Legislature(1997 - 1998)

03/09/1998 01:35 PM Senate JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              SENATE JUDICIARY COMMITTEE                                       
                    March 9, 1998                                              
                      1:35 p.m.                                                
MEMBERS PRESENT                                                                
Senator Robin Taylor, Chairman                                                 
Senator Drue Pearce, Vice-Chairman                                             
Senator Mike Miller                                                            
Senator Sean Parnell                                                           
Senator Johnny Ellis                                                           
OTHER MEMBERS PRESENT                                                          
Senator Loren Leman                                                            
Senator Jerry Ward                                                             
Senator Lyda Green                                                             
COMMITTEE CALENDAR                                                             
SENATE JOINT RESOLUTION NO. 42                                                 
Proposing an amendment to the Constitution of the State of Alaska              
relating to marriage.                                                          
     - MOVED CSSJR 42(JUD) OUT OF COMMITTEE                                    
SENATE CONCURRENT RESOLUTION NO. 25                                            
Urging an appeal and an expeditious decision on the appeal of a                
case concerning marriage.                                                      
     - MOVED CSSCR 25(JUD) OUT OF COMMITTEE                                    
SENATE BILL NO. 201                                                            
"An Act relating to prohibiting recovery of damages and prohibiting            
a remedy to a person in a civil action."                                       
     - HEARD AND HELD                                                          
PREVIOUS SENATE COMMITTEE ACTION                                               
SJR 42 - No previous action to report.                                         
SCR 25 - No previous action to report.                                         
SB 201 - See Judiciary minutes dated 10/10/97, 1/28/98 and 3/6/98.             
WITNESS REGISTER                                                               
Senator Loren Leman                                                            
State Capitol                                                                  
Juneau, Ak 99801-1182                                                          
   POSITION STATEMENT: Presented SJR 42                                        
Mr. John Gaguine                                                               
Department of Law                                                              
PO Box 110300                                                                  
Juneau, Ak 99811                                                               
   POSITION STATEMENT: Commented on SJR 42                                     
Professor Lynn Wardel                                                          
Brigham Young University                                                       
Salt Lake City, Ut                                                             
   POSITION STATEMENT: Supported SJR 42                                        
Professor Don Cecil                                                            
University of Alaska, Southeast                                                
11120 Glacier Highway                                                          
Juneau, Ak 88901                                                               
   POSITION STATEMENT: Opposed SJR 42                                          
Ms. Sara Boesser                                                               
9365 View Drive                                                                
Juneau Ak 99801                                                                
   POSITION STATEMENT: Opposed SJR 42                                          
Ms. Marsha Buck                                                                
PFLAG Juneau                                                                   
8445 Kimberly St.                                                              
Juneau, Ak 99801                                                               
   POSITION STATEMENT: Opposed SJR 42                                          
Ms. Pam Northrip                                                               
2810 Fritz Cove Rd.                                                            
Juneau, Ak 99801                                                               
   POSITION STATEMENT: Opposed SJR 42                                          
Mr. Peter Pinney                                                               
PO Box 82290                                                                   
Fairbanks, Ak 99708                                                            
   POSITION STATEMENT: Opposed SJR 42                                          
Ms. Ellen Twiname                                                              
5306 Caribou Ave.                                                              
Anchorage, Ak 99508                                                            
   POSITION STATEMENT: Opposed SJR 42                                          
Mr. Michael Jones                                                              
PO Box 6185                                                                    
Sitka, Ak 99835                                                                
   POSITION STATEMENT: Opposed SJR 42                                          
Reverend Howard Bess                                                           
PO Box 2888                                                                    
Palmer, Ak 99645                                                               
   POSITION STATEMENT: Opposed SJR 42                                          
Michael Johnstone                                                              
Los Angeles, Ca                                                                
Ms. Liz Dodd                                                                   
100 Parks St.                                                                  
Juneau, Ak 99801                                                               
   POSITION STATEMENT: Opposed SJR 42                                          
Mr. Tom Gordy                                                                  
Christian Coalition of Alaska                                                  
   POSITION STATEMENT: Opposed SJR 42                                          
Mr. Mike Pauley                                                                
Staff to Senator Loren Leman                                                   
State Capitol                                                                  
Juneau, Ak 99801-1182                                                          
   POSITION STATEMENT: Commented on SJR 42                                     
Mr. Larry Carroll                                                              
3510 Mendenhall Loop Rd.                                                       
Juneau, Ak 99801                                                               
   POSITION STATEMENT: Commented on SB 201                                     
ACTION NARRATIVE                                                               
TAPE 98-15, SIDE A                                                             
Number 001                                                                     
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to                
order at 1:35 p.m. and called SJR 42 as the first order of                     
         SJR 42 - CONSTITUTIONAL AMENDMENT RE MARRIAGE                         
SENATOR LOREN LEMAN came forward to present the resolution on                  
behalf of the Senate Health, Education and Social Services                     
committee. SENATOR LEMAN explained that both the resolutions                   
respond to the recent ruling by Superior Court Judge Peter                     
Michalski, which decided that our society's traditional definition             
of marriage may be unconstitutional.  He explained that SJR 42                 
proposes an amendment to the state constitution that defines                   
marriage as a union between one man and one woman.                             
SENATOR LEMAN said the judge's ruling ignores the clear public                 
policy statement made by the Legislature in 1996 when it                       
overwhelmingly passed SB 308, known as the definition of marriage              
bill. SENATOR LEMAN said this bill helped establish important                  
social policy in Alaska. He said Judge Michalski argued the statute            
disallowing same sex marriage is unconstitutional unless the state             
can show compelling governmental interest to the contrary. SENATOR             
LEMAN commented that the judge arrived at this decision through                
some ironic reasoning, alleging the constitutional right to public             
recognition of one's choice of a life partner under the right to               
privacy clause of the Alaska Constitution. SENATOR LEMAN said our              
laws have never permitted granting licences to same sex marriages              
and these marriages are currently not recognized in any of the 50              
states nor, to the best of his knowledge, any country in the world.            
SENATOR LEMAN predicted that if the Alaska court forces the state              
to recognize same sex marriage, state law would be in conflict with            
federal law in a multitude of ways, creating an explosion of                   
litigation. SENATOR LEMAN noted that the word marriage appears in              
more than 800 sections of federal statute and the word spouse is               
used 3,100 times. In all these statutes and regulations the federal            
government recognizes marriage as a union between one man and one              
woman, regardless of what the Alaska court says.                               
SENATOR LEMAN concluded that same sex marriage would cause a host              
of conflict with programs and services ranging from the Internal               
Revenue Service to Social Security benefits. He said some may argue            
this demonstrates the need to change the federal statutes, but                 
SENATOR LEMAN maintained his disagreement and said the 1996 vote in            
Congress on the Defense of Marriage Act shows these proponents have            
their work cut out for them.                                                   
SENATOR LEMAN advised CHAIRMAN TAYLOR he would hear arguments on               
both sides of this contentious issue and his belief is that the                
preservation  of the definition of marriage as a union between one             
man and one woman is so important its loss would break down the                
very foundation of our society. He proposed that the issue is so               
profound, the people of Alaska should decide.                                  
