DOWN BY LAW

THE CITY'S CONTENTIOUS TOP LAWYER COURTS POLITICAL TROUBLE.SECRET AGENT DAN HE'S YOUR CITY ATTORNEY. BUT DAN MUSE SAYS YOU'RE NOT HIS CLIENT.

With Denver's city elections less than three months away, Mayor Wellington Webb may be unhappy to find Dan Muse, the man he named city attorney back in 1991, buffeted by accusations of wrongdoing and ineptitude. But he shouldn't be surprised.

Twelve years ago, during his first, unsuccessful bid for the mayor's seat, Webb himself took political advantage of the travails of then-city attorney Max Zall, an appointee of embattled incumbent Bill McNichols. Zall, critics said at the time, was too old, stale and feckless for the job. He was taking every Friday off to visit his sick wife in Arizona, and he was allowing members of his staff to do legal work on the side for private clients. Webb blasted the moonlighting policy in particular, saying it created dangerous conflicts of interest for lawyers representing the city. Zall's shortcomings, Webb said in one campaign speech, were "symptomatic of this entire [McNichols] administration."

It was an effective tactic. Though Webb didn't end up winning the race (fellow challenger Federico Pena did), his charges definitely damaged McNichols. Five days before the May 1983 election, the 82-year-old Zall resigned, saying he was "tired of being a target."

Today it's Webb who's the embattled incumbent--and Muse the city attorney under fire. Last fall the Federal Aviation Administration revealed it is investigating whether Muse improperly used Denver International Airport funds to pay city legal expenses not related to the project. Muse's decision to hire the high-priced Washington law firm of Debevoise & Plimpton to defend Denver against another airport probe by the Securities and Exchange Commission also boomeranged badly when the firm racked up close to $1 million in legal bills in the span of just a few months. Muse boiled over with frustration last week when it was revealed that the U.S. Department of Transportation's inspector general is looking into whether the payments to Debevoise themselves were illegally made with DIA funds. "It boggles the imagination how they can think it's wrong," Muse complained to one reporter.

More than once in the last year, Muse has drawn flak for conducting city business in secret. Councilwoman Mary DeGroot recently ripped Muse for refusing to release Debevoise & Plimpton's complete billing statements to the public. (Westword has taken Muse to court in an attempt to force him to release uncensored billing statements from the city's outside attorneys.)

Two weeks ago, Muse was on the receiving end of yet another damaging allegation. Assistant City Attorney April Snook complained that Muse had vengefully demoted her because she's an open supporter of DeGroot, one of three candidates challenging Webb this spring. "I found that outrageous," DeGroot says.

The charges come on the heels of previous controversies involving Muse, such as the 1993 flap over an alleged sweetheart lease with the city-owned Winter Park ski resort. But don't expect Muse to follow in Max Zall's footsteps and quit. Muse, 48, says he's proud of his record--and insists it will stand up to scrutiny from federal investigators, the media and those seeking to unseat Webb.

"I welcome any analysis of what I've done in this office, because I've done an excellent job," Muse says. "If the mayor's political opponents want a whipping boy during the campaign, they've come to the wrong place."

When Dan Muse was growing up in Columbus, Ohio, his parents sent him to Eastmoor High School, where, he says, he was one of only a handful of black students and a regular target of racist barbs from classmates. It was excellent training, he says, for his current job. "I got shit shoveled at me every day when I was twelve years old," Muse says. "That was tough. This [being city attorney] is real easy by comparison. I can handle this doing the backstroke."

Muse was selected as Denver's top lawyer in August 1991, a month after Webb took office. The public was told he was chosen on merit alone--picked by a special Webb task force that had scoured the city to find the best possible talent to fill the new mayor's eight-person cabinet. That task force, according to the Denver Post, was "designed to keep cronyism from tainting the selection process."

But, in fact, Muse was an old friend of Webb's. Back in the early 1970s, shortly after his graduation from the University of Denver law school, Muse managed two of Webb's campaigns for the Colorado legislature. What's more, the chair of the "cronyism-free" committee that selected Muse was local attorney Tyrone Holt, a Webb campaign aide whose law firm almost immediately thereafter was given lucrative legal work on the bond-underwriting team for Denver International Airport.

Muse came to the city job with a mix of private and public legal experience. Early in his career, he was a law partner of King Trimble, a political ally of Webb's who'd served in the state legislature (and later, like Holt, as a DIA bond counsel). Muse then entered government service, working as a state assistant attorney general for several years before being appointed to the Colorado Public Utilities Commission in 1979. He served as a commissioner for five years before stepping down and going back into private practice, where he specialized in utility and small-business law.

