Prosecutor asks SBI to review allegations raised about House speaker Moore

Two years after then-House Rules Chairman Tim Moore’s legislation rescued a controversial south Durham mixed-use land project and boosted a high-end residential community next door, one of the developers took him on as his lawyer.

And two years after that, the same developer, Neal Hunter, gave Moore a legal services contract for a Durham-based pharmaceutical company Hunter had recently co-founded, paying him $40,000 for four months of work largely related to how federal tax law treated such startups.

Moore, a Cleveland County Republican who became House speaker in 2015, disclosed those details in an interview Friday about his private legal work. He was adamant he never mixed that work with his legislative duties.

But a state prosecutor told The News & Observer she has asked the State Bureau of Investigation to look into concerns about Moore’s work for Hunter and a separate case where Moore’s private legal work preceded controversial state legislation involving bail agents.

“Certainly, the allegations in both of these (cases), if they bear out to be true, seem to suggest a pattern of the use of public position for personal gain,” Wake County District Attorney Lorrin Freeman said.

She said her inquiry is not a criminal investigation.

Last month, The N&O reported on Moore’s contract for KNOW Bio, the pharmaceutical startup Hunter co-founded in late 2015. Anne Whitaker, a former CEO, said she learned about the contract shortly after she was hired in 2017 and later canceled it because she did not see it as a needed expense for a budding company. She said the work appeared to involve lobbying of federal officials.

Her account was confirmed by Harry Smith, the UNC Board of Governors chairman who had served on KNOW Bio’s board at the time.

Freeman said she learned about the contract from the N&O’s story. A few days before its publication, she said an anonymous letter arrived regarding Moore’s legal work for the North Carolina Bail Agents Association, a not-for-profit group that earns fees by providing training for those in the bail business. The letter, later sent to the N&O, alleged the association had paid $10,000 in a “legal retainer fee” to win his support for legislation that would prevent a for-profit competitor from offering the training.

Moore confirmed he worked for the association for that sum of money in early 2012, but said the allegations in the letter are “full of lies.” He said he represented the association regarding the training dispute in hearings and meetings before the state insurance department, which regulates the bail bond industry, but that ended his involvement. He said he spent “28 to 30 hours” representing the association. He didn’t recall if the department made a determination.

In June 2012, three months after Moore said his representation ended, and as the session wound to a close and bills were taken up in droves, the House Insurance Committee brought up and approved an unrelated Senate bill. It had been stripped and amended with legislation that gave the association the exclusive right to provide training. The new version listed no sponsors; Moore said the insurance department requested it. The House and Senate approved it by overwhelming margins, but one lawmaker later said he was misled about its intent.

The law has since been thrown out by state judges who found it set up an unconstitutional monopoly.

The legislative record shows Moore excused himself from voting on the legislation when it came to the House floor.

“At no time did I do anything relevant to that bill, because I would have a conflict,” Moore said.

Moore said he has seen the letter, which was first sent to the State Board of Elections & Ethics Enforcement in May. Josh Lawson, the election board’s general counsel, confirmed receipt of the letter but said he was prohibited from speaking further about it.

Moore said the letter was timed to the election. He added he’d like to find out who was behind it “because I’d like to sue them.”

Jarret Burr, the association’s interim leader, said he was unfamiliar with the details of the case and could not comment. Michael Mann, one of three lobbyists who represented the association at the time, said Moore was not asked to help with the legislation and stayed out of it.

“Tim did not play any role in that legislation,” Mann said.

New details

In the case of KNOW Bio and its co-founder Hunter, Moore’s legal work came after he ran legislation in 2012 and 2013 to force the City of Durham to provide water and sewer to the 751 South development and Colvard Farms, an upscale residential community. Hunter had developed Colvard Farms, which is now expanding. He sold the land for 751 South to his cousin, Alex Mitchell, and Tyler Morris, a Raleigh developer, but is financing some of the purchase and remains a non-voting partner.

The 751 South project broke ground in April. It would place 600,000 square feet of shops and offices and 1,300 residences within two miles of Jordan Lake, a major source of drinking water in the Triangle. The lake has long struggled from stormwater pollution, which was one of the reasons city officials wouldn’t support the development.