SENATOR LEMAN noted there were amendments to both SR 42 and SCR 25             
and offered them to the committee for consideration. He then                   
introduced PROFESSOR LYNN WARDLE as an expert witness.                         
MR. JOHN GAGUINE, representing the Department of Law, replied "no"             
to a question from CHAIRMAN TAYLOR asking if the amendment to the              
bill significantly changed the issue. CHAIRMAN TAYLOR asked MR.                
GAGUINE if it was appropriate to place this amendment on the                   
ballot. MR. GAGUINE answered that he did not wish to speak for the             
administration, but said it appears to him that the amendment would            
moot the litigation, which seems to him its intent.                            
Number 200                                                                     
PROFESSOR LYNN WARDLE stated he has taught family law for 20 years             
and has done extensive research on the same issue. He indicated he             
was speaking on his own behalf. PROF. WARDLE said same sex marriage            
is not recognized by any jurisdiction in the world. He mentioned               
that about six jurisdictions, mainly in Scandinavia, have                      
established same-sex domestic partnership, an institution quite                
different from marriage. PROF. WARDLE suggested that even these                
jurisdictions make a strong point of the fact that these                       
partnerships differ from marriage. In the past 25 years in this                
country, many lawsuits have been filed in dozens of courts seeking             
same-sex marriage and until a short time ago, not a single court               
had accepted any one of these claims. However, in Hawaii, in 1996,             
a judge ruled that the refusal to give marriage licences to same-              
sex couples violated the state constitution. A few months later the            
Hawaii legislature proposed an amendment to the constitution to                
essentially overturn that decision, according to PROF. WARDLE. He              
said that amendment is now awaiting a vote.                                    
PROF. WARDLE said the decision of the Alaska judge is even more                
radical than that handed down in Hawaii. He said that court                    
rejected the claim that there is a constitutional right to same sex            
marriage, reaching their claim through a convoluted route of legal             
analysis. In the Alaska case, Judge Michalski interpreted                      
provisions of the Alaska Constitution as granting a fundamental                
right to same-sex marriage. PROF. WARDLE commented that no other               
court has ever reached this decision, which he sees as quite                   
radical. He said the ruling is not yet final, but it does establish            
a clear legal standard that tells the world this is the view of                
marriage held by the people of Alaska. PROF. WARDLE sees this as an            
inaccurate portrayal.                                                          
PROFESSOR WARDLE said marriage is the foundation of society and has            
always been understood to be between a man and a woman. He said it             
is unique and uniquely beneficial as men and women have a                      
complementary relationship. He sees this to be the major flaw of               
the decision: the failure to recognize the heterosexual                        
relationship provides more societal and individual benefits than               
any other.                                                                     
PROF. WARDLE said there is an honest answer to the question same-              
sex couples might ask about why their unions, meaningful to them,              
cannot be recognized in the same way as heterosexual marriage. He              
said the answer is that a man and a woman contribute fundamental               
things to society, unique to their relationship. Marriages meet                
social policy goals and that is why they have been singled out,                
historically, for preferred status. PROF. WARDLE identified some of            
the social policy purposes that merit special standing as                      
PROF. WARDLE stressed another flaw in Judge Michalski decision was             
the tenet that all choices of life partners are equal. PROF WARDLE             
said the judge's opinion is lacking in the support, evidence and               
judicial precedence necessary for this type of dramatic conclusion.            
He believes that a right to privacy does not mandate a state must              
confer a preferred public status on anyone. He said the logical                
extension of this opinion would open the door for incestuous and               
multiple marriages.                                                            
PROFESSOR WARDLE concluded that this matter goes beyond Alaska, as             
this decision will affect other states and prompt a constitutional             
crisis. He said the state has a compelling interest in not                     
redefining marriage in such a radical way, especially in a way that            
will result in years of costly and confusing litigation. PROFESSOR             
WARDLE said the case will bring up questions of alimony, property              
interests, child support, inheritance, succession and benefits,                
among others. He said other states may refuse to recognize same-sex            
marriages from Alaska and he believes it is important for the                  
legislature to act now.                                                        
Finally, PROFESSOR WARDLE summed up by saying the legislature, who             
are also guardians of the constitution, must represent the people              
by allowing them to make the final decision regarding the                      
definition of marriage. He urged quick action on this legislation.             
SENATOR ELLIS asked CHAIRMAN TAYLOR if he would afford the same                
time to Alaskans as he did to this out of town guest. CHAIRMAN                 
TAYLOR replied he absolutely would and asked if there was a                    
spokesman for the opposition, as there were far too many people                
present to allow unlimited testimony from each person. SENATOR                 
ELLIS asked how many people were signed up to testify and CHAIRMAN             
TAYLOR said, counting those in the room as well as teleconference              
participants, it looked to be approximately 70 total. SENATOR ELLIS            
asked if the plan was to take two people and then cut off                      
testimony. CHAIRMAN TAYLOR replied he would take one or two after              
that, and would have to as they were running out of time.                      
Number 375                                                                     
REVEREND DONALD CECIL, a Professor of Communications at the                    
University of Alaska Southeast, said he wished Alaska's slogan was             
"Live free or die." He moved to Alaska in 1980 in search of a place            
where he could live free from interference by the government and               
others to the greatest possible extent. He wanted to live in a                 
state uncluttered by excessive laws, in a place that allows people             
to march to the beat of a different drummer so long as no one got              
hurt. He quoted U.S. Supreme Court justice Lewis Brandice who said,            
"the makers of our Constitution sought to protect Americans in                 
their beliefs, their emotions, and their sensations. They conferred            
the right to be left alone, the most comprehensive of rights and               
the right most valued by civilized man." He mentioned other Supreme            
Court Justices who validated these sentiments in other writings.               
REVEREND CECIL said the right to choose a marriage partner is a                
right of individual freedom and the people testifying in favor of              
that right are not asking for an endorsement. He said only a small             
percentage of Alaskans would evermake this choice and other                    
Alaskans would continue living their lives according to their                  
beliefs, freely honoring what is inside themselves biologically and            
emotionally. Likewise, the small minority of Alaskans would be able            
to honor what is inside of them and lead their lives according to              
their deepest beliefs. REVEREND CECIL remarked that the only injury            
would be to someone else's sacred idea of how others should live               
their lives.                                                                   
REVEREND CECIL affirmed that he would like to continue living in a             
state that fully embraces the concept of personal freedom. In his              
opinion, SJR 42 is an affront to freedom of choice. In the name of             
freedom for all Alaskans, he recommends they throw out SJR 42 and              
get back to the more important business before them.                           
In response to SENATOR LEMAN's remarks regarding decisions that are            
out of the mainstream, REVEREND CECIL quoted Thomas Jefferson, who             
said, "I am not an advocate for frequent changes in laws and                   
constitutions . . .  laws and institutions must go hand in hand                
with the progress of the human mind, as that becomes more                      
developed, more enlightened, as new discoveries are made, new                  
truths discovered and manners and opinions change, well, with the              
change of circumstances, institutions must advance also to keep                
pace with the times. We might as well require a man to wear still              
a coat which fitted him when a boy as civilized society to remain              
ever under the regimen of their ancestors."                                    
