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Friday, June 16, 2006

Bad Press for Matt Entenza


Entenza pressed on wife's ties to United
Republican foe asks how DFL attorney general hopeful would avoid possible conflict in probe
Pioneer Press

Rep. Matt Entenza, the Democratic candidate for Minnesota attorney general, should explain how — and if — he could avoid a serious conflict of interest involving a state investigation of UnitedHealth Group, a company that has given millions of dollars in stock options to Entenza's wife, the Republican attorney general candidate said Thursday.

"We can be certain no attorney general in Minnesota history has faced such a significant personal conflict of interest on such an important issue," charged the GOP candidate, Rep. Jeff Johnson of Plymouth.

At a news conference, Johnson recognized the attorney general's office has procedures to deal with conflicts of interest. But he said he could not imagine how Entenza, if elected, could adequately separate himself from an investigation of UnitedHealth Group initiated by Mike Hatch, the current attorney general.

In reply, Entenza said that, if elected, he would follow standard policies in the attorney general's office that allow, and demand, new members of the staff avoid any contact with actions against former clients or employers.

"I'm a former assistant attorney general," Entenza said. "The office has a rigorous conflict-of-interest policy that anyone would have to follow, and I would do exactly the same thing."

The Minnetonka-based UnitedHealth Group is being investigated by the federal Securities and Exchange Commission, the Internal Revenue Service and a federal prosecutor in New York. The company and certain officers also have been named as defendants in multiple shareholder lawsuits.

Entenza's wife, Lois Quam, is a top executive at the health insurance company. And she, like many UnitedHealth employees, earned huge sums on stock options she received from the company.

Entenza, a state representative from St. Paul who leads the Democratic-Farmer-Labor minority in the House, estimated Quam has earned "probably $20 million" from stock options during her career at UnitedHealth.

The federal investigations and the civil lawsuits center on allegations that UnitedHealth CEO William McGuire, Chief Operating Officer Stephen Hemsley and several other executives received several billion dollars worth of stock-option grants that were backdated to times when stock prices were particularly low.

That allegedly allowed them to realize bigger profits when they exercised the options and sold the shares. UnitedHealth is one of several dozen companies across the country that face federal investigations involving similar allegations.

Quam has not been accused of wrongdoing in any of the public filings by federal investigators, and Hatch said he had seen no documents accusing Quam of any impropriety.

In addition, Brian Rice, a Minneapolis attorney for eight public employee pension funds that initiated one of the civil lawsuits against UnitedHealth, said he knew of no allegation in any of the suits that Quam's stock options were handled improperly.

Hatch, who disclosed his investigation of UnitedHealth in a June 6 letter to a federal magistrate supervising the civil suits, said the state investigation would look at the role UnitedHealth's directors played in awarding stock options and at the question of whether shareholders were defrauded.

Rural Democratic blogs are very cool to Matt Entenza.