Moore had previously declined to talk about his work for Hunter, citing client confidentiality. But on Friday, Moore said he had received permission from Hunter to talk about KNOW Bio. Hunter, a well known entrepreneur and former CEO of Cree, could not be reached and has yet to publicly discuss Moore’s legal work.

Moore said his work for KNOW Bio grew from the earlier, unrelated, legal work he did for Hunter in 2015. He declined to characterize what that work entailed, except that Hunter told him he wanted an out-of-town attorney. Moore said he didn’t recall how much he was paid for it.

“He asked if I would be willing to assist (KNOW Bio) with various issues they had, legal matters, and then also they were looking at some federal issues. I told him I’d be glad to look into that and see if I could be of some assistance,” Moore said.

Moore said in his contract with KNOW Bio, he stipulated that he would not lobby federal officials as part of his work, but he would monitor federal law. He said the work included reviewing federal tax policy for startups and making “detailed studies” of it. His fee was $10,000 a month, and he was paid for four months, though he said he worked for KNOW Bio “throughout 2017.”

He acknowledged that he had not done that type of legal work before. “That was unique to KNOW Bio,” he said.

Whitaker, the former CEO had said she terminated the contract, but Moore said that wasn’t conveyed to him.

“I was actually never given an official termination,” he said. “It was just a conversation, really, where I felt like on my own they ought to probably get a lobbyist, a full-fledged DC lobbyist involved, if that was the direction to go, and that they indicated that’s what (they) going to do.”

Several months later, in June, the Kilpatrick Townsend & Stockton firm registered three lobbyists for KNOW Bio. Among them is a former top legislative aide to Moore, Nelson Freeman. Moore said he recalled Hunter asking about Freeman, and Moore then recommended him.

Another business tie to developers

Moore said he had no other legal business with Hunter or any of his companies. Moore also initially said he had done no legal work for Mitchell, who has become a close friend since the 2013 legislation. Both Mitchell and Hunter and their spouses have contributed roughly $30,000 each to Moore’s campaigns since early 2013.

But Moore later told the N&O he had done about $5,000 in contract-review work roughly a year ago for another business in which Mitchell said he was a minority owner – Impact Performance Lighting, a Raleigh company originally formed in June 2014 as Phoenix LED that sold LED lighting. Mitchell said he had nothing to do with Moore receiving the work, and didn’t learn he was a minority owner until Friday.

Mitchell is also a member of the UNC Board of Governors, voted there by the House in 2015. He said his only involvement with KNOW Bio was persuading his colleague Smith on the UNCBOG to join the company. Smith said he invested $1 million in joining the board, but backed out after several months to pursue more lucrative opportunities.

Mitchell said he played no role in Moore’s hire, had no idea what he was paid, and didn’t step in on Moore’s behalf when KNOW Bio officials ended the contract.

“I don’t remember operating as some sort of agent (for Moore),” Mitchell said. “That’s just being honest with you.”

State ethics laws contribute to the lack of transparency in lawmakers’ private businesses. While the ethics law requires reporting of employers, real estate holdings and investments such as company stock, it does not force disclosure of clients who provide significant income. Lawmakers are required, however, to recuse themselves from legislative actions involving their clients.

Some open government advocates say that’s a loophole that could keep pay-to-play schemes under the radar. But that’s a hard reform to push through a part-time legislature that typically has a sizable number of attorneys. The North Carolina Bar Association reports 13 lawyers serve in the 50-member Senate and 20 lawyers serve in the 120-member House. The Senate is led by an attorney, Phil Berger of Rockingham County, and House Minority Leader Darren Jackson and Senate Minority Leader Dan Blue - both Democrats - are also attorneys.

Ethics reforms in the wake of scandals flowing from former House Speaker Jim Black’s administration a dozen years ago did not address client disclosure.

“A little over a decade later, it’s time to take a look and see what loopholes need to be closed, and what rules need to be clarified,” said Jane Pinsky, director of the N.C. Coalition for Lobbying and Government Reform.

Dan Kane: 919-829-4861, @dankanenando