"He's a fine lawyer," says Edward Bendelow, one of Muse's former law partners from the 1980s. Bendelow says he's been following the flap over Debevoise & Plimpton's legal bills in the papers over the last few months--and insists that Muse is getting a bad rap. "He's doing the job that he has to do as an attorney for his client," Bendelow says. Even some of the Webb administration's staunchest critics say they have nothing personal against Muse. "I think he's a good, competent attorney," says city councilwoman Ramona Martinez, a Webb enemy who rarely turns down a chance to lambaste the mayor.

But others are less impressed. Bill Schroer, former head of the Colorado Energy Advocacy Office, says Muse gave a far-from-stellar performance during his stint on the utilities commission. Schroer's job was to represent the state's low-income residents before the agency, and he spent many hours in front of the commissioners as they mulled utility rate hikes and other matters that would affect his clients. Not only did Muse seem uninterested in the work, Schroer says, but he sometimes fell asleep in the middle of PUC proceedings, a habit that earned him the unflattering nickname of "Commissioner Snooze."

"We saw it more than once," says Schroer, who now heads a lobbying group called the Colorado Business Alliance. "We put everything into our work, and we expected a public servant to do the same. When you see someone snoozing, it puts a seed of doubt in your mind."

Muse, however, has been wide awake when it comes to protecting the interests of Wellington Webb. City Hall critics say he's so blinded by politics that he ignores the law when necessary in order to aid the mayor. "What I see from the top is that the advice is political and not necessarily legal," says DeGroot. She cites an incident in 1993, when Muse's office, she says, joined Webb in blocking her and Ramona Martinez from viewing city documents relating to controversial concession contracts at DIA. Martinez and DeGroot complained publicly, and the mayor quickly relented.

Last year the Denver Post reported that Muse had stifled a report by a city investigator that accused former Webb aide Charles Rutland of possible criminal acts, including giving a city contract to one of his friends. Muse decided not to forward the report to the Denver district attorney, even though DA Bill Ritter later said the city attorney's office had no jurisdiction in the matter. (After the Post story came out, Ritter demanded a copy of the report but found no evidence of wrongdoing on Rutland's part.)

"On a personality basis, he [Muse] is really a nice guy," says city councilman Ted Hackworth, a supporter of city auditor and mayoral candidate Bob Crider and a frequent Webb critic. But "it's like Dr. Jekyll and Mr. Hyde when we get into the political arena. He makes a lot of political decisions, not decisions based on law."

April Snook claims Muse has gone so far as to engage in political retribution against his own employees. An assistant city attorney, Snook recently learned she was being transferred to traffic court from her job in the Department of Excise and Licenses. Snook calls the move "an unbearable demotion." In a personnel grievance filed with the city's Career Service Authority, Snook claims that she's being targeted for her work on DeGroot's campaign. "I think his arrogance gets in the way of his doing his job," Snook says of Muse. "He can't handle any kind of confrontation. It's a personal issue with him."

In addition to Muse's "continuing pattern of retaliation" against her, Snook has also accused Muse of "unwelcome verbal conduct of a sexual nature." As she left a 1992 meeting in Muse's office, Snook claims in her grievance, Muse looked her up and down and asked her if she worked out. Snook said she didn't, and Muse replied, "Looks good."

"Mr. Muse's comments could not possibly have been intended in any manner other than sexual, and they did achieve their obvious intent," Snook alleges in her complaint. "I no longer schedule appointments with him to discuss my career."

Muse calls Snook's allegations "horseshit." He denies Snook has been demoted, saying that her transfer into traffic court is part of a rotation of attorneys that was planned long before her work for DeGroot became known. Other attorneys in the office agree. One, who asks not to be identified, calls Snook's claim "absolutely ridiculous" and says few of his colleagues take it seriously.

Laurie Kaczanowska, an assistant city attorney who has worked with Snook, also disputes Snook's claim that she is being punished for her political activities. "April's a friend of mine," she says. But Kaczanowska says that she too is openly supporting DeGroot and that no one has retaliated against her. "I haven't had any flak," Kaczanowska says. "It's known throughout the office, [but] nobody's come after me."

Hackworth and others also criticize Muse for politicizing the city's use of outside legal talent. According to Crider, Muse has spent close to $15 million on private lawyers during Webb's four-year term--more than Pena spent during his entire eight years in office. Muse, who claims the correct figure is $12.7 million, also has parceled out work to a large number of individual law firms. Records show the city retained 35 separate firms during Webb's first two and half years in office. One former senior city official, who requests anonymity, says Muse appears to be using his budget to create political debts to Webb throughout the city's legal community. "They're spreading the work around all over Denver," says the former official. "And that's deliberate."

(Records, however, show that Muse was continuing a practice already in place when he arrived. During the last two and half years of the Pena administration, the city retained 31 outside law firms. Pena city attorneys Steve Kaplan and Patricia Wells declined comment for this article.)