MS. SARA BOESSER, representing the Statewide Committee for                     
Equality, said there were 30-40 people out in the hall and another             
60 around the state who came to testify against this bill. She said            
they worked hard to be there and all came expecting to be allowed              
to speak against this amendment to the Constitution.                           
MS. BOESSER commented that if the remarks of the out-of-state                  
speaker were true, the Attorney General would have no trouble                  
showing the court a  compelling reason why same-sex couples should             
not marry. MS. BOESSER suggested if the committee took the time to             
listen to all those assembled, they would hear plenty of reasons               
why lesbians and gays should be allowed to take on the                         
responsibilities and rights of legal marriage. She said they'd hear            
stories how the inability to marry hurts them and their children,              
and also how gutting the constitution of fundamental privacy rights            
is as unAlaskan a precedent as there could be.                                 
MS. BOESSER emphasized that her point was the intense pain that the            
ballot procedure itself will cause innumerable people. She does not            
believe the committee understands how difficult it will be to face             
the type of angry, anti-gay onslaught some Alaskans will mount. She            
is sure over the next few weeks the legislators themselves will                
receive many cards and letters asking them to drop this proposition            
and let the court case proceed. Some of these letters may be from              
angry, upset people; MS. BOESSER said there is nothing she can do              
to control that, like there is nothing the legislature can do to               
control the barrage of hateful, prejudiced rhetoric that will ensue            
if this goes to the ballot. She  said if they feel the                         
uncomfortable sting of angry words, they should realize that what              
they suffer is only the tip of the iceberg when compared to the                
hate speech, untrue stereotypes and misinformation that will be                
spread about her and her partner of 17 years. She dreads that. She             
suggested that when they feel stung, they should think about people            
like her, hearing daily attacks in the coffee shop, on the radio               
and in the press, attacks on themselves and their loved ones. MS.              
BOESSER concluded that this bill, whether it is intended or not,               
builds a podium for hate speech for eight long months of painful               
discourse. She charged the committee to understand their personal              
responsibility in unleashing that pain upon them and their loved               
ones. She urged the committee to stop the bill now and allow the               
courts to continue the appeals process.                                        
MS. MARSHA BUCK, representing Parents and Friends of Gays and                  
Lesbians (PFLAG), said she is angry about SJR 42 and opposes it.               
She said she is angry for two reasons: first, because she has a                
daughter married to another woman and she knows this resolution                
will increase the hatred, violence and name-calling against her and            
she is a hardworking, churchgoing, voting person who doesn't                   
deserve that; second, she is angry because she understood the                  
Republican platform was to stay out of citizens' private business              
and this gets into it in a way she never expected.                             
MS. BUCK noted that the legislature is now on resolution number 42,            
meaning there are 42 ways in which this Legislature is trying to               
change the Constitution. This also makes her angry, to see this                
attack against the Constitution when there are so many other                   
important things to be done, like working on subsistence and school            
funding. MARSHA BUCK stated that the Constitution protects                     
citizens' rights, including her daughter's rights. She wondered if             
the Legislature sees the connection between this type of resolution            
and the increase of hate crimes and violence against gays and                  
lesbians. MS. BUCK identified herself as a long time Juneau                    
resident and indicated she would use her time and resources to                 
oppose this legislation.                                                       
Number 475                                                                     
MS. PAM NORTHRIP, a teacher of 25 years from Juneau, reflected on              
the marriage of her Presbyterian son to his partner by a Catholic              
priest in a Quaker church. She said the priest explained why he                
performed the ceremony saying in a world filled with violence,                 
bitterness and hate crimes, it is inherent upon each one of us to              
do what we can to promote love. She said she hopes none of the                 
committee, in the name of family values, would reject a son or                 
daughter who came to them and revealed that, in addition to all the            
wonderful things they are, they are gay. MS. NORTHRIP said she has             
learned in her experience that families come in all sizes, races,              
and configurations. She said defining families as only mothers and             
fathers with children excludes single parent, multi-parent,                    
divorced, widowed, multi-racial and adoptive families and tells                
their children that there is something wrong with them. She said it            
hurts families and increases our suicide rate.                                 
MS. NORTHRIP suggested that acceptance and inclusion do not mandate            
agreement, but only allow individual freedom and choice. She                   
indicated that the rights of the minority are as important as the              
opinion of the majority and she is unable to see how the state has             
any compelling interest to discourage caring, kindness, commitment             
and love. MS. NORTHRIP hoped the committee would not pass this                 
resolution that defines marriage so narrowly and hurts so many                 
SENATOR ELLIS asked CHAIRMAN TAYLOR why he had set up what SENATOR             
ELLIS saw as an artificial time constraint. CHAIRMAN TAYLOR replied            
he only had about an hour and a half to take up three different                
matters. SENATOR ELLIS asked why this matter, due to all the public            
interest, couldn't be carried over. CHAIRMAN TAYLOR replied he                 
intended to move the bill today. SENATOR ELLIS asked why, saying               
there were Alaskans who had come to testify and would not be able              
to do so due to this artificial scheduling crisis. CHAIRMAN TAYLOR             
agreed, saying if they were to take the time to allow every person             
to speak, because of the deeply felt emotions on this issue, he                
thinks every Alaskan would speak. He added he thought that may be              
part of the agenda also.                                                       
SENATOR PARNELL asked if testimony could be faxed into the                     
committee and CHAIRMAN TAYLOR said certainly, people could send                
their comments right through the Legislative Information Offices               
Number 515                                                                     
MR. WILSON VALENTINE, an appointed member of the Commission for                
Human Rights (Juneau) and an Episcopal priest, did not address the             
right or wrong of homosexual marriages, but came to speak about the            
goal of the Human Right's Commission, protecting the rights of all             
people. He fears that if you write into the Constitution a                     
discrimination against any group, you are against human rights and             
the work that modern people in the human family have been striving             
to accomplish. MR. VALENTINE said putting into concrete something              
that discriminates against anyone is wrong. He said the real                   
question is the treatment and protection of the people of Alaska,              
which should be protected in our Constitution.                                 
MR. PETER PINNEY testified via teleconference from Fairbanks, where            
he spoke on behalf of the 20 people there at the LIO who opposed               
the bill. MR. PINNEY said he looked at the issue like gun control,             
if you start placing restrictions on it, who knows where they may              
end. He mentioned other bills under consideration by the                       
Legislature, including those relating to "charter marriage" and                
behavior of people with HIV asked if this is how this Legislature              
wants to be remembered. He said there are other pressing issues.               
