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Sep 04, 2023

Questions raised over state economic director’s use of state email and his Lincoln cigar lounge

Tony Goins announced his resignation Wednesday as director of the Nebraska Department of Economic Development. He’s pictured here at a press conference last year with then-Gov. Pete Ricketts. (Paul

Tony Goins announced his resignation Wednesday as director of the Nebraska Department of Economic Development. He’s pictured here at a press conference last year with then-Gov. Pete Ricketts. (Paul Hammel/Nebraska Examiner)

LINCOLN — The emailed invitation for the Nov. 14 political campaign event at the Capital Cigar Lounge was to the point: “Friends, Please respond if you are able to attend. This will be an important event.”

The sender was Tony Goins, director of the Nebraska Department of Economic Development.

The problem, though, was that the email was sent over the official nebraska.gov email system, and state law prohibits the use of public resources “for the purpose of campaigning.”

And the event was held at a cigar lounge in which Goins is a 51% owner.

When asked about the email in an interview last weekend, Goins initially responded that he did not know that soliciting guests for a political event — in this case for State Sen. Suzanne Geist, a Lincoln mayoral candidate — was not allowed.

Moments later, though, he said he recalled telling the manager of the lounge to continue the invitation email string on another account.

“I remember saying we need to move this to my personal email,” Goins said.

That instruction was not indicated in state emails reviewed by the Examiner. Pressed further, Goins said on Thursday he relayed the message in a phone call with the manager.

The propriety of inviting people to a political event using official state email wasn’t the only issue raised by a review of hundreds of emails sent to and from Goins over the past year on his official state email account. The emails were obtained through a public records request.

While many of the emails dealt with trade missions, presentations he made and other state business, the cigar lounge he co-owns in south Lincoln came up in several emails.

Goins has served as the state’s top economic developer since July 2019. He was reappointed to the $212,293-a-year post by Gov. Jim Pillen after the November election. Goins has co-owned the Capital Cigar Lounge since 2019, before he took the state DED job.

Under state law, the head of a state agency is prohibited from obtaining “any profit” from any other employer than the state. State law also prohibits public officials from using their office to “obtain financial gain ….”

Goins’ emails discussed several meetings or attempted meetings with business leaders and groups at the cigar bar, including at least one that directed a DED employee to set up a meeting there. Among them:

When asked about the email involving Brewer’s bill, he said that he was commenting on a bill draft sent to him and that he passed it on “to the guys in the industry,” an apparent reference to the cigar association.

Goins said he wasn’t lobbying for the bill, and neither did his business. The bill, Legislative Bill 251, was later introduced, then withdrawn by Brewer because it duplicated a measure introduced by another senator.

Other offers and invitations to meet at the lounge indicated in the emails:

Goins, when asked about the state seeking to rent his private business for a reception for the Irish Development Agency delegation, said he did not recall the Irish visitors, though a July 27 email sent by him instructs a DED consultant, Daren Waters, “to coordinate a reception at the lounge.”

Goins also sent two emails in March from his state account to solicit a new job for himself. In October, he began a back-and-forth in October with a Lincoln business owner in which he sought to resolve “a challenging situation” for one of his cigar lounge customers, a contractor.

I don’t take any profit. I’m not going to sit here and tell you I’m going to be perfect, but I’m not using a state job to become profitable.

– Tony Goins, director of the Nebraska Department of Economic Development

When asked about the job solicitation emails, Goins acknowledged that he probably should have used his personal email account for those March 2022 messages, but “in the heat of the day,” he didn’t. He said that at the time, he was unsure whether he would be reappointed to his post in the next administration after talking with the candidates running for governor in the primary.

State resources are intended for state business, although state accountability laws provide an exception if the private use is “de minimis,” or trivial. State rules allow the use of state email to contact babysitters, doctors, day care centers and the like.

Goins said that when he took the state job, he gave his cigar bar manager “strict instruction to walk that fine line.”

Goins said he pays attention to how the business is doing and said that, on his personal Facebook page, he posts videos promoting special events and touting cigars and liquors sold at the lounge.

But the day-to-day operations of the Capital Cigar Lounge, he said, are handled by a manager.

He said he watches how the cigar bar is doing on “a very high level” but isn’t involved in the bar’s management and doesn’t work there.

“I don’t take any profit,” Goins said. “I’m not going to sit here and tell you I’m going to be perfect, but I’m not using a state job to become profitable.”

The emails indicated that the cigar lounge pays the $1,187 monthly bill on a Lincoln Navigator SUV that he drives. “It’s not in my name. I just drive it,” he said.

By all accounts, Nebraska’s economy has done well during the tenure of Goins, a former executive with Cabela’s, JP Morgan Chase and Ford Motor Company. He also reached the rank of sergeant in the Marine Corps.

Nebraska weathered the economic hit from the COVID-19 pandemic better than most states and was ranked last year as the best state, post-pandemic, in terms of health, economic, social and educational factors by Politico.

DED was entrusted with distributing more than $700 million of federal aid doled out to the states to help businesses survive the shutdowns and supply chain slowdowns caused by the spread of the virus. Goins’ partner in Capital Cigar, Austin Hillis, said the business has never applied for or received any grants from the state agency.

Goins has “equity” in Capital Cigar, Hillis said. “But our agreement was that he would be involved but be involved from afar.”

The meetings at the cigar bar, mostly after regular working hours, raise questions about whether businesses were seeking to curry favor with Goins by spending money at his establishment. Or whether officials felt obliged to patronize his establishment, and whether the gatherings could have influenced the DED in awarding funds.

Absolutely not, said Goins.

“I’ll tell you this. With all truth and honesty, I work to support this state. … I’m working today. I work around the clock,” he said on Saturday. “There’s not a bone in my body that I would do anything unethical.”