Muse blames DIA and other "extraordinary" circumstances for his large legal bills. The Washington firm of Patton, Boggs & Blow, for instance, has received more than $5 million from the city during Webb's reign, all of it to help settle complex litigation over pollution at the Lowry Landfill. Another $2 million went to the Denver firm of Opperman & Associates to represent the city in condemnation proceedings at DIA. "These expenditures have saved Denver taxpayers more than $400 million" by making possible favorable settlements for the city, Muse claims.

Muse doesn't dispute that some of the firms who have won city business have close ties to him and Webb. But he dismisses that as irrelevant. "I know virtually everybody in this legal community," Muse says. "I don't think it's a fair criticism to say that people who happen to be friends of the mayor should be disqualified from getting city business if they're good firms. Judge them by the quality of their work."

A few firms, however, have received city contracts despite problematic histories. Tyrone Holt was named to the DIA bond team in 1991 even though large tax debts had driven him into bankruptcy several years earlier. Months later, the Colorado Supreme Court suspended Holt from practice for drug use and income-tax evasion. The law firm of Trimble & Nulan, co-owned by Muse's old law partner King Trimble, has received hundreds of thousands of dollars from the city even though Darrell Nulan, Trimble's current partner, was suspended from practice for sixty days in 1992 for misusing money from a client trust account.

Muse says he didn't know about Holt's drug and tax troubles--and fired him the minute they came to light. And he says Nulan's transgression wasn't serious enough to bar Trimble & Nulan from working for the city. "He made one mistake in twenty years," Muse says. "He made a mistake and he paid."

In February 1991, just a few months before Wellington Webb's election as mayor, Dan Muse's 22-year marriage to Channel 4 newscaster Reynelda Ware Muse was coming to an end. Muse and his wife had been living apart for two years and had worked out the terms of their separation agreement in anticipation of a final divorce decree. There was only one problem: Neither wanted the details of their financial affairs to become a matter of public record. That month, the couple filed a joint motion in Denver District Court asking Judge Lynne Hufnagel to shield their financial affidavits and private papers from the media and other prying eyes--even though that information is usually made public in divorce files.

The papers might make interesting reading. Reynelda Muse had been one of 22 influential Denverites picked to be local stockholders of Mile-Hi Cablevision before the company was awarded Denver's first cable franchise in 1982. (King Trimble, then a Denver city councilman, headed the city's cable selection committee.) Some of Mile-Hi's stockholders made huge profits when the company was bought by cable giant Telecommunications Inc. in 1990. Dan Muse, furthermore, had been a shareholder in an airport concessions partnership controlled by controversial Denver businessman King Harris, whose various companies have won millions of dollars in city contracts over the years. (Muse has said he sold his interest in Airport Concessions Inc. shortly before he was named city attorney and now recuses himself from all city matters involving Harris.)

The Muses' interest in keeping their financial information private outweighed the public's right to inspect the file, argued the couple in their divorce motion. And Hufnagel acceded to the rare request--ruling the Muses' financial papers off limits to everyone except them, their attorneys and the court.

Muse has been secretive about more than just his personal affairs. Repeatedly during his term as city attorney, he has worked to keep information about the legal business of the city out of the reach of Denver taxpayers.

In 1993, for instance, Muse secretly settled a lawsuit against more than three dozen corporations that had contributed to the pollution of Denver's Lowry Landfill. Muse refused to reveal details of the settlement to either the media or the city council, making it impossible to verify his claim that it was negotiated "under very favorable terms to the city."

"The fact that you can't take a look at the numbers is of no consequence to me," Muse told a Post reporter. "I don't care."

Recently, the Rocky Mountain News revealed that Muse had agreed to secretly settle a lawsuit between the city and the Deline family, owners of thirteen square miles of farmland condemned for use at DIA. After years of fighting the Delines in court, the city agreed to pay almost $27 million for the property in 1992 but tried to keep that figure hidden, the paper said. Lynne Hufnagel, by coincidence, was the judge who agreed to seal the file from public view. The Delines' reason for wanting the settlement closed, the paper said, was that making it public would create a security risk for members of the family--even though newspapers had already published stories noting that a judge had initially valued the property at $38 million.

Muse insists the city routinely engaged in closed settlements long before he took over the city attorney's job. "I haven't changed the way we do business," he says. Secrecy is an unpleasant fact of life in litigation, Muse adds: Often opposing parties won't negotiate an agreement unless the city promises to keep the terms private. Muse says he understands public distrust of sealed court files, but he says it's often the best course to follow. In the Lowry Landfill suit, he says, the secret settlement limited the city's share of the cleanup bill to 20 percent of the total, now estimated at close to $100 million. Cities in similar situations around the country often have to pay as much as 80 percent of cleanup costs, Muse claims. "I'll take the criticism" over the secrecy of the Lowry settlement, Muse says, "because it's clear to me that it was in the city's best interest."

