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Stealing the Statehouse

Nonprofit Founder Claims Bob Riley Directed Donations to Hubbard-Owned Businesses

Bill Britt

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By Bill Britt
Alabama Political Reporter

MONTGOMERY—How did then-Governor Bob Riley and Chairman of the ALGOP Mike Hubbard route almost a million dollars in republican campaigns contribution through a nonprofit and back to a Hubbard owned company?

“Someone from the governor’s [Bob Riley’s] office would call and say you’re getting a check for $200,000 and you’re going to get a bill at the same time from [Mike] Hubbard’s deal and you need to pay that, that is what that money is for.”

Those are the words of A. Eric Johnston a Birmingham-based attorney and anti-gambling advocate who explains the operational relationship between Bob Riley, Mike Hubbard and his 501c(4), Citizens for a better Alabama.

According to Johnston, efforts by then-Governor Bob Riley allowed over a million dollars to flow through his nonprofit, Citizens for Better Alabama, into to the hands of Mike Hubbard.

The picture Johnston paints appears to be a brazen orchestration of campaign funds by a sitting governor to benefit his most faithful ally, Mike Hubbard.

Citizens for Better Alabama (CBA) was a Birmingham-based, tax-exempt group that was the public face of opposition to Sweet Home Alabama, and to shut down legal casinos operated at VictoryLand and Country Crossings. According to archived versions of its website, the CBA – run by A. Eric Johnston – has “been an advocate for the family since 1991.”

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In the beginning according to Johnston CBA did not have a lot of money to fight gambling in Alabama. In a 2009, Johnston wrote a letter, denouncing the deceptive ads being run for the Sweet Home Alabama plan. In the letter he wrote, “The Citizens for a Better Alabama may not have the millions of dollars it would take to combat these deceptive ads on the airwaves, but we do have the truth on our side.”

http://www.smbassociation.com/templates/System/details.asp?id=20652&PID=672937

Johnston is a well-known figure around the halls of power in Montgomery. He has worked for years on social issue such as pro-life and gambling. He is respected as a man of honesty and integrity.

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Johnston said he had been fighting gambling for years without much help. “We really never had a knight on a white horse… We just had to fight it in legislature and kill the bills.”

But according to Johnston in the last year of Bob Riley’s last term as governor that all change when the governor decided to fight gambling in the state.
According to Johnston, when Riley became interested in ridding the state of bingo gambling he was contacted by the Governor who said he wanted to help Johnston raise money.

“I don’t know why he [Riley] decided to do it [fight gambling] other than it was a propitious time to do it,” said Johnston. “Whatever he was doing was good. He was stopping illegal gambling.”

At the time it seemed that Johnston had found his white knight. But there was a problem, rather than making a partnership with a crusading knight, it seems Johnston had unknowingly entered into a potential devil’s bargain.

After aligning with Riley and Hubbard in 2010, CBA raised and spent over $1 million after never taking in over $50,000 in a year ever before.

Based on 2010 campaign finance and other records, the CBA was a crucial conduit for passing campaign cash through the 501c(4) into a potentially lucrative aspect of Mike Hubbard’s financial bottom-line.

According to the IRS Form 990 tax return filed by CBA for 2010, the tax-exempt 501c(4) group took in a little over $1 million in donations. Of that amount, $413,750 came from Hubbard’s personal leadership PAC – the Auburn-based Network PAC – between February and October 2010.  

Riley’s Gov PAC gave $292,000 and $314,500 was contributed directly to CBA through individuals at Riley’s request.
                                 
Johnston said that the money that his organization received was almost entirely for advertising, he said, “Mike was in that business and I thought it appropriate for him to handle it.”

Again a pattern occurs where Hubbard directs money to an entity and then that money is given back to a Hubbard-owned business. However, in this case, money was being directed by Bob Riley told the head of the 501c(4) how the money was to be spent. Not just the large amounts but even the so-called small donation. “I would be informed by the governor’s office that I would be getting a check for 2 or 3 thousand dollars and we would have ad bills that cost that much,” said Johnston,  “and that money would be for those bills.”

According to Johnson, “We ran a zero balance campaign. Whatever money came in was spent, a lot of it was coordinated through Mike Hubbard’s company.”
In an April 2010 story in the “Huntsville Times,” Hubbard said that his media companies were placing anti-bingo advertising for the CBA. “The Times” reported that “even though his company is benefiting financially from placing the anti-gambling ads Hubbard said ‘that would not stop him from voting’ on the bill to allow voter referendum on legalized gambling.

http://blog.al.com/breaking/2010/04/leftover_riley_pac_money_would.html

The usual fee for placing ads is 15 to 20 percent. With the new revelations from Johnston, it appears that a lot more was going on than profiting from ad placement.

