Mary Easley Scandal: NC State Document Dump Gives Inside Peek at How Deal was Done

Updated July 27, 2009

In a victory for advocates of government transparency, NC State University released to the public all of the documents subpoenaed by the federal grand jury currently investigating Mike and Mary Easley. The subpoenaed materials included official documentation related to Mrs. Easley’s position, as well as e-mails dealing with the creation of the position and the hiring of Mrs Easley.

Former Governor Easley has maintained since the scandal first broke in 2008 that he had no involvement in the creation of the position and the hiring of his wife at the Raleigh campus. But the emails released by NC State officials paint a different picture. The document dump included emails from Dan Gerlach, then a top Easley aide, discussing the creation of the position and the hiring of Mrs. Easley with NC State officials (Gerlach currently heads the Golden Leaf Foundation, a public-private venture charged with investing the proceeds from the federal tobacco settlement).

The released e-mails also revealed how prominent a role NC State’s provost Larry Nielsen played in the affair. Nielsen resigned from the post of provost on May 22, but remains with the Raleigh campus on “paid study leave” with no change in his $298,700 salary for six months. In late November 2009, his salary will be reduced to $156,000 per year as he returns to the faculty of the campus’s College of Natural Resources.

Mary Easley, however, did not receive any severance pay or notice of employment termination – which are required for all other NC State employees.

In addition to Schiller, the Easley's have retained the services of Fayetteville attorney Wade Byrd – a close political associate of Senate Majority Tony Rand, a top Democrat party fundraiser, and an experienced trial lawyer at the federal level – to assist them with the ongoing federal grand jury probe. In regard to former Governor Easley, the grand jury appears to be examining his role in his wife’s hiring at NCSU, as well as his alleged exchange of political favors for sweetheart real estate deals, free vacations, free cars, and free flights on private aircraft.

The Rest of The Story
A federal grand jury has subpoenaed records from the State Auditor’s office relating to a 2008 probe of then-First Lady Mary Easley’s travel expenses.

Last fall, the auditor's office, then led by Les Merritt, determined that state-funded trips Mary Easley took to France, Estonia and Russia while serving as first lady included "unreasonable and excessive expenses." Dennis Patterson, a spokesman for the Auditor's office, said he could not reveal whether the auditor's office had investigated Easley's controversial $170,000-a-year job at NC State University or anything else about her beyond the trips.

This new development provides yet another twist into a political scandal that is tying Raleigh’s political community into knots. Former Governor Mike Easley and his wife are the subject of an extensive federal grand jury probe focusing on free air travel and free cars the governor received while in office, as well as the details behind the creation of a position for Mrs. Easley at NC State University.

At the May 2009 press conference, Schiller, a Raleigh attorney, said Easley received the job "on her merits" and read letters praising Easley's performance.

Schiller said NC State should keep its promise to Easley.

Republicans in the state legislature were quick to respond to Schiller’s remarks.

"If Gov. Perdue cannot prevail upon her fellow Democrats to do the honorable thing, it will become necessary to eliminate state taxpayer funding for Mary Easley’s position,” said state Senator Phil Berger, the Senate Republican leader.

Sen. Berger got his wish.

The circumstances around Mrs. Easley’s employment have led to increased scrutiny by federal investigators of one of the flagship institutions in North Carolina’s university system, claiming the careers of Chancellor Oblinger as well as those of school’s second-ranking administrator and chairman of its board of trustees.  Both were subsequently subpoenaed to appear before a federal grand jury investigating whether Easley used her status as First Lady to raise contributions from individuals and corporate donors, including Blue Cross Blue Shield of NC, which administers the State Employees Health Plan, that ultimately went to pay for her own salary.

Dr. Larry Nielsen, the provost at NC State, resigned effective May 22 amid questions about his role in the hiring of former first lady Mary Easley. "I have chosen to resign because of the intense public attention and criticism from my hiring of Mrs. Mary Easley and now because of questions surrounding the way I was hired as provost," Nielsen said in a letter to the NCSU community.

On May 15, NCSU board of trustees chairman McQueen Campbell submitted his letter of resignation to Governor Bev Perdue, stating, "I am not resigning because I have acted inappropriately. Both the chancellor and the provost have communicated publicly and independently that the hiring process of Mary Easley was free from any improper influence."

Campbell had insisted that he played no role in Mary Easley's job at NC State. He denied having even a single conversation with university officials or Mary Easley before she got a three-year contract at $80,000 a year in 2005, or when she received a five-year, $850,000 contract that touched off controversy.  But Campbell's personal friendship with the Easley's is no secret; as a pilot, he treated then-Governor Easley to numerous private flights.

Bowles had publicly called for Campbell’s resignation a day before Campbell’s resignation letter became public. Campbell had six weeks left in his term on the board of trustees.

The Raleigh News & Observer reported that Nielsen hired Mary Easley in May 2005 while he was interim provost and was about to be replaced. A public search process involving four other candidates began on the same day that Mary Easley faxed her resume to Nielsen. According to the paper, Nielsen waived a job search, created a new position and hired Mary Easley for it two weeks later.

Nielsen has said the idea and the decision was his alone, but people involved in that search and university life say a temporary provost would not create a new position and fund it without consulting others.  The release of the Gerlach e-mails and other information has since documented that Gov. Easley, Oblinger and others were also involved in the hiring.

Some History
In the wake of controversy over large travel bills paid by the state, First Lady Mary Easley found herself the subject of further questions.

On the same day stories about her expensive state-funded trips through Europe were front page news across North Carolina, Mrs. Easley received an 88-percent pay raise for her job at NC State University.

