal investigations but also about reorienting the auditor’s office to promote government efficiency. “We are really in dire need of someone who’s doing that, who’s using that platform to do that in Iowa right now.”

In Sand’s view, this aspect of the auditor’s work affects everything else that matters to Iowans, “whether it’s mental health, or education or environmental protection, or agricultural supports. Whatever it is, that issue will benefit from a leaner government that is doing more with less by trimming the fat.”

Bring it on.

Sand For Auditor Campaign Committee

Tom Miller, Des Moines, Attorney General
Bonnie Campbell, Des Moines, Former Attorney General
Scott Brennan, West Des Moines, Former Iowa Democratic Party Chair
Rob Hogg, Cedar Rapids, State Senator
Pam Jochum, Dubuque, State Senator
Daryl Beall, Fort Dodge, Former State Senator
Chris Hall, Sioux City, State Representative
Stacey Walker, Cedar Rapids, Linn County Supervisor
Kingsley Botchway, Iowa City, Mayor Pro-Tempore
Kurt Meyer, St. Ansgar, Tri-County Democrats Chair
Tanner Halleran, Keokuk, Keokuk County Democrats Chair
Sam Gray, Marion, Linn County Democrats 2nd Vice Chair
Lilian Sanchez, Iowa City, University of Iowa elected student leader
Penny Rosfjord, Sioux City, Woodbury County Activist
Ian Russell, Bettendorf, Scott County Activist
Sara Riley, Cedar Rapids, Linn County Activist
Laura Hubka, Riceville, Winneshiek County Activist
Jack Wertzberger, Dubuque, Dubuque County Activist
Courtney Vorwald, Elkader, Clayton County Activist
Elesha Gayman, Davenport, Scott County Activist
Amanda Bahena-Ortega, Sioux Center, Community Leader
Larry Grimstav, Decorah, Community Leader
Ravi Patel, Burlington, Des Moines County Business Owner
Rich Eychaner, Des Moines, Polk County Business Owner

Top image: Photo of Democratic state auditor candidate Rob Sand from the front page of his campaign website.