The question must be asked, “Why was the Chairman of the ALGOP coordinating money and advertising for a nonprofit that is suppose to be non-partisan and then funneling the money to his own companies? What business did a sitting governor and his staff have direct campaign donations to a nonprofit that was suppose to be non-partisan and then actually telling then how to spend the money?’

Johnston said that Mike Hubbard, directed the Media, “I would just get the bills.”
But Johnston admits that he would be told BEFORE he received the cash where and to whom it must go too.

Johnston said, he, Riley and Hubbard, while not close, “worked together as a team.” This type of coordination would seem to violate Citizens for Better Alabama tax-exempt status.

Johnston supplied “Alabama Political Reporter” with a copy of CBA’s 990 IRS fillings. However, the document we received is different than the one that Johnston filed with the IRS, according to a comparison on Guide Star.

http://www.guidestar.org/FinDocuments/2010/631/031/2010-631031538-07846083-9O.pdf

On the 990 fillings, Johnston does not itemize the over $700,000 he received from Hubbard’s Network PAC and Bob Riley’s Gov PAC. The rest of the money primarily originated with longtime big-money Bob Riley donors.

Johnston as the sole member of CBA said, “I didn’t raise any money.”
He says that Riley would call high-networth individuals around the state to ask for contributions, “I recognized many of the people that sent money. It was the businessmen from around the state.”

Johnston said a few called him to talk about CBA and after his conversation with them they would send in a check. However, the bulk of the money came from two PACs where the donors presumably thought that their money was going to finance campaigns not anti-gambling ads.

In a report by the “Mobile Bay Times” they wrote, “recent public files show that the organization [CBA] has placed over a quarter of a million dollars in broadcast media ads going back to January 27, 2010 and continuing through February 18, 2010.” The report also says that the, “…sum does not include the costs associated with advertising production or the printing, distribution, and insertion of phony ‘Special Report’ news-style bulletins in nearly 40 papers across Alabama in recent weeks.”

When asked for CBA’s expenses for 2010, Eric Johnston only supplied the groups 990 IRS filing. If only approximately $250,000 was placed in media buys then where did the remaining $700,000 plus go? Did Mike Hubbard’s Network Creative Media supply CBA with a large sum of advertising products?

Another anomaly during the affair is why was  $101,750 sent from Hubbard’s Network PAC to CBA after the announcement of the federal bingo investigation and the end of efforts to pass bingo legislation?

It would take a clear examination of CBA, Bob Riley’s and Mike Hubbard’s banking records to know for sure what happened to all the money. What Eric Johnston has made clear, is that Riley raised the money, along with two PACs. 

His statements to the Alabama Political Reporter also made it clear that Riley directed payments to Mike Hubbard and Hubbard handled whatever media was developed or purchased.

The following is a breakdown of CBA contributions:

Bob Riley’s GOV PAC is formed in late 2009 specifically for the anti-bingo effort.  Below is the  first list of contributions starting in December 2009:

http://arc-sos.state.al.us/cgi/elcreport.mbr/report?year=2010&report=C&month=1&elcpass=41061&day=31

The  next group of contributions in early 2010:

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0109992.PDF

A list of supposed donations to CBA in early 2010 (none of these are listed on CBA’s form 990):

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0109993.PDF

GOV PAC’s last big contribution report in 2010 including the $93,000 from the Alabama GOP that originated with Poarch Creek money conduit RSLC:

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110585.PDF

GOV PAC’s last list of alleged donations to CBA (none of these are listed on CBA’s form 990):

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110587.PDF

Alabama GOP’s (PAC controlled by Mike Hubbard) first report of a diversion of money showing money diverted to other PACS allegedly to go to CBA (note $50,000 to NETPAC in early February 2010):

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0109997.PDF

This 45-day pre-primary report filed in April 2010 by the State GOP shows the $150,000 from the Poarch Creek Indian conduit RSLC received on 3/18/2010 – page 27):

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110567.PDF

The expenditures report for the 45-day pre-primary report for the Alabama GOP  shows the $150,000 from Poarch conduit RSLC broken into a $93,000 contribution to GOV PAC (on page 3 of this report–shown above to have been allegedly sent on to CBA) and a $57,000 contribution to NETWORK PAC (controlled by Mike Hubbard – page 5); additionally, there is a diversion of $35,000 of party money to AG PAC headed by Bob Riley’s niece and nephew (Johnny and Kim Adams – page 1) and a diversion of $45,000 to another PAC headed by Riley’s niece and nephew – Victory PAC (page 7) along with an additional $35,000 diverted to NETWORK PAC (page 5).  All of this money eventually ended up in NETWORK PAC.

