Bakke Calls Defendant Sandy Blunt

November 8, 2010

Bakke calls Sandy Blunt.  Served as political appointee of G. H.W. Bush.  Worked at Bureau of Workers Compensation from 1995-2004 in Ohio.  Was WSI CEO May 1, 2004 to December 2007.  April 18, 2007 - October 22, 2007 on paid administrative leave.  WSI policy handbook outlined chain of command.  Take complaints to direct supervisor, then next level, eventually to CEO.  If not resolved, go somewhere else, he didn't remember where.  Said he noticed inappropriate relationship between Long and Peltz.  Lots of time behind closed doors.  Organization lost faith in their ability to go to either Long or Peltz regarding fraternization or sexual harassment.  Said he met with Long regarding Peltz multiple times.  He says he remembers one specific date when they documented it around April 2, 2007.  Said considered their relationship had risen to hostile and offensive environment to others. 

This was language from the WSI handbook.  Fraternization was defined as work environment free from intimate, romantic, or dating relationship between supervisor and subordinate.  Blunt had no evidence.  Long denied it, but the organization believed they were intimate and you can't unring that bell.  He consulted with an outside HR person named Hunter Lott because a witness said Long touched Peltz' butt.  Lott said to document it in a side file and take the sexual harassment policy to his team, have them review, sign and date.  Blunt told Long if the conduct did not stop he would move the management structure. 

Long said he was loyal to his wife, but said Peltz wanted to have a sexual relationship because of problems with her husband.  Long agreed about the perception of a relationship and put distance between them.  Blunt said the conduct did not change and he planned to change their reporting relationship.  He said it was particularly bad because of her position as HR and Long's position as her supervisor.  Where else can people go if they're not confident in going to them?

Said Long recommended larger than minimum pay raises for Peltz.  18% increase.  Blunt asked for a basis.  Long said the finance position was open, that paid more, Peltz would apply for that position and they would lose her in HR.  Blunt agreed. 

He stored the side file in a candy drawer that everyone would access.  Said did not place in personnel file because witnesses did not come forward.  Without a witness, it would not be fair to Long. 

Went on leave.  Indvik wanted him to work with Halvorson for continuity.  He told Halvorson of his side file.  Halvorson came back and said those file notes weren't in his drawer.  Side file notes made April 2, 2007.  So when he got back, he recreated the document based on the memory he had. 

Billie/Jim notes.  Met with employee alleged after 5:00 p.m. in January, Jim slapped Billie on butt.  Billie laughed and hit Jim on the arm with a folder.  Employee told this to Cindy Ternes.  Ternes told me.  Third party upset but afraid to come forward. 

Talked with Bjornson by phone.  She in California.  Called Hunter Lott.  Lott advised document issue re  SH policy.  Ask to get first hand statement from witness.  April 2, 2007 harassment policy signed by all execs.  Jim noted discomfort with strong attraction Billie had with him.  Said he had to tell his wife.  Blunt advised Long to limit private time, no closed doors, but noted conduct continued.  Blunt wanted to change management structure. 

Observed the two together at Paradiso.  After 2 drinks, Billie became amorous.  One board member said "Anyone else notice they were about to throw down right here?" 

Halloween party.  Billie brought children first year.  Jim took Billie's kids trick or treating around the office.  Second year, they're walking around like they're family, weird. 

Regarding performance audit.  Can't argue with the auditor, we will not win.  Then Jim said, I'm a marine, I'm trained to kill, I will not take this.  All of us were under stress, but none of us got to that level.  Got complaints from Bachler that she and peers can't go to Long because of his protection of Billie.  Employees thought Long favored Billie because of pay raise. 

Chamber of Commerce meeting.  Said they met with democratic caucuses and republican caucuses, this meeting was business leaders.  Not unusual to meet with legislators.  George Keiser was their chair of Industry, Business and Labor.  Had nothing to do with election or fund raising.  They had an audit.  There was alot of press.  They wanted the truth about WSI to get out.  Long spoke at the meeting and said I can write this, my wife can also, WSI does good work.  Keiser and Blunt said slow down, we're a public agency.  Blunt said he told the Chamber of Commerce just to put in a public records request and they would have to write their own editorials.  WSI could provide facts and bullet points. 

Was concerned about calling Strevak on the cell phone.  I said to Jim that's your state cell phone.  I said the minute someone sees the State Republican Headquarters on that phone, it will invite scrutiny.  The next day Long wanted clarity, said he talked with Jodi and thought this was a violation of the Hatch Act.  I said I am a former federal employee, a George Herbert Walker Bush appointee.  I said the Hatch Act is regarding political fundraising.  That's not what we're doing.  I said it's ok, we're just providing information.  Halvorson came in and said it's legitimate. 

Bakke said that Long provided testimony that you both acknowledged it was illegal conduct.  Absolutely not.  After public records requests came in, Halvorson and Long went to Strevak's office at Republican headquarters to share information.  Said there was no letter writing campaign. 

Long noted two comments from Keiser at the Chamber meeting.  WSI is the crown jewel of the republican party and republicans are going to lose WSI.  Blunt said Keiser said neither. 