MR. PINNY said, as a long time Republican, he has always disdained             
intervention in people's lives. He said this action is not an                  
economic one, but rather a moral one and the state needs to pay                
closer attention to economic issues. MR. PINNEY said the committee             
could not prove to him that any two people getting married creates             
a negative economic impact. He said for long time in Alaska, before            
the pioneers, there was no marriage in Alaska and nothing fell                 
apart. Mr. PINNEY stated he did not feel comfortable with a                    
government legislating against any group, and he especially did not            
feel comfortable with this Legislature presenting legislation                  
against him.                                                                   
MS. ELLEN TWINAME testified via teleconference from a room of 15               
people opposed to the bill at the Anchorage LIO. MS. TWINAME  said             
she does not support this attempt to change the Constitution, which            
she feels will unfairly deny same-sex couples access to benefits               
that mixed couples take for granted. She remarked that married                 
people enjoy privileges that have nothing to do with religion or               
procreation such as tax-breaks, health insurance benefits and                  
rights to make health care and burial decisions for one another.               
She does not see how same sex marriages could hurt society, and                
suggested heterosexual couples are enjoying special rights that                
should belong to everyone. MS. TWINAME concluded by saying that our            
judiciary should not be afraid to set a precedent because that is              
how the world gets changed. She believes being the first state to              
allow same-sex marriages would be a reason for Alaskans to be                  
SENATOR WARD remarked that the person who testified via                        
teleconference from  Fairbanks said there was no marriage before               
the pioneers. SENATOR WARD refuted this, saying Athabascans married            
for thousands of years and did not have same-sex marriage.                     
MR. MICHAEL JONES testified via teleconference from Sitka. MR.                 
JONES suggested that publicity around this bill has expressed the              
need for it in order to retain the sanctity of marriage. MR. JONES             
said this amendment would not sanctify marriage, but only define               
the exclusivity of marriage. He suggested if the act of marriage is            
to be sanctified, perhaps outlawing divorce or making it more                  
difficult to obtain would be more appropriate. He said only one of             
five dictionary definitions he looked at defines marriage in terms             
of opposite sex partners. MR. JONES concluded by saying the                    
Legislature certainly has more important things to do and he urged             
them to drop this proposal.                                                    
TAPE 98-15, SIDE B                                                             
Number 001                                                                     
REVEREND HOWARD BESS, a Baptist minister, testified via                        
teleconference from Mat-Su and said marriage is a part of our                  
society and stabilizes social structures and creates an orderly                
society. However, when government seeks to interfere with a                    
person's choice of a life partner, it defeats the purpose of the               
government, confuses property rights and disrupts orderly decision             
making. REVEREND BESS believes the judge's ruling in this case was             
right on target and was supported by sound legal reasoning. He                 
urged the committee to leave the ruling alone and allow the courts             
to do their job.                                                               
MR. MICHAEL JOHNSTONE testified via teleconference from Los                    
Angeles, but said he had lived in Alaska for 23 years. MR.                     
JOHNSTONE is the head of a ministry dedicated to providing a                   
Christian view of homosexuality, and helping individuals who decide            
to reject homosexuality. His ministry was founded in Alaska. He                
serves on the board of the National Legal Council as well as the               
Steering Committee for the National Campaign to protect marriage.              
MR. JOHNSTONE stated he is a former homosexual, having rejected his            
homosexuality in 1998. He is HIV+ and developed AIDS in 1997.                  
MR. JOHNSTONE said that the idea of rejecting same sex marriage in             
terms of public policy is well entrenched, with 28 states already              
having adopted legislation to prohibit the redefining of marriage.             
He said the public is clearly against such a change, some would say            
due to mass homophobia or mean-spirited religious bigots who want              
to stomp on the freedoms of others, he says it is because people               
instinctively understand that to redefine marriage is to destroy it            
and to destroy marriage is to destroy the structure and meaning of             
families, the glue that bonds society together. MR. JOHNSTONE said             
despite the best intentions of some homosexuals to replicate the               
family, they simply cannot, as the family bond is rooted in the                
ability to create life. MR. JOHNSTONE said if traditional marriage             
is the superglue of society, same sex marriage and the counterfeit             
homosexual family is merely white paste. He said same sex marriage             
is an experiment being played out by intellectual elites and social            
scientists. He says we have been down this road before,                        
experimenting with marriage and the family through no-fault                    
divorce, which has resulted in destroyed homes, fatherless children            
and serial marriages.                                                          
MR. JOHNSTONE said those who utilize the courts in an attempt to               
thwart the fundamental understanding of the public are the same                
people whose sexual philosophy is anti-family and anti-children,               
and who envision a future  that embraces the idea that all sex is              
good and healthy recreation, without norms. MR. JOHNSTONE said                 
their belief is truly in sexual freedom and the ultimate extension             
of this would be incest, pedophilism and other aberrations.                    
MR. JOHNSTONE concluded that the traditional family is the                     
foundation of strong society and deserves special social                       
privileges, providing fulfillment of important functions such as               
procreation, education, protection and provision. He commented that            
the right to privacy is not an absolute, and the state must foster             
and protect the institution of marriage, as it has through the                 
ages. He believes this amendment does that.                                    
MS. LIZ DODD, a local Juneau resident and representative of The                
Alaska Civil Liberties Union (ACLU), said she was somewhat amused              
to hear SENATOR LEMAN saying Alaska should defer to the federal                
government on this issue. She hadn't counted him among those who               
deferred to federal authorities on such things as subsistence,                 
management of the Tongass National Forest and others. She said she             
grew up in Alaska and has seen a tendency to try and maintain                  
freedom from federal interference to the greatest extent possible.             
MS. DODD also remarked that it was interesting that SENATOR LEMAN              
had brought a key person from out of state to comment on this bill,            
specifically from Utah. She commented that Alaska is not Utah.                 
Alaska is governed by a wonderful, carefully deliberated                       
Constitution crafted by great minds; she said we should not usurp              
that work without thinking long and hard about it.                             
MS. DODD asked why this proposed amendment would be added to the               
back of the Constitution rather than being included in Article 1,              
Section 1, the declaration of rights. LIZ DODD said this amendment             
seems to make a cataclysmic change to that section of inherent                 
rights, critical rights. These rights affirm that all persons have             
a natural right to life, liberty, the pursuit of happiness and the             
enjoyment of the rewards of their own industry; that all persons               
are equal, and entitled to equal rights and opportunities under the            
law. MS. DODD said the amendment before them drops a footnote to               
this section excluding some people from its protection when it                 
comes to marriage. She believes this is a dangerous leap, and once             
it has been made it may never end. She said regardless of a                    
person's belief in same-sex marriage, anyone who cares about the               
Constitution should be worried that, when a piece of legislation               
was found to be unconstitutional, this Legislature tried to go back            
and change it.                                                                 
MS. DODD said, growing up in Juneau, she encountered a lot of                  
strange people, but was trained by her parents to leave people                 
alone. She agreed that it will be a big deal if the state allows               
same-sex marriages, but explained that this change is coming and               
why shouldn't it come first in the state that most prizes                      
individual rights and where a person can live and let live. She                
said she did not hold out much hope, but urged the committee to                
come to their senses and reject this bill.                                     
CHAIRMAN TAYLOR asked MS. DODD how she could characterize this as              
a cataclysmic change when there has never been a different                     
interpretation than this amendment assumes. LIZ DODD replied that              
there had never been a challenge to this assumption previously, as             
far as she knew. CHAIRMAN TAYLOR argued that there had been a                  
ruling on benefit packages for same sex couples. He added that the             
courts do not have a monopoly on interpretation of the                         
Constitution, as the Legislature must do it daily.                             