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110569.PDF

45-day pre-primary report for NETWORK PAC – contributions.  Note that the $35,000 diverted to AG PAC and the $45,000 diverted to Victory PAC came back to NETWORK PAC along with the $142,000 diverted from the Alabama GOP – the $142,000 includes the $57,000 from Poarch Creek money conduit RSLC).

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110802.PDF

On the expenditure side of the 45-day pre-primary report of Mike Hubbard’s NETWORK PAC we see $312,000 allegedly sent to CBA with the bulk of this money diverted from the Alabama Republican Party (NONE of this is shown on CBA’s 990):

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0110805.PDF

In the middle of a runoff campaign (July 2010) – and weeks after the bingo effort died – NETWORK PAC is still showing an alleged $10,000 contribution to CBA (this is NOT shown on CBA’s 990):

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0117650.PDF

In the 45-day pre-fall election report NETWORK PAC again shows a contribution to CBA that is not on CBA’s 990:

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0120536.PDF

The 10-day pre-election report for NETWORK PAC shows yet another alleged contribution to CBA that is not shown on CBA’s 990 form:

http://arc-sos.state.al.us/PEL/SOSELPDF.003/E0122082.PDF

On NETWORK PAC’s end of 2010 report, a $75,000 contribution to CBA is listed – but it is nowhere to be found on CBA’s form 990:

http://arc-sos.state.al.us/PEL/SOSELPDF.004/E0125809.PDF

In all, over $700,000 is shown contributed to GOV PAC and NETWORK PAC that is allegedly sent on to CBA – but none of that money is reported as received by CBA in its IRS form 990.

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.

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Opinion | Inside the Statehouse: Buck’s pocket

Steve Flowers

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You voted Tuesday on a crowded ballot.

Historically, in Alabama we have voted more heavily in our Governor’s race year than in a presidential year. That is probably because we were more interested in the local sheriff and probate judge’s races, which run in a gubernatorial year, than who is president. The old adage, “all politics is local,” definitely applies here in Alabama.

We not only have a governor’s race this year, we have all secondary statewide offices with a good many of them open including Lt. Governor, Attorney General, State Treasurer, Auditor, and two seats on the Public Service Commission. We have five seats on the State Supreme Court, one being Chief Justice. All 140 seats in the Legislature are up for a four-year term. These 35 state Senate seats and 105 House contests are where most of the special interest PAC money will go. And, yes, we have 67 sheriffs and 68 probate judges as well as a lot of circuit judgeships on the ballot.

You may think the campaigning is over. However, some of the above races have resulted in a runoff which will be held on July 17. So get ready, we have six more weeks of campaigning before all the horses are settled on for the sprint in November.

We have a lot of folks headed to Buck’s Pocket. Last year after the open Senate seat contest, a young TV reporter for one of the stations I do commentary for asked me about Roy Moore and his loss. I told her ole Moore had gotten on his horse, Sassy, and ridden off into the sunset to Buck’s Pocket, which by the way wasn’t a long ride from his home in Gallant in Etowah County. She looked at me with a puzzled look. Probably a lot of you are also wondering what I’m talking about when I refer to Buck’s Pocket.

For decades, losing political candidates in Alabama have been exiled to Buck’s Pocket.  It is uncertain when or how the colloquialism began, but political insiders have used this terminology for at least 60 years.  Alabama author, Winston Groom, wrote a colorful allegorical novel about Alabama politics and he referred to a defeated gubernatorial candidate having to go to Buck’s Pocket.  Most observers credit Big Jim Folsom with creating the term.  He would refer to the pilgrimage and ultimate arrival of his opponents to the political purgatory reserved for losing gubernatorial candidates.

This brings me to another contention surrounding Buck’s Pocket. Many argue that Buck’s Pocket is reserved for losing candidates in the governor’s race. Others say Buck’s Pocket is the proverbial graveyard for all losing candidates in Alabama.

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One thing that all insiders agree on is that once you are sent to Buck’s pocket you eat poke salad for every meal. Groom also suggested that you were relegated to this mythical rural resting place forever. However, history has proven that a good many defeated Alabama politicians have risen from the grave and left Buck’s Pocket to live another day. Roy Moore may be a good example. He has risen from the grave before. He is only 70, and he may grow weary of eating poke sallet.