Long testified regarding requests from auditors that Blunt said if they request 30 pages, give them 100.  Blunt said, I said if they request 3 pages, but it takes 30 to respond, do provide the full record to protect the agency.  This was not an attempt to hide or bury.  That he understood this would result in a deeper audit and that they provided 10-55 times more information than was required. 

Said Spencer was not computer savvy.  He wanted business contacts from his computer.  There were only 11.  That he personally brought Long along as a witness and as the IT guy, Long could punch in the password. 

Any other contact about Long and Peltz.  One employee said Billie had Jim wrapped around her little finger.  Another time Jim and I had made a decision.  Billie got irate and chewed Jim out.  I said this is what I'm concerned about. 

Discussion of animosity between Long and Halvorson.  Halvorson said Long insubordinate.  I said he would have to deal with it and if it was still going on when I returned, I would deal with it. 

Regarding Armstrong, open records.  "In Ohio I worked with a person who said you always give out open records.  It's not the discovery but the cover up that kills you."  I brought that to North Dakota.  Said WSI employees visited him at his home when he was on leave.  Said board was explicit that he was on paid leave and he should work with Halvorson for continuity.

Regarding Nallie and Hutchings.  Long suggested it was inappropriate to appoint them and not go through a hiring process.  The audit said they suggested an open hiring process, but it was ok to appoint them, but we should put their qualifications in the file because they weren't there. 

Bakke:  Long said he was deathly afraid of you.  Did he tell you that?

Blunt:  No.  In the criminal trial, Long said I was fairly easy to talk to.

Tuntland objected and wanted the context of that testimony put in the record. 

Q-You told Blunt of concerns regarding spending money. 

A-Numerous conversations.  Anything not justified by the procurement law, Blunt would justify as promotional. 

Bakke asked whether Long was present at meetings regarding the audit. 

Bakke:  Did he say at meetings that there was suspected or actual violations of law?

Blunt:  Never.

Bakke:  Any complaints of unethical activity at WSI?

Blunt:  Never.

Blunt said Halvorson was chosen as interim CEO as he was free of conflicts and the employees mistrusted Long.  Said there were alot of conflicts with Long, including the media and Billie.  Said when he returned on October 22, 2007, he was unaware Long had filed a whistleblower complaint and that Halvorson was still handling management while he got up to speed.  Said he was not involved in the decision to put Long on paid administrative leave because he was the subject of the complaint and that would have been inappropriate.  Said he had left the agency in December of 2007, three months before the decision was made to terminate Long. 

Was aware Long was vocal in the media regarding WSI.  Heard him on the Heitkamp show.  Said his comments were patently false and never occurred.  Did not understand how he could expect to go back to the agency.  Said he told Heitkamp he couldn't work with the CEO and he couldn't just take it lying down, that they should just fire him.  He couldn't expect to just lie like that and then go back. 

Tuntland redirect Blunt.

Tuntland:  You said you thought because of his request for whistleblower protection you thought it was inappropriate for you to supervise Jim.  From the document whistleblower complaint under heading misuse of Spencer's sick leave, regarding Spencer's sick leave, it was not only a misapplication of public funds, but accessing of information given to Spencer for grant writing.  Even after you left, he had Halvorson give Spencer computer information on a daily basis.  Long named Halvorson as a suspected wrongdoer so you thought it was ok for Halvorson to supervise Long?

Blunt:  Yes.

Tuntland:  Were you talking to Sonja Nallie when she said "Jim Long is taking the cops to Armstrong's office"?

Blunt:  Not that I recall, no.

Regarding hiring of Hutchings and Nallie.  Tuntland asked if either were veterans.  Blunt said no.  He asked if Blunt was aware that Veteran's Preference law applies to everyone at the agency but agency heads, and asked if he'd given veterans an opportunity to apply for those positions.  Blunt:  No, because they were appointments. 

Tuntland:  You said Jim and Billie had performance related issues and spent alot of time behind closed doors.  Were the doors locked?  He didn't know.  He asked whether he'd ever seen people adjusting clothing.  Blunt said he didn't think it had to be physical to be inappropriate.  Blunt said they could have had meetings in conference rooms.  Tuntland established that WSI handbook said if there were fraternization, the preferred resolution is moving one employee from supervision to another, but no action was ever taken.  Blunt said that wasn't fair, he was seeking to make administrative changes and move Billie to another supervisor.  He said I was going to put something in Jim's file that could lead to his termination.  Under the policy handbook, it refers to unwanted sexual advances and states such conduct was offensive.  Established no evidence of Long sleeping with Billie or having an affair.  Tuntland established others at WSI had sexual relations that was not considered offensive.  Tuntland pointed out that they had a policy of nepotism also and asked whether he would consider a husband supervising a wife offensive to employees.  Blunt:  In the case you are referring to, it was legal.