MS. DODD said what she meant was that it is an unprecedented idea,             
as far as she knows, to take away from Article 1, Section 1, the               
inherent rights of people. She said this amendment nullifies the               
concept of inherent rights and allows for an exception that says               
only some people are equal. She said this is a big change for                  
Alaska and that is why she used the term cataclysmic.                          
SENATOR LEMAN agreed that the change could be made to Article 1,               
Section 1, but the drafter of the legislation was the person who               
chose where it would be included. SENATOR LEMAN clarified that this            
is not his bill, but a resolution, which he supports, by the SENATE            
HESS COMMITTEE, the true sponsor of the legislation. He also                   
remarked that he did not invite PROF. WARDLE, nor did he pay for               
his trip, and had only met him that very day. Having said that, he             
expressed appreciation for the Professor's testimony and his                   
knowledge of the issue. SENATOR LEMAN also mentioned an article,               
written by MS. DODD, in which she referred to him as a "moralist               
extremist," saying if he is extreme, along with the 80 per cent of             
Alaskans who believe in traditional marriage, she should not be                
worried about the amendment, since the people of Alaska would not              
support it. SENATOR LEMAN said he is not the aggressor in this                 
case, he is only trying to defend the institution of marriage and              
put it in the Constitution so a judge cannot misinterpret it.                  
MS. DODD asked to respond, and said the reason she referred to                 
SENATOR LEMAN as an extremist, is because a state legislator should            
defend the Constitution, not the Bible. She clarified that she was             
not making a personal attack on LEMAN, only meant to defend against            
his attack on our Constitution.                                                
MR. TOM GORDY, state Chairman of the Christian Coalition, said this            
decision has opened up a can of worms that could destroy the                   
traditional meaning of marriage as we know it. MR. GORDY referred              
to several portions of the decision and commented that the decision            
is what brought everyone there today and necessitated a                        
constitutional amendment. He said the state already has laws                   
prohibiting bigamy and incest, and asked if these prohibitions                 
implicate the right to privacy. MR. GORDY asked if we were prepared            
as a state to recognize multiple person marriages or incestuous                
marriages. He said he sees on t.v. sickening things that are being             
done in our society and added that they will be pushing for these              
rights, all of which are possible due to this decision.                        
MR. GORDY asked how we keep these things from happening as a result            
of a liberal judicial system seeking to legislate rather than                  
interpreting laws. He said we must change the Constitution to avoid            
the crumbling of our society. He suggests we learn from history,               
saying every single society who has weakened marriage or even eased            
divorce all came crumbling down. He urged the committee to pass the            
bill in order to preserve the sanctity of marriage and protect our             
SENATOR MILLER moved amendment #1. SENATOR ELLIS objected to ask               
what the purpose of the amendment is. SENATOR MILLER said it just              
cleans up the language. SENATOR PARNELL asked if the new work draft            
had been adopted and CHAIRMAN TAYLOR said it had not and asked                 
SENATOR MILLER to remove his motion in order to do so. SENATOR                 
MILLER withdrew his motion and SENATOR PARNELL made a motion to                
adopt the work draft (version "E") as a judiciary committee                    
substitute. SENATOR ELLIS objected, asking what the changes from               
the previous version are. SENATOR LEMAN said it is an attempt to               
clarify and ensure the amendment covers what it is intended to do.             
SENATOR LEMAN said the amendment to the amendment just clarifies               
things further with some simplified language.                                  
SENATOR ELLIS asked about MS. DODD's question about the placement              
of the amendment. He asked if there was any difference in weight               
given to any section of the Constitution due to its placement and              
CHAIRMAN TAYLOR replied that everything in the Constitution is                 
given equal weight, regardless of location.                                    
CHAIRMAN TAYLOR asked if there was objection maintained to the work            
draft and SENATOR ELLIS said there was. Roll call was taken and the            
work draft was adopted.                                                        
SENATOR MILLER moved the amendment and SENATOR ELLIS objected,                 
again commenting on what he saw as a false time constraint imposed             
by CHAIRMAN TAYLOR. SENATOR ELLIS also said there was insufficient             
time for people around the state to receive the relevant materials             
and he believed it to be an uninformed decision. He cited these as             
reasons why he needed to object every chance he could. SENATOR                 
MILLER remarked that the public will have the ultimate input, on               
the November ballot, if this amendment goes forward. SENATOR ELLIS             
replied that it is the job of the committee to scrutinize and                  
discuss these issues, and to push it through so quickly in the                 
space of one hearing does a disservice. He said they are not really            
giving it the consideration it deserves. SENATOR ELLIS said it is              
all very transparent and rushed and he does not believe the                    
committee is doing an adequate job.                                            
CHAIRMAN TAYLOR remarked they had spent an hour and 25 minutes on              
the matter and he did not consider that rushed. He said the concept            
is not rocket science. CHAIRMAN TAYLOR commented that they had                 
testimony where every person in the room indicated they were going             
to say the same thing. He said, in the room, there were three or so            
witnesses in support and probably 15 in opposition. He concluded               
that the testimony, in his opinion, was becoming repetitive and                
there reaches a certain point where additional testimony is going              
to do very little to embellish something that has repeatedly been              
said before. SENATOR ELLIS countered that people on both sides of              
the issue had taken off work and changed their schedules in order              
to testify and in normal conditions would have been heard. CHAIRMAN            
TAYLOR said he was acting out of courtesy to people waiting to be              
heard on some other matters that were supposed to come up.                     
 Roll call was taken on the amendment and the amendment was                    
SENATOR MILLER moved CSSJR 42 out of committee with individual                 
recommendations and SENATOR ELLIS objected, saying  he thinks those            
supporting the bill would be better off doing what the judge asked             
them to do, and show the judge a compelling state interest. SENATOR            
ELLIS noted that if SENATOR LEMAN and the witness from Utah are                
correct, it would be easy to prove and that is where they should               
direct their energy and not attempt to subvert the court decision.             
He said that this constitutional amendment seems like the easy way,            
and when the decision was handed down he thought there would be                
work by the sponsors to show the state's compelling interest.                  
CHAIRMAN TAYLOR asked what he suggested be done and SENATOR ELLIS              
said the legal experts know what is required, he envisions the                 
marshaling of opinions. CHAIRMAN TAYLOR asked if this wouldn't be              
done in the appeals process, and did he believe legislation was                
necessary. SENATOR ELLIS replied he was not sure. SENATOR LEMAN                
said SENATOR ELLIS had referred to him and indicated that he                   
participate in showing a compelling a state interest. He stated he             
has not at all been involved in this litigation, but does support              
a resolution introduced by the HESS committee regarding this                   
matter; specifically SCR 25.                                                   
With no further discussion, once again the roll was called and SJR
42 moved from committee.                                                       
CHAIRMAN TAYLOR announced SCR 25 as the next order of business.                
