By Gordon R. Friedman

The Oregonian

State ethics commissioners Thursday unanimously rejected a proposed settlement with ex-First Lady Cylvia Hayes, Commissioner Dan Mason said.

Hayes, who owns a home in Bend, had agreed in January to a $44,000 fine for breaking ethics laws 22 times. But the settlement needed final approval from the Oregon Government Ethics Commission.

Hayes did not attend the commission meeting, and her absence was a factor in the vote against the settlement.

“All of us felt offended,” Mason said.

Ethics investigators concluded Hayes abused her access to Gov. John Kitzhaber, her longtime fiance, to land consulting work that paid more than $200,000.

Federal and state prosecutors declined to seek criminal charges against Hayes and Kitzhaber. But the couple’s actions sparked an influence peddling scandal that led to Kitzhaber’s resignation and Hayes’ bankruptcy.

The vote sends Hayes and the state back to the drawing board, leaving her case pending as officials and lawyers renegotiate a settlement.

If and when one is reached, said Michael Fuller, Hayes’ bankruptcy attorney, the former first lady’s fines would likely be forgiven because she has filed for bankruptcy.

Hayes has to make a good-faith effort to pay her debts, Fuller said.

Even so, what she pays of an eventual ethics fine would be “pennies on the dollar,” he said.

“The vast majority of the fine would be forgiven, if not all of it,” Fuller said.

That fact didn’t set well with the ethics commissioners.

“The discussion among all of us led to wondering if she would even pay anything,” Mason said, “which tipped the scale on rejecting the agreement, in my opinion.”

Kitzhaber settled his own ethics case last year, agreeing to a $20,000 fine for 10 violations.

An element of Hayes’ bankruptcy proceedings involves a debt of about $125,000 owed to The Oregonian for attorney fees stemming from a court case in which the newspaper prevailed in its attempt to access Hayes’ emails.

Fuller said he and the newspaper’s attorneys have been negotiating for months and have reached a tentative settlement which will soon be presented to the court. Willamette Week first reported the negotiations.

“We have a deal hammered out,” Fuller said, “and it’s a fair deal.”

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