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Florida repeals ‘blind trust’ law that shielded Rick Scott’s investments

A loophole prevented efforts to make sure the governor was following the 2011 law.
U.S. Sen. Rick Scott, R-Fla., speaks to reporters on Capitol Hill in January. (AP Photo/Manuel Balce Ceneta)
U.S. Sen. Rick Scott, R-Fla., speaks to reporters on Capitol Hill in January. (AP Photo/Manuel Balce Ceneta)
Published Jun. 6, 2019
Updated Jun. 6, 2019

TALLAHASSEE — The law that allowed millionaire former Gov. Rick Scott to create a blind trust to shield his investments from public disclosure was quietly wiped from the books Tuesday by his successor, Gov. Ron DeSantis.

The law was passed by the Republican-led Legislature in 2011 when Scott, a former hospital executive, was first elected to office.

Scott, who was elected to the U.S. Senate in November, was the wealthiest governor in Florida history. He said the law was needed to avoid any conflict of interest between his work as governor and his fortune, which he disclosed to the U.S. Senate last year as between $255 million and $510 million.

But a loophole in the 2011 blind trust law made it impossible for the courts and the Florida Commission on Ethics to verify if the governor had indeed followed the law or used it to skirt scrutiny, leading to years of protracted lawsuits against him by his opponents.

THE BUZZ: Rick Scott won’t put his wealth in a blind trust anymore

When Scott established the blind trust, he put it in the control of two of his long-time financial advisers and a former business partner. Then, when Scott ran for re-election in 2014, he briefly dissolved his first blind trust and released information about the individual holdings in it. He also released his tax returns for 2013.

The tax returns showed that the Scott family earned millions more than the governor reported individually on his financial-disclosure form and it raised questions about whether Scott might have control over assets held by his wife.

An investigation by the Herald/Times into those investments found that filings with the Securities and Exchange Commission indicated that the governor was listed as the owner of investments in several companies that he had not reported to the state.

Questions and lawsuits dogged Scott during his eight years as governor about whether he was using his office to profit from his investments in several companies that did business with Florida.

THE BUZZ: Rick Scott reveals highest-ever family assets of at least $255 million

Among the companies in which Scott and his wife had investments were Gilead Sciences, the company that produces the drug used to treat inmates with hepatitis C; Spectra Energy, the company working to build the Sabal Trail pipeline in North Florida; Mosquito Control Services LLC, which offers Zika control spraying services; and the parent company of Florida East Coast Industries, which owned All Aboard Florida.

Sen. Tom Lee, R-Thonotosassa, said he sponsored the bill because he disagreed with the law and supported the constitutional amendment that requires that financial interests of elected officials “should be information that’s available to the voters.”

“I think it’s great when successful people want to come in and bring their life experience to government ... but you have to play by the same set of standards as I do,” he told a Senate committee last spring.

Agriculture Commissioner Nikki Fried, who reported a net worth of about $272,000 when she was elected last year, is the only current state officer to open a blind trust to shield her investments. The repeal of the blind trust law takes effect January 2020.

DeSantis told reporters on Tuesday that he would sign the bill because “it makes sense” but he said that doesn’t mean he had concluded that Scott abused the blind trust law.

“I’m certainly not suggesting he did,” DeSantis said. “I have no knowledge of what he did.”

THE BUZZ: Rick and Ann Scott’s financial trail leads to Cayman Islands tax haven

Scott spokesperson Chris Hartline said the former governor “complied with the law” and didn’t have any comment on its repeal. “Obviously, it doesn’t impact us anymore,’’ he said, noting that Scott now files monthly financial disclosure reports as required by the U.S. Senate.

Unlike Florida law, which requires specific amounts listed for each asset, the federal law allows for a high and low range so it is impossible to know how much Scott and his wife are worth and how much they own in each of their investments.

In 2014, a lawsuit was filed by George Sheldon, a Democratic candidate for attorney general, but a court ruled that the governor could not be compelled to disclose more information. In 2017, Tallahassee attorney Don Hinkle, a major Democratic fundraiser and donor, filed a lawsuit claiming that Scott’s use of the blind trust violated the state constitution, which requires “full and fair disclosure” of assets by public officials.

Hinkle, who had tried and failed three times to get the Florida Commission on Ethics to investigate the governor’s financial disclosures, said the repeal of the blind trust law was “overdue.”

“It’s inconsistent with the Florida Constitution,’’ he said. “They just passed a special law to benefit Rick Scott. Since he moved to Washington, they don’t need it anymore.”

THE BUZZ: Rick Scott and wife invested in parent company bidding on Tampa high-speed rail

Hinkle said the court rulings underscore the loophole in the state’s financial disclosure law. He had asked the Ethics Commission to investigate why Scott signed federal securities documents indicating he was the “beneficial owner” of assets in his wife’s trust but didn’t report them as assets on his own financial disclosure form. The commission — some members were appointed by Scott — dismissed the complaints without looking at Scott’s financial record.

“What my case showed is that the Ethics Commission’s decision not to pursue a claim is the end of the road,’’ he said. “There should be some judicial review of the Ethics Commission decision on whether to even investigate a claim. No one has ever looked at what Rick Scott did to see if it complies with the law. We don’t know what he owned while he was governor.”

THE BUZZ: Rick and Ann Scott had stake in shipping giant linked to Putin

The Florida Constitution requires public officials to disclose their financial interests and, while the Ethics Commission can issue a fine, a reprimand or recommend impeachment for violating the law, it has no authority to order disclosure if a public official fails to do it.

Mary Ellen Klas can be reached at meklas@miamiherald.com and on Twitter @MaryEllenKlas

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