              SCR 25 - APPEAL OF MARRIAGE DECISION                             
SENATOR LEMAN said his opening comments on SJR 42 also apply to                
this bill and he had no further comment. He did recommend an                   
amendment to the committee.                                                    
CHAIRMAN TAYLOR asked if the appeal has yet been filed. SENATOR                
LEMAN said he understood it would be filed today. CHAIRMAN TAYLOR              
asked for testimony on SCR 25 and there was none. He did note that             
several opponents of SJR 42  indicated that the matter should be               
left up to the court, CHAIRMAN TAYLOR suggested they would support             
this resolution.                                                               
SENATOR MILLER moved amendment #1 and SENATOR ELLIS objected for               
the purpose of an explanation. SENATOR MILLER replied it looked                
self-explanatory. CHAIRMAN TAYLOR asked about the phrase "bearing              
in mind that this is a court authorized by the people." SENATOR                
ELLIS commented it is apparently not all that self-explanatory.                
SENATOR LEMAN said he believed that the Supreme Court must be                  
contemplative in deciding this.                                                
Number 120                                                                     
MR. MIKE PAULEY, staff to SENATOR LEMAN, said the amendment is                 
technically inaccurate as there is not yet an appeal in progress,              
he said the revised language is more appropriate. He said the                  
phrase "bearing in mind it is a court authorized by the people"                
simply speaks to the issue that it is a discretionary matter and               
the court does not have to take it up, but given the great social              
and legal ramifications, the public has an interest in the court               
granting review, which they do not have to do.                                 
SENATOR PARNELL suggested removing that phrase, as the court is                
well aware of that fact and to be expressly reminded of it might               
generate some negative connotations and detract from their goal.               
SENATOR PARNELL moved this as an amendment to the amendment: the               
deletion of the phrase "bearing in mind it is a court authorized by            
the people." Without objection, it was so ordered.                             
CHAIRMAN TAYLOR said that brought back the original motion, the                
passage of Amendment #1 as amended. SENATOR ELLIS maintained his               
objection, roll was called and the amendment (#1) was adopted.                 
SENATOR MILLER moved SCR 25 out of committee out of committee with             
individual recommendations. SENATOR ELLIS objected, roll was called            
and SCR 25 moved out of committee with individual recommendation.              
            SB 201 - PROHIBIT RECOVERY BY WRONGDOER                            
CHAIRMAN TAYLOR announced the continuing inquiry into the time line            
report received last week from the Legislative Budget and Audit                
Committee. CHAIRMAN TAYLOR called MR. LARRY CARROLL to testify.                
MR. CARROLL came forward and said he was with the Division of                  
Banking, Securities and Corporations (BSC) for 22 years and was the            
senior examiner at the time of the World Plus, Incorporated (WPI)              
matter. He said he is somewhat constrained by confidentiality and              
certain aspects of the case may best be discussed in a private                 
session with the committee. CHAIRMAN TAYLOR responded that he would            
like to keep the hearing open as long as possible. MR. CARROLL                 
replied his only concern was for certain people's personal                     
finances, which should not become public record.                               
CHAIRMAN TAYLOR asked if MR. CARROLL had had a chance to review the            
time line provided by the auditors, saying there was concern on the            
part of the committee based on this document. CHAIRMAN TAYLOR                  
expressed concern that it had been reported to him that the events             
that had transpired may have affect his perception of his ability              
to continue in state employment.  CHAIRMAN TAYLOR, commending MR.              
CARROLL as a person of high integrity, wanted to give MR. CARROLL              
the opportunity to comment on that.                                            
MR. CARROLL said reasonable people may disagree on courses of                  
action, and his determination to undertake or refrain from an                  
investigation may have been different from another persons, but                
this decision was the purview of the Department of Law. He said he             
did not agree with the decision to leave the matter to the federal             
investigators. MR. CARROLL said he tried to persuade the Attorney              
General to agree with him and failed to do so.                                 
MR. CARROLL said he was not satisfied with the ongoing federal                 
investigation, but thinks the Attorney General acted in good faith             
based on the information that he had. MR. CARROLL understood that              
simultaneous investigations can interfere with each other, but                 
liked to think that with some discretion, a state case could have              
been pursued. MR. CARROLL said Alaska statute does not allow for               
the return of investors' funds, as there is no possibility for                 
MR. CARROLL said the state did do a number of things in the World              
Plus matter. He indicated that there was careful scrutiny of                   
registered individuals dealing with WPI and one person received a              
letter of sanction, while another was suspended and fined. MR.                 
CARROLL said he contacted the U.S. Securities and Exchange                     
Commission, who then traveled to Fairbanks and eventually issued an            
injunction. Mr. CARROLL said that the Attorney General had assured             
him that if the federal government did not follow through and                  
deliver justice, he would revisit the matter.                                  
LARRY CARROLL said, having done what they could do, his division               
stepped back. He also said the evidence he obtained was not tainted            
by the quashed subpoena, like the other evidence previously                    
CHAIRMAN TAYLOR clarified that no state action was brought and                 
again asked MR. CARROLL if that lack of action affected his view of            
his job.  MR. CARROLL replied probably not. He cited the generous              
Retirement Incentive Program offered at the time as his temptation             
to leave, although he said he certainly was not pleased that the               
state did not go forward with charges.                                         
MR. CARROLL said that the first wave of investors they contacted               
wanted the scheme to go forward so they could get paid. He said a              
big part of the propaganda surrounding this scheme was "don't tell             
anyone about any of this." He said he understands that there is a              
group of investors in Fairbanks suing the state so he wouldn't say             
anything further, on the advice of counsel.                                    
CHAIRMAN TAYLOR asked if the federal authorities had brought in a              
clean group of people after having recused the first set of                    
investigators. LARRY CARROLL replied that this was true, saying                
they started over from square one and he provided them with all the            
information he had. He also said that when the first glimmer of                
this occurred, around November, he sent a bank examiner up to                  
Fairbanks to help the bankruptcy controller estimate the size of               
the scheme. He said he was not happy that he was unable to continue            
with the investigation after having started it.                                
CHAIRMAN TAYLOR inquired if, in his report to the Attorney General,            
he had recommended  state charges different from the federal                   
charges being pursued. MR. CARROLL said he had also recommended                
charging people with false filings, that is providing sworn                    
information to his division that was untrue. He said none of that              
would help return money to investors as the money is gone.                     
Number 202                                                                     
CHAIRMAN TAYLOR understood that the money was gone, but commented              
that if this woman had been stopped, a new round of Alaskans could             
have been protected from investing money in her fraudulent scheme.             
MR. CARROLL replied that the time frame suggests that the state                
became aware of the alleged violation sometime in 1995 or 1996,                
when the federal authorities were aware of it as early as 1992, and            
yet did not make the state aware of it. CHAIRMAN TAYLOR said that              
MR. CARROLL was aware of problems with WPI also in 1992, as                    
documented in correspondence between his division and the State of             
Idaho. MR. CARROLL agreed, but said before they approved Ms.                   