Most folks don’t know that there really is a Buck’s Pocket. Big Jim would campaign extensively in rural North Alabama often one on one on county roads. One day while stumping in the remote Sand Mountain area of DeKalb County he wound up in an area referred to as Buck’s Pocket. It was a beautiful and pristine area, but it was sure enough back in the woods. Big Jim who loved the country and loved country folks was said to say that, “I love the country but I sure wouldn’t want to be sent to Buck’s Pocket to live.”

Buck’s pocket is now not a mythical place. If you are traveling up the interstate past Gadsden, on the way to Chattanooga, you will see it. There is a Buck’s Pocket State Park in DeKalb County, thanks to Big Jim.

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So the next time you hear an old timer refer to a defeated candidate as going to Buck’s Pocket, you will know what they are talking about.

See you next week.

Steve Flowers is Alabama’s leading political columnist. His weekly column appears in over 60 Alabama newspapers. He served 16 years in the state legislature. Steve may be reached at www.steveflowers.us.

 

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In Case You Missed It

Hubbard’s Lee County Trial Finally Ends in Silence

Bill Britt

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By Bill Britt
Alabama Political Reporter

MONTGOMERY—The post-trial appeal of convicted felon and former Speaker of the House, Mike Hubbard, finally expired on September 8, in silence, according to the Attorney General’s office calculations.

For almost four years, Hubbard, aided by his criminal lawyers, used the State House, the Governor’s Office and some within the Attorney General’s office to deny, deflect and delay justice. Hubbard stormed the State House presiding over an orgy of greed and corruption. Those days are over for Hubbard and so is any appeal before the circuit court of Lee County.

Under Rule 24.4 of the Alabama Rules of Criminal Procedure, Hubbard’s motion for a new trial, dismissal and/or an investigation by the Lee County Sheriff were denied by operation of law because Judge Jacob Walker, III, did nothing.

Under the Rules of Criminal Procedure, “no motion for a new trial or motion… shall remain pending in the trial court for more than sixty days after the pronouncement of sentence.” Hubbard’s sentencing July 8, on 12 felony counts of public corruption, means as of September 8, the calendar has run out for him, with Judge Walker deciding not to rule at all.

Under Rule 24.4: Denial by operation of law. “A failure by the trial court to rule on such a motion within the sixty (60) days allowed by this section shall constitute a denial of the motion as of the sixtieth day.”

At his post-trial hearing, Hubbard’s attorneys made their last stand in Lee County, with Bill Baxley arguing that his client was blindsided, bushwhacked and bamboozled, to no avail.

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The Lee County case of the State of Alabama versus Michael G. Hubbard is over. He has a right to appeal his conviction to the Alabama Court of Criminal Appeals within 42 days, which expires on October 20.

Hubbard’s past efforts show he will seek every avenue available to delay his incarceration.

Every previous motion that Hubbard has set before the Court of Criminal Appeals, was denied without opinion. Many believe this same fate awaits Hubbard’s next appeal before the high court.

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Hubbard’s days of freedom are rapidly coming to an end. His appeal was silently denied and most didn’t even notice. He is rapidly becoming yesterday’s news.

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In Case You Missed It

Hubbard’s Post-Trial Snoozer

Bill Britt

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By Bill Britt
Alabama Political Reporter

OPELIKA—While searching for any thread of an argument that might lead to a new trial for convicted felon Mike Hubbard—once the most powerful politico in the state—attorney Bill Baxley whined, fretted and accused state prosecutors of blindsiding, bushwhacking and bamboozling his client.

Having written about Hubbard’s misdeeds since late 2012, the courtroom drama ending with his conviction makes Baxley’s latest attempt at the September 2 hearing feel like Hubbard trial 2.0 ad nauseam. Only Baxley’s fantastical leaps of legal logic and strained linguistic gymnastics kept the proceedings remotely interesting. Baxley argued several points, only winning on one issue with Judge Walker’s ruling that Hubbard would not be required to pay $1.125 million in restitution, as the prosecution asked.

Before the hearing began, Hubbard’s criminal defense team filed a motion to unseal all court documents related to the case, except one document. Baxley indicated that Judge Jacob Walker knew “the one” he referred too. After some legal wrangling by the prosecution and with Judge Walker, the defense was directed to construct a list of documents to be unsealed. Judge Walker’s decision was followed by Baxley huffing and puffing. Finally, he made reference to testimony given by Professor Bennett L. Gershman a “so-called” expert in prosecutorial misconduct. Hubbard filed to have Gershman’s testimony unsealed in 2015, to no avail.

Testimony given by former State Ethics Directors James “Jim” Sumner is central to Hubbard’s motion to dismiss or grant a new trial, neither of which is likely to occur. But, Baxley and company need to earn the additional $50,000 plus Hubbard recently raised from “friends.” Baxley argued it was improper for the State to present “expert” testimony about what various portions of the ethics statute mean, and whether certain phrases or clauses within those statutes would or would not encompass certain situations or events. The court seemed unmoved by Baxley’s logic since Judge Walker certified Sumner as an expert.