Goins said there are times when, after hours, he might meet officials at the lounge or, if he’s heading to the cigar bar, he will arrange a meeting there. The DED director said the time he spends at the lounge is “almost nothing” because he is traveling so often on state business. Indeed, he was gone from Sunday to Wednesday to testify in Washington, D.C. Then on Thursday, he said, he traveled to Omaha for a meeting with a company’s CEO.

“I don’t have to ask people to come there,” Goins said of the cigar lounge. “It’s a place where people enjoy spending time.”

Many of his cigar bar members are business owners, he added, and he benefits by hearing how they’re doing and what they have to deal with. The lounge has also hosted a series of lectures by entrepreneurs for others in the business world, called “Something in the Water.”

One Lincoln business owner who arranged a meeting at Capital Cigar Lounge on Sept. 27 with seven other business leaders said no state business was “done or discussed.”

“The meeting organized with Tony was educational for a group of business leaders who meet regularly for personal and leadership development. It was educational on cigar history and the state of the Nebraska economy,” said Matt Plooster, the co-founder and CEO of Bridgepoint Investment Banking.

Plooster said he did not expect that holding a presentation at the cigar lounge would curry favor with the DED director. He added that prior to hearing Goins speak at the event, his group heard from an economist from the University of Nebraska.

Another business executive, Billy Hagstrom of the startup Bluestem Biosciences, said meetings with Goins at his cigar bar that were discussed in state emails never came off. Hagstrom declined further comment.

Goins, who said he has smoked cigars for 30 years, uses the gatherings at the cigar bar to “build relationships and build trust” and to relate to someone “who may think about things differently or look differently.”

“I think what the data will show is that I’ve been fair to everyone,” he said. “If you look at my overall economic portfolio, not even a tenth of it has to do with the lounge.”

“If someone wants to make that into a story, it’s not a story,” he said.

The relationship between the public agency head and a private business has been raised before.

Earlier this year, the Nebraska Accountability and Disclosure Commission received a letter pointing out that Goins had not listed ownership of the lounge in his annual statements of financial interest filing, which is required of politicians and state officials.

That prompted him to file an amendment Feb. 9 that listed him as “owner/partner” of the Capital Cigar Lounge in 2020 and 2021. It stated that he received a monthly car payment from the business. In an email, he said he was 51% owner of Midwest Leaf LLC, which operates the cigar lounge, and that the business covers the lease payment on a company car, “which goes directly to the finance company.”

When you're the business owner, or the CEO, it just causes a lot of issues.

– Tony Fulton, former state tax commissioner

Frank Daley of the NADC said he called Goins after getting the letter to ask if he had omitted the cigar bar and, if so, to update his report.

The letter was not a “complaint” that would trigger an investigation, Daley said, because it was anonymous, and complaints must be signed under oath.

It can be a serious offense if someone deliberately omits a financial interest, punishable by up to a $5,000 civil fine. But Daley said, but in this case, it made sense to inquire and ask Goins to update and correct his filings.

“Filing an amendment is a pretty common thing,” Daley said.

When asked about a state agency contracting with an entity owned by its director, Daley said he could not comment on a specific case. But in general, he said, a public official cannot use his or her office for “financial gain.”

There are exceptions, he said, if an official declares a conflict of interest and refrains from voting on any contractual matter. (To be clear, it was a DED employee, according to emails, who requested a quote on renting the cigar lounge. But Goins had directed the employee to set up the reception.)

One former state agency director, former State Tax Commissioner Tony Fulton, said that when he took over running the Nebraska Department of Revenue, he was very careful to divorce himself from the business he owns, Guardian Angels Home Care.

His wife, he said, had to be trained to take over and run the business.

Fulton, who left the state job late last year, said he had also filed a conflict of interest statement about his private business and about an investment he had in a proposed niobium mine in Tecumseh, Nebraska. He said he arranged to have another state agency head take over if any issues came to his department concerning Guardian Angels or the NioCorp mine.

“When you’re the business owner, or the CEO, it just causes a lot of issues,” said Fulton, who added that he stopped getting paychecks from the company while working for the state.

Anthony Schutz, a University of Nebraska law professor who specializes in constitutional law, said the state law prohibiting state agency directors from obtaining “any profit” from other public or private entities appears aimed at ensuring that they are focusing on “the state’s ends.” What exactly is meant by “profit” hasn’t been clarified in law, he said.

“To some extent, it might just be to make sure a person just has one job,” Schutz said of the prohibition on outside profit.

But, if business was being steered to his private establishment, either by clients or Goins, that would raise eyebrows, Schutz said.

Schutz compared it to patronage of companies and properties owned by former President Donald Trump — who, unlike past presidents, didn’t divest himself from the companies. The hotels, golf resorts and commercial real estate pulled in $2.4 billion in revenue during his presidency, according to Forbes.

Goins insisted that he doesn’t steer business to his cigar bar and said owning a small business and visiting with its customers has given him a unique perspective in seeking to boost the state’s economy.

He has made Nebraska his home, he said, and encouraged his children to move here. Goins said he’s committed to selling the state as a good place to do business.

“No one is going to say ‘I got preferential treatment because I bought a cocktail at Tony’s lounge,’” he said. “Would I jeopardize my career for that? Would I risk my reputation over a cocktail?”

SUPPORT NEWS YOU TRUST.

by Paul Hammel, Nebraska Examiner March 31, 2023

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Senior Reporter Paul Hammel has covered the Nebraska state government and the state for decades. Previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun, he is a member of the Omaha Press Club's Hall of Fame. He grows hops, brews homemade beer, plays bass guitar and basically loves traveling and writing about the state. A native of Ralston, Nebraska, he is vice president of the John G. Neihardt Foundation.