Bonham's exemptions, they had representations that all her Idaho               
accounts were settled and there were to be no further sales of that            
nature. CHAIRMAN TAYLOR interjected that in fact all of these                  
representations were fraudulent and yet no charges have ever been              
brought against the attorney that submitted them. LARRY CARROLL                
said this was true, but believed he was currently under suit by the            
bankruptcy trustee.                                                            
CHAIRMAN TAYLOR stated that he was glad someone had cleaned house              
and actually gone out and attempted to protect the people. He said             
his main concern was the audit he received which reported that the             
Attorney General was not sufficiently independent to make this                 
determination and should seek an independent prosecutor to make                
recommendations on these offenses. CHAIRMAN TAYLOR expressed                   
concern that the statute of limitations might have passed on                   
infractions by state employees who deceived MR. CARROLL's division.            
MR. CARROLL replied that the Securities Act was good for three                 
years from the infraction and he agreed that CHAIRMAN TAYLOR may be            
CHAIRMAN TAYLOR asked if the federal government is prosecuting Ms.             
Bonham for bad checks. LARRY CARROLL did not know, but said she did            
issue bad checks. CHAIRMAN TAYLOR asked the amount and MR. CARROLL             
said she did have an account she ran money through that ended up               
about $80,000 overdrawn.                                                       
SENATOR WARD asked for clarification that LARRY CARROLL had spoken             
to the A.G. and was told that if the federal government did not                
come through he would pursue charges. MR. CARROLL explained that               
what the Attorney General said was he would revisit the issue.                 
SENATOR WARD said he must have known that there was an issue, and              
asked MR. CARROLL if he knew who had advised the Attorney General              
to do this. MR. CARROLL said SENATOR WARD would have to ask the                
Attorney General himself, but did know that he relied heavily on               
his deputy, Lori Otto. SENATOR WARD said so it was Lori Otto who               
advised him and MR. CARROLL repeated that SENATOR WARD would have              
to ask the Attorney General. He did say Ms. Otto told him they ran             
a great risk of "screwing up" the federal investigation if they                
went forward. LARRY CARROLL said other things she said were best               
discussed outside of the public domain. CHAIRMAN TAYLOR said he                
would like to keep the proceeding open to the public as long as                
possible but understood they were likely going to end up in                    
executive session. MR. CARROLL mentioned that Ms. Otto was his                 
attorney at the time and CHAIRMAN TAYLOR added that, tragically,               
she was also the attorney for all the victims in the state and they            
person they had to rely upon to protect them from a fraudulent                 
perpetrator like Ms. Bonham. MR. CARROLL said he did not argue with            
this. CHAIRMAN TAYLOR replied that the most troubling part was the             
question of why they chose not to go forward. CHAIRMAN TAYLOR said,            
if they were to believe the words of the Attorney General as quoted            
in the Daily News-Miner, the investigation did not go forward                  
because there were too many of their own people involved in the                
scheme. LARRY CARROLL agreed there were a number of them involved.             
CHAIRMAN TAYLOR said the feds also ran into the same problem of                
having investigators involved, but they did the right thing by                 
recusing their people and bringing in new people to prosecute the              
case. CHAIRMAN TAYLOR noted that they then had to rely on the work             
done by MR. CARROLL and was glad no one in his department had                  
suggested they back off and not investigate in order to spare some             
state employees. LARRY CARROLL said, to the contrary, he distinctly            
recalls the Director saying to Ms. Otto, "we are not going to                  
ignore our law". CHAIRMAN TAYLOR asked why he would have made this             
statement to Ms. Otto, and MR. CARROLL said in response to her                 
opinion that there was no need to proceed as there was a parallel              
proceeding already underway.                                                   
CHAIRMAN TAYLOR asked if MR. CARROLL knew for a fact that Mr.                  
Kirkpatrick responded to something that indicated he disagreed with            
Ms. Otto and would proceed with an investigation. CHAIRMAN TAYLOR              
asked if Mr. Kirkpatrick was asked to back off or told that he                 
should do so. LARRY CARROLL said he was privy to this conversation             
and, though not quite in this context, he thinks the rationale was             
that the continued investigation could cause problems with the                 
federal proceeding especially in aspects such as immunization of               
certain people. CHAIRMAN TAYLOR commented that this would only be              
important if someone was trying to protect a person involved in the            
scheme, probably a state employee. CHAIRMAN TAYLOR said all the                
people involved in the case essentially ended up with total                    
immunity due to the fact that someone decided not to prosecute.                
CHAIRMAN TAYLOR noted that Mr. Hompesch did not appear to be a                 
victim in the scheme; MR. CARROLL replied that Mr. Hompesch had                
told him he was "equally bamboozled" by Ms. Bonham and that she had            
lied to him as well.                                                           
CHAIRMAN TAYLOR asked MR. CARROLL if, in the process of conducting             
his investigation, he received any unsolicited endorsements from               
Ms. Bonahm's attorney, written by state employees, some of which               
would be the very same people who would have been prosecuting Ms.              
Bonham had the Attorney General decided to go forward with the                 
case. LARRY CARROLL said he received 35 such letters and CHAIRMAN              
TAYLOR said someone had gone out and rounded those letters up,                 
especially from influential folks so BSC would not investigate.                
LARRY CARROLL said, at that time, the only thing they had                      
considered was remedying the fact Ms. Bonham was selling                       
unregistered securities and then going forward with an exemption.              
MR. CARROLL said he believes these letters were an attempt to                  
demonstrate that this was a legitimate business enterprise, which              
turned out to be untrue. MR. CARROLL said, regardless of these                 
letters, his organization moved slowly on the exemption process, in            
fact, imposing requirements for the filing of quarterly reports. He            
said these reports were filed and were totally false.                          
CHAIRMAN TAYLOR expressed suspicion regarding these letters,                   
particularly one written by the very person who would have                     
investigated the scheme had it been pursued. CHAIRMAN TAYLOR                   
hypothesized that if he were Ms. Bonham, he might think it was a               
good strategy to embroil the people who would prosecute him. He                
might then have them send letters to BSC at the request of his                 
attorney, further entangling those who might prosecute him to the              
extent that they are in jeopardy of losing their own funds if they             
do so. LARRY CARROLL said he was also quite concerned with this                
scenario, and got in a bit of trouble from an indignant Ms. Otto               
when he chuckled about this very predicament.                                  
CHAIRMAN TAYLOR mentioned his additional concern that, after the               
heat on WPI began to build and further inquiries came in from both             
the IRS and the SEC (who began putting pressure on Ms. Bonham), Ms.            
Bonham was writing bad checks as well as witdrawing large sums of              
cash. CHAIRMAN TAYLOR would like to know if there was any                      
investigation to determine whether there were any significant cash             
deposits to the accounts of those people who sent in these written             
endorsements about the same time these letters appeared. LARRY                 
CARROLL replied that the bankruptcy trustee has filed suit against             
200-300 investors who had good returns, but there were no subpoena             
of bank records by BSC.                                                        
SENATOR WARD asked how much money was invested in WPI after MR.                
CARROLL recommended to Ms. Otto they pursue an investigation. LARRY            
CARROLL replied there was none.                                                
CHAIRMAN TAYLOR clarified that this type of scheme needs a                     
tremendous amount of money to flow in continuously in order to pay             
off previous investors. MR. CARROLL said it needed to double.                  