During the two-hour hearing, Baxley’s delaying tactics appeared to try Judge Walker’s patience, especially when the defense claimed they were unprepared to hear testimony concerning jury misconduct. Judge Walker said he set aside other cases to hear Hubbard’s claims of jury misconduct, a surprising claim that surfaced quickly after Hubbard’s conviction.

Hubbard’s criminal defense team citing an affidavit from a panel member filed a motion just days after Hubbard’s conviction calling for an investigation into jury misconduct by an impartial third party. In searching for a neutral investigator, Baxley determined Hubbard’s friend Lee County Sheriff Jay Jones was the best choice.

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From the bench, Judge Walker informed Baxley that there is no legal basis for an outside investigation, and that testimony would be taken before his court to settle the matter. Baxley claimed the defense was once again unprepared for such at the hearing, and the juror who reported the alleged misconduct was unavailable.

Judge Walker questioned the two bailiffs and the court administrators who oversaw Hubbard’s trial. Bailiff Bobby Bond testified that he was instructed by court administrator Patricia Campbell, to caution a juror who reportedly was talking under her breath at the beginning of Hubbard’s trial. Bond said he issued the warning, but the juror denied the allegations and no further complaints were noted. Both Bailiffs who rotated sitting next to the jury box during the proceedings testified they never heard chatter from any jurors.

Under oath, Campbell confirmed she had received the complaint and reported it to Judge Walker, who ordered her to address the situation through the bailiffs. Baxley asked Campbell what was said. She remembered the accusing juror of claiming a fellow juror said, “Yes, now the truth comes out.”

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Defense co-council Lance Bell rose to claim that Hubbard had not received a fair trial an assertion soon rebutted by the prosecution.
He, along with Baxley said the jury was not impartial, and Hubbard should receive, at least, a new trial. Arguing for the prosecution, Assistant Attorney General Katie Langer cited case law and explained the split verdict showed they were, in fact, impartial because otherwise, the trial would have ended with a hung jury.

As Judge Walker pointed out several times, the clock is ticking with very few days remaining before the 60 day deadline brings all proceeding before his court to a close. The trial judge may rule on these motion or simply wait out the clock.

 

Photo Credit: Albert Cesare/Montgomery Advertiser/Pool

 

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In Case You Missed It

Attorney General Reacts to Hubbard Loyalist’s Plans for Ethics Reform

Bill Britt

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By Bill Britt
Alabama Political Reporter

MONTGOMERY—Alabama House Ethics Committee Chairman, Mike Ball (R-Madison), announced his plans (yesterday) to form a commission to review the state’s ethics laws. Ball, a staunch defender of convicted felon and former House Speaker, Mike Hubbard, told WHNT-TV in Huntsville that his committee would “review the State’s Ethics laws and recommend improvements in time for the opening of the Alabama Legislature next year.”

However, just hours after APR published its story on Ball’s plan, Attorney General Luther Strange, sent his comments.  “I am strongly opposed to Rep. Mike Ball’s idea of a commission to review Alabama’s ethics law. The whole point of such a commission would be to undermine the law,” said Strange.  “Alabamians want our ethics laws enforced, not gutted.”

Ball also said he wanted an “open and honest” process, stating, “Our best chance for success is for it to be carefully looked at, out in the open.” Ball claims he is determined to stop three ethics bills from coming to the House because he didn’t want them “lost in the mix, however, there is a reason to believe other forces are at work, especially given Speaker McCutcheon’s promise of principled leadership.”

It would be difficult to fathom a Hubbard loyalist overseeing a commission to amend laws that landed his former boss in prison.

The day after Hubbard’s indictment, Ball stood by his side at a pep rally proclaiming his boss’s innocence while sporting an “I Like Mike” sticker on his lapel.

Ball regularly appeared on talk radio accusing State prosecutors of conducting a political witch hunt to ensnare Hubbard.

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In April 2015, Ball testified in a pre-trial hearing that Hubbard’s arrest was politically motivated. Under oath, Ball said the ethics laws needed amending to avoid prosecutions like Hubbard’s in the future.

Presiding Circuit Court Judge Jacob Walker, III allowed Ball to testify, even though he said Ball’s testimony was not relevant to Hubbard’s indictments. Judge Walker ruled that accusations against Special Division’s Chief Matt Hart were not only irrelevant, but unfounded.

Ball is one of the remaining Hubbard loyalists at the State House.

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