Muse has also run into a buzz saw of controversy for refusing to make public complete invoices from Debevoise & Plimpton, the law firm he hired last fall in an effort to fend off a DIA bond investigation by the SEC. Press interest in the firm's bills was sparked by the fact that Debevoise & Plimpton ran up bills of close to $1 million in five months, even though the city has never been formally accused of any wrongdoing. Citing "attorney-client privilege," Muse refused to release any of the invoices until the city council ordered him to do so. Even then, the council accepted Muse's recommendation that the bills be heavily censored because they offered a "road map" of the city's defense strategy.

Muse's sudden hard line on the privacy of legal bills is curious, since such invoices have been made available to reporters and other members of the public through the city auditor's office for years. Westword relied on legal bills extensively in a story on DIA bond lawyers last year ("Gentleman Prefer Bonds," May 18). Journalists at both daily papers say they've routinely used the bills as sources for stories. And Muse didn't crack down on the practice until shortly after Channel 7 cited legal invoices from the firm of Bookhardt & O'Toole in a story especially embarrassing to Muse last fall. Reporter John Ferrugia revealed that the city had hired the firm to explore suing Channel 4's Dan Caplis for libel after Caplis ran a story suggesting that the city may have misled investors in DIA bonds by failing to fully disclose problems at the new airport.

Muse says it was one of his subordinates, chief airport attorney Lee Marable, who sicced Bookhardt & O'Toole on Caplis. "I didn't know anything about it," he says. But he says it's always been his policy not to give out legal bills to the press. In fact, he claims he simply didn't realize the auditor's office was making them available. "There's [been] no change in my policy," he says. "I can't account for what the city auditor did."

Muse justifies his claim of "attorney-client privilege" by saying that he considers his clients to be Mayor Webb and the Denver City Council, not the general public. Without explicit permission from the mayor and council, he says, he won't release any uncensored legal bills in the future. "I cannot be accountable to 500,000 different people," Muse says. "The city council speaks for the people who've elected them."

Muse says he loves controversy. So maybe it isn't surprising that he cites the renegotiated lease of the city-owned Winter Park ski resort as one of his biggest accomplishments in office.

The initial Winter Park deal, made public in the summer of 1993, was roundly vilified as a disaster. Virtually everyone at City Hall agreed that the old lease between Denver and the nonprofit Winter Park Recreational Association, which operates the resort for the city, was inadequate. It brought the city just $7,000 in revenue every year.

Under an initial modified agreement brokered by Muse, the WPRA agreed to begin making annual payments in the millions--money Webb hoped to spend on improvements to the city's parks system. But that contract also would have allowed the association to buy the resort outright--for what critics said was less than half of its market value. Outraged, the Denver City Council shot down Muse's first lease agreement, forcing Webb to reopen talks with the WPRA. Months later, the city reached a second agreement with the association that increased the annual rent payment to $1 million plus 3 percent of the resort's total revenues--but kept the ski area permanently in the city's hands.

Muse says he deserves credit for even getting the recalcitrant Winter Park group to the table. And he says the differences between the first agreement and the second aren't significant. "It [the second agreement] was not a dramatic improvement to the initial terms," Muse claims. "For people to say it was is not fair or accurate."

Councilman Hackworth, however, finds that statement incredible. "It proves he [Muse] shouldn't be a businessman," Hackworth says. Hackworth emphasizes that the city keeps control of the resort under the second agreement, instead of handing it over to Winter Park. "Sounds like a hell of a difference to me," he says.

Even Andrew Wallach, the Webb aide who staffed the Winter Park talks, says the changes between the two contracts were "pretty significant. The big difference is they [the WPRA] don't have any option to buy it," Wallach says.

Insists Muse, "We're talking nuance here. We're not talking about major changes."

Muse trumpets the resolution of the Lowry Landfill suit and the DIA condemnation cases as other important accomplishments. He's also proud of the lead role the city took in opposing Amendment 2, the Colorado ballot intiative that sought to deny special civil-rights protections to homosexuals. The city joined other plaintiffs in a lawsuit seeking to overturn the measure, which was later declared unconstitutional.

Muse says he's confident Webb will be re-elected in May--and that he'll remain as Denver's city attorney. But he says he has doubts about whether he'll serve out all four years. With DIA about to open, many of the city's biggest legal challenges have been dealt with, Muse says, and he may decide to move on before Webb's second term ends.

"Eight years is a long time to do anything," Muse says. "I'll stay here as long as it feels good to me and good to the mayor. It's fun--but I don't need it. I can walk away from it tomorrow.

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