CHAIRMAN TAYLOR asked if those people who knew Ms. Bonham was under            
suspicion and wrote a letter to BSC did not benefit by assuring                
continued investment and their own payoff in this scheme. MR.                  
CARROLL said, for the purposes of discussion, they should assume               
the people who wrote the letters did so in good faith in response              
to a request. Mr. CARROLL said, assuming all this, what Ms. Bonahm             
had done with the letters is known as "lulling", meaning lulling               
new investors into her scheme on the strength of these letters. MR.            
CARROLL said the letters absolutely did help perpetrate the scheme,            
but that he did not know that the people who wrote the letters                 
knew, at the time, that it was a scheme. CHAIRMAN TAYLOR noted that            
no one has checked to see if, as the scheme began to crumble, these            
peoples' bank accounts ballooned. Again Larry Carroll expalined                
that the rationale was that there was an ongoing federal                       
investigation and the guilty parties would be held accountable. He             
said those were the instructions received form the Department of               
Law. Additionally, he said there is a letter to that effect the                
committee may want to look at. CHAIRMAN TAYLOR asked if this letter            
was written by Ms. Otto. LARRY CARROLL said it was, and the letter             
was the result of several discussions with Ms. Otto.                           
CHAIRMAN TAYLOR asked if he could date when the first discussions              
occurred. MR. CARROLL estimated the discussions began shortly after            
Thanksgiving 1995 and ran through February 1996. CHAIRMAN TAYLOR               
asked when WPI was shut down and MR. CARROLL replied it was late               
November of 1995, to the best of his recollection.                             
SENATOR WARD commented that it had just occurred to him that a                 
letter from a prosecutor endorsing this deal would be a heck of a              
selling tool. SENATOR WARD asked if Ms. Otto solicited these                   
letters and MR. CARROLL said he presumed the letters were solicited            
by Ms. Bonham or Mr. Hompesch, and in fact Ms. Otto did not now                
anything about them until informed by BSC.                                     
CHAIRMAN TAYLOR asked if, during the course of an investigation,               
MR. CARROLL found someone in his department was involved in a                  
fraudulent scheme, would he not recuse that employee immediately.              
LARRY CARROLL affirmed he would absolutely recuse that employee                
immediately. CHAIRMAN TAYLOR then asked if he would stop his                   
investigation because of it and MR. CARROLL said he would not.                 
LARRY CARROLL said in discussion with the Attorney General, he                 
asked what he should say if calls came in asking why the                       
investigation was not being pursued, and the Attorney General said             
he would field those calls and he did.                                         
CHAIRMAN TAYLOR asked if BSC had received calls prior to the Master            
of Bankruptcy shutting Ms. Bonham down. LARRY CARROLL recalled only            
one investor calling, who was having trouble transferring his note.            
MR. CARROLL said it was a firm rule of Ms. Bonham that no investor             
talk about the scheme. He said when people did began to talk, BSC              
heard her four basic stories that she sold to investors. MR.                   
CARROLL said he doesn't know what she thought was going to happen,             
as there was no legitimate business enterprise underlying the                  
scheme. MR. CARROLL explained that BSC had no idea the whole thing             
was so huge, they honestly believed it was limited to 15 investors             
dealing in airline mileage.                                                    
SENATOR WARD said he has been contacted by people who believe that             
the state somehow held this whole thing together until prominent               
people like lawyers and judges got their money and then allowed the            
scam to fall apart. MR. CARROLL said, indeed, some of the people               
who won big were prominent in Fairbanks. He did not go so far as to            
agree with SENATOR WARD's statement, saying some of these people               
also rolled over their money and lost. MR. CARROLL agreed with                 
CHAIRMAN TAYLOR's conclusion that to to really find out who won and            
who lost would take a great deal of investigation. He did say they             
had an open and shut case against Ms. Bonham.                                  
 CHAIRMAN TAYLOR clarified that MR. CARROLL was told by the A.G.               
that if the federal authorities failed to catch the perpetrators,              
he would revisit the case. MR. CARROLL agreed this was what had                
transpired, and he was concerned about the direction of the case as            
the search warrant had been quashed and the evidence was delivered             
back to Ms. Bonham and he was not comfortable leaving the                      
investigation in their hands.                                                  
CHAIRMAN TAYLOR explained that he was concerned about the extent to            
which BSC relied on these endorsements submitted by state                      
employees. He said it seemed there was a plethora of state laws                
violated and the only person now being prosecuted is Raejean                   
Bonham. CHAIRMAN TAYLOR asked MR. CARROLL if, when he got that                 
committment from the A.G., he thought additional players would be              
prosecuted. LARRY CARROLL said yes, to the extent that there were              
other culpable players involved. MR. CARROLL indicated he                      
hypothesized that other people might have some problems that would             
come to light in an investigation. He stated this, also, "did not              
sit well".                                                                     
TAPE 98-16, SIDE B                                                             
Number 001                                                                     
CHAIRMAN TAYLOR asked to whom MR. CARROLL was referring by this                
last comment and LARRY CARROLL replied he meant Ms. Otto, who                  
suggested he "be careful" making those types of styatements. He                
said he indicated he was speaking to her as his lawyer.                        
CHAIRMAN TAYLOR asked if she told him to "be careful" about                    
investigating state employees and MR. CARROLL clarified she said to            
"be careful" about making a statement implying the possible guilt              
of state employees. CHAIRMAN TAYLOR said it was, though, ok to make            
the statement that Raejean Bonahm was culpable and MR. CARROLL said            
it was already apparent, through a preponderance of the evidence,              
that she was implicated. MR. CARROLL said he still does not know if            
there is anyone else who may be culpable, due to the fact that                 
there was no further investigation of the matter. He again                     
suggested that the committee look at the letter sent to the                    
division, which clearly sets out instructions given to employees of            
the Department of Law. He stated very clearly that he is not                   
accusing anyone of anything, and indicated to CHAIRMAN TAYLOR that             
they may be getting into that grey area he hoped to avoid.                     
CHAIRMAN TAYLOR thanked MR. CARROLL for his testimony.                         
LARRY CARROLL expressed appreciation for the opportunity to speak.             
He said the division does a lot of good work and catches a lot of              
bad guys. He said this scam turned out to be one of the biggest,               
and was taken over by the feds who finally completed it. He said he            
is sorry for the people who lost their money and he is glad to have            
aided the federal investigation. He concluded by saying he makes no            
apologies for what he did and CHAIRMAN TAYLOR replied that he hopes            
others will be able to make that same statement.                               
CHAIRMAN TAYLOR said the Legislative Auditors had been authorized              
to do an audit of BSC and the Department of Law relating to their              
decisions surrounding this case. He hopes to see a preliminary                 
report in 30 days, and indicated that, at that point, it may be                
necessary to go into executive session.                                        
MR. CARROLL remarked he wanted to be clear that he is no longer                
affiliated with BSC, and that he is not a spokeman for them.                   
CHAIRMAN TAYLOR aknowledged this was understood and, with no                   
further business to come before the committee, adjourned the                   
meeting at 4:02.                                                               

Document Name Date/Time Subjects