ST. JOSEPH — Berrien County commissioners should disclose even a possible conflict of interest in the future to maintain public trust, according to a special counsel’s report released Thursday on an investigation of funds received by the late husband of Commissioner Teri Freehling.

John Dewane, the attorney and retired Berrien County judge appointed to look into the matter, concluded that Freehling did not violate any laws by failing to disclose the business dealings and by not abstaining from some votes, because she did not have a contractual arrangement with the drain office.

The board needs to set a higher bar, Dewane wrote.

“Good policy may suggest that the Board encourage a higher level of transparency because it recognizes that the Commissioners are subject to constant public scrutiny,” Dewane said. 

The board bylaws could likely encourage “disclosure and abstention under circumstances where a reasonable person would conclude that there may be an appearance of a conflict of interest, even if none exists as a matter of law,” Dewane stated.

Those bylaws dealing with disclosure of conflict of interest are in the process of being revised.

Board Chairman Mac Elliott, who called the situation “unprecedented” in his 35 years in county government, suspended Freehling from the Personnel and Human Services Committee while those bylaws are being updated.

After the meeting, Elliott said it is always better to err on the side of caution.

“When in doubt, disclose it,” he said. “You’ll never get into trouble.”

Freehling declined to comment, because of a pending lawsuit involving the drain contract funds that went to her husband.

At issue were contracts from the drain office that earned Patrick Freehling around $400,000 over two years through his company, Baroda Valley Farms. Documents show that Doug Hartzler, of Bridgman, secured the contracts and rented equipment from Freehling, who died in May in an accident on the family’s farm. According to the report, the company transferred to his partners after his death.

Teri Freehling, a county commissioner since April 2015, said she knew about some of the business details of her husband, who also worked at the Cook Nuclear Plant, and abstained from some votes, but did not know about all of the transactions and did vote on some requisitions for payment to Hartzler.

“Commissioner Freehling was aware of the operational details of the business, occasionally helping on some of the projects, but disclaims knowledge of the financial details,” the report states.

Dewane found that Freehling “appears to have taken a passive rather than an active, inquisitive approach” to the work being done by her husband and the money being received, but probably should have been better informed.

“While pursuit of this knowledge may not have been legally required, and this lack of knowledge may have been a factor in the decision not to prosecute, this approach likely does not promote the public confidence which might arise from avoiding even the appearance of impropriety.”

Concerning the decision not to prosecute, Dewane was referring to Berrien County Prosecutor Michael Sepic’s announcement in September that he would not seek criminal misdmeanor charges against Freehling for the alleged failure to disclose a conflict of interest. Sepic’s decision came after an investigation by Michigan State Police Detective Doug Kill that the prosecutor concluded did not prove that Freehling knew the full extent of the money paid to her husband.

Along with county officials, Dewane spoke with Michigan Assistant Attorney General Michael Frezza, who he said agreed with Sepic’s conclusion not to prosecute. Frezza also noted other attorney general rulings, some backed by Supreme Court decisions, that “a spouse is not, either directly or indirectly, a party to a contract between a public body and the other spouse,” and that husbands and wives are “legally distinct persons, even when they file a joint tax return.”

Digging around

The issue came to the attention of county officials in September 2017, when Administrator Bill Wolf heard a rumor that Patrick Freehling was doing quite a bit more work for the drain office than the commissioner had disclosed earlier in the year. Wolf found that Hartzler Excavating had received more than $320,000 in contracts, with Patrick Freehling as a subcontractor, and he made Jon Hinkelman, then board chairman, aware of the situation.

Teri Freehling later had conversations with Corporate Counsel James McGovern, who advised her that, even though not legally required, “disclosure and abstaining were prudent.” Freehling made one disclosure and abstained on a contract involving her husband on Sept. 28, 2017.

Thereafter, Commissioner Freehling ignored the continuing advice of the county’s attorney on disclosure, “and abstained on only one requisition for Hartzler Excavating,” on March 1, 2018, the report disclosed.

In October, Freehling made a statement to the board that she should have known more about her husband’s business. She promised to be more careful in the future.

In his interview with the state police, Hartzler denied that Patrick Freehling was ever a subcontractor. He said he would receive payments from the drain office and turn the check over to Patrick Freehling, who would then pay Hartzler for his work.

Hartzler further claimed in his statement that Teri Freehling was present more than 20 times when money and drain projects were discussed and she “knew before he did when he was getting a check” because she was on the Finance Committee.

Detective Kill unexpectedly found a bank account for Baroda Valley Farms LLC that included a personal checking account in the name of Patrick and Teri Freehling. He also found money from Hartzler Excavating passing between the business account and another personal account in both of their names.

Dewane determined that the checks cited “do not appear to me to be co-mingling (of funds) but ordinary transactions.”

This matter also is the subject of a lawsuit filed by Hartzler, claiming he was defrauded by the Freehlings and Drain Commissioner Christopher Quattrin in an alleged scheme to funnel county money to the Freehlings. Hartzler also charges that when he fired a friend of the Freehlings, he stopped getting drain contracts, that then went to a company set up by Robert DeVries, the person he dismissed.

Contact: jmatuszak@TheHP.com, 932-0360, Twitter: @HPMatuszak