Regarding the side file.  Tim Wahlin's initials date 10-27-07 were on the recreated document.  Established within first week of returning to agency Blunt gave the recreated document to Wahlin.  Asked whether Blunt knew Jim had already talked with Quinn.  Blunt said he did not.  Tuntland said it was in the newspaper.  Then Blunt said maybe he did know.  Tuntland established Blunt had put this very sensitive document in his candy drawer which was accessible to many people.  Blunt said he was never aware of any people digging through that drawer. 

Regarding the sexual harassment policy with signatures, the only member of the executive team who did not sign it was Halvorson. 

Regarding Chamber meeting, Blunt said there was a political effort to insure the WSI governance structure was changed.  The meeting at the Chamber was to fashion a response against that change.  A change would have put the appointment of WSI CEO under the Governor.  WSI made it through the session without changes, but the initiated measure did make those changes. 

Blunt said he never talked with Billie, he talked with Long.  Others in the executive team did talk with Billie.  Regarding the harassment policy meeting, he did not explain why they were having that meeting, did not expressly say it was because of Jim and Billie. 

Blunt said he became aware of the search warrant of Armstrong's office when Armstrong called him and said this is a great day, your charges have been dropped.  But, a search warrant had been executed.  My journal has been seized and copied.  That was late Friday.  He was reinstated the following Monday. 

Tuntland established the report about Jim patting Billie on the posterior was made three months after the event and questioned if that showed great concern.  Blunt just said he took it seriously. 

Regarding who would become interim CEO, Blunt knew Nallie and Hutchings could not because they were his Ohio friends and Bjornson was busy with legal.  He did not recall that Jim had supported Bjornson for the role.  He said that Halvorson and Long were the two choices, but the board made the choice of Halvorson. 

Tuntland established Billie was not aboard during Halloween 2005, so the first Halloween party was 2006.  Halloween 2007, Blunt had just been reinstated and Tuntland questioned whether Blunt would remember if Jim was walking around with Billie's kids.  Blunt said that was employee perception and because of the whistleblower complaint he did not have contact with Jim. 

Tuntland:  While you were CEO of WSI, Denise Bachler complained about her supervisor, Tammy Dolan?

Blunt:  Don't recall.  Pat Kelly, yes.

Tuntland:  Any other supervisors besides Dolan, Kelly and Jim that she complained about?

Blunt:  Don't recall. 

Tuntland established the Chamber of Commerce meeting was the first stakeholder's meeting Jim had been invited to and that he was never invited to one again. 

Back to Mark Armstrong's journal.  Journal said, talked about ways of solving crisis, everything we do is a risk.  And, chair Indvik wanted to be aggressive.  Blunt could remember neither.  Note:  Tuntland is not sharing the contents with the jury on the overhead.  He expects them to read these documents.  Tuntland asked if Blunt were privy to Keiser's comments regarding a public campaign.  Blunt said Keiser did not discuss that with him.  May 7th reference to 5 hour meeting at Steve Cates' house.  Blunt said he was not at the meeting and was not part of plan to oust Riha. 

Following meeting at Chamber, did WSI submit documents in response to a request by Keiser or Chamber or Strevak?  Blunt said that WSI fulfilled public record requests.  Tuntland:  Were any documents prepared by WSI employees, specifically in response to the Chamber's request?  Blunt said they fulfilled the request with records they had.  They did not prepare anything and that was a question for Armstrong. 

Tuntland:  Did you give Jim a copy of the information you retrieved from Spencer's computer?

Blunt:  Don't recall. 

Tuntland:  Jim had a good knowledge of computers, didn't he?

Blunt:  Yes.

Tuntland:  The board wanted you to communicate with Halvorson regarding WSI while you were on leave?

Blunt:  Yes, to stay in contact for continuity.

Tuntland:  Why is that not in the board minutes?

Blunt:  Indvik said that to me personally, verbally.

Tuntland established that Halvorson had only directly managed two people at one time. 

Tuntland established that Long had approved a larger than minimum pay raise for Peltz and that he had given Blunt justification and Blunt approved of it.  He had also approved of larger than normal pay raises for Spencer, Nallie, Bjornson, Halvorson and Armstrong.   There was a discussion of Blunt being charged with three separate felonies.  One was voluntarily dismissed by the prosecutor.  The jury found Blunt guilty on one count and dismissed one count.  Blunt said the prosecutor had a discovery violation and that is the issue under appeal at the North Dakota Supreme Court and there was also a Writ of Tertiari at the US Supreme Court. 

Bakke re-cross.

Bakke established the contact list off Spencer's computer were contacts from Ohio from workers comp, not business contacts from North Dakota.  Blunt said not that he recalled. 

When Blunt removed himself from supervising Long after he returned, Halvorson was not involved in investigating the whistleblower complaint.  Rob Forward, Anne Green, and Tim Wahlin were and reported to Bjornson. 

Said veteran's preference issue was reviewed by legal team and HR at WSI.  Blunt did not remember who assigned Forward and Wahlin to investigate Long's allegations, but he did not.  Said the report was addressed to Blunt and Halvorson just out of habit.  State auditors report said aware of people suspected of wrongdoing appointing their own investigator.  Blunt said no, this was a different situation involving Long investigating someone. 

Blunt excused.