Just like the stories about taxpayer-funded chauffeured luxury cars and $60-per-person meals in fine European restaurants, this large raise for a state position held by the governor’s wife was something that raised the ire of taxpayers, politicians, and journalists from across the political spectrum. At a time when Gov. Mike Easley had proposed giving state workers, including NCSU employees, a 1.5-percent salary increase in his 2008 budget plan, the spending excesses of the Easley’s weren’t taken lightly.

"I think the average rank-and-file state employee is going to be beside themselves and just feel like this is one more slap in the face," said Ardis Watkins, director of legislative affairs for the State Employees Association of North Carolina, in an interview with WRAL-TV.

Bob Hall, executive director of government watchdog group Democracy North Carolina, said the timing of the raise is pretty embarrassing for the Easley’s. "It just highlights the disparity and sort of arbitrary way money gets allocated here and there," Hall told WRAL. "We need to have rules and standards for how money gets spent, so there's not favoritism."

Even News & Observer political columnist Barry Saunders, a usually reliable defender of the Easley’s, had problems with the disclosures. “You don't need to be Orlando Wilson or some other great fisherman to know that there is but one rule to fishing: If a catch is too small, you toss it back. The opposite rule should apply in politics: If a catch is too big, you should throw it back – because … there is something fishy about that huge raise first lady Mary Easley received from N.C. State University. If she doesn't throw it back, Chancellor James Oblinger or UNC system President Erskine Bowles should reduce it … [N]o longer facing re-election and apparently having lost any taste for public life, the governor appears to be in the midst of an unseemly effort to cushion Lady E's and his return to private life.”

Then-Governor Easley told journalists he couldn’t understand the controversy surrounding his wife’s jump in salary.

"It's not a raise. She's taking a new position," the governor said. "She could go out with a law firm and make a lot more money, but she's decided to stay with public service."

Her previous salary was $90,300 a year, but that increased in July 2008 to $170,000 a year – an 88 percent increase – as part of a five-year contract (a full-time professor at N.C. State earns an average of $110,790).  The salary increase put the First Lady’s salary nearly $35,000 ahead of her husband’s then-gubernatorial salary of $135,854.

Jim Martin, a chemistry professor at NCSU and the elected faculty chairman is paid $101,000 per year as a full professor.

“When I see an adjunct faculty member being paid, you know, half again, if not close to double the salary of a faculty member, you can't help but say, ‘Why?' What is that telling all the rest of us who have made this commitment to public service?” Martin said.

Mrs. Easley told WRAL-TV that she wasn't bothered by criticism of her contract doubling her annual salary. She had then been an “executive-in-residence and senior lecturer” at the university for three years, developing a speakers program and teaching a graduate course in public administration and courses in the Administrative Officers Management Program, which provides leadership training to law enforcement officers.

Then-NC State Provost Larry Nielsen stated that Easley's salary "is within the range of similar management and law faculty and administrators at NC State and other universities."

In addition to her previous duties, said Nielsen, Easley would begin expanding the Public Safety Leadership Initiative to include first responders and security professionals. She was also to co-direct pre-law services at NC State and become the university's liaison with area law firms and law schools at other universities as she develops a dual degree program (NCSU does not have a law school).

About-Face: Flexible Rules for The First Lady?
To make the story even more interesting, the Associated Press reported on July 9, 2008 that the nearly $80,000 pay raise given to the governor's wife as well as other large pay raises were not reviewed by the university system’s governing board as required.

According to Hannah Gage, chairwoman of the UNC Board of Governors, university officials had previously decided at a meeting of UNC President Erskine Bowles, NCSU Chancellor James Oblinger, herself, and other officials that the raises would have to be approved by the board.

Other state universities have followed the policy properly, Gage said. But NC State apparently misinterpreted the policy and didn't bring other large pay raises to the Board of Governors.

The university system policy requires that proposed pay increases of more than 15-percent (or $10,000) be approved by a Board of Governors committee and the full board.

Mary Easley stated that she had been told that the Board of Governors must approve her raise and others, and Provost Nielsen agreed that Mary Easley's appointment had to be approved by the Board of Governors, along with similar positions and that the university had been interpreting its obligation differently under system rules. But two days later, the UNC system did an about-face. UNC system officials said that they were talking to campuses about its pay raise policy but would not order a statewide analysis in the wake of the unusually large increase for first lady Mary Easley.

NCSU officials claimed they didn't think that the university system policy applied to Easley's situation because it does not cover new job hires, which is how they considered her new appointment. But while her job was expanded and she received a fixed five-year contract, some of her duties and her title remained unchanged.

"We believed we were using the right approach in the way we were handling fixed-term contracts," said then-NCSU Chancellor James Oblinger on the university’s web site.

But less than a year later, almost everyone involved with Easley’s employment is backpedaling as fast as they can. It’s probably enough to make the Easley’s wish they’d paid for those dang cars.

In any event, it appears that current Governor Bev Perdue has learned from the troubles currently plaguing her predecessor. Her office felt compelled to issue a release to the media about her reimbursing private aircraft owners for her use of their aircraft.

Perdue has also reassigned five troopers from her security detail back to regular patrol duty. The five all had substantial experience guarding former Governor Easley and his family while Easley was in office. While Easley typically traveled with a security detail, Perdue has traveled on commercial flights without security, or on official aircraft with limited security.

Where will it end?
On July 26, time-stamped records from the special unit of the State Highway Patrol assigned to guard the first family while Mike Easley was governor surfaced, indicating that on average, Mary Easley worked fewer than three days a week for less than six hours each day.

Mary Easley doesn't seem to be bothered by all the criticism, nor by the wave of job losses created in her wake.  In a letter submitted to NCSU through her attorney on June 29, Easley announced that she plans to challenge her dismissal.