LAS VEGAS " A district judge has disqualified the state attorney general's office from prosecuting Nevada Lt. Gov. Brian Krolicki and his chief of staff on criminal charges, but she refused to dismiss the case.
In an order signed Tuesday, District Judge Elissa Cadish ruled that allowing the attorney general to prosecute the case could create the perception of a conflict of interest.
Cadish said the issue of who should prosecute Krolicki would be decided at a June 3 hearing.
Krolicki, once considered a possible Republican opponent to Nevada Sen. Harry Reid, is charged with mishandling a multibillion dollar college savings program when he served as state treasurer. His chief of staff, Kathryn Besser, also is charged in the case.
Attorneys for Krolicki and Besser have argued that the officials relied on legal advice from a division of the attorney general's office when determining how to manage the college fund. Therefore, the lawyers said, it was inappropriate for another division of the office to lead the prosecution.
Cadish agreed, noting that if the attorney general's office stayed on the case it would find itself cross-examining current and former attorneys from its own office.
"And this situation would, at a minimum, be an odd spectacle before the jury," she wrote.
Deputy Attorney General Conrad Hafen has said the attorney general's office created a "Chinese wall" between the division of the office that advised Krolicki and those handling the prosecution.
The attorney general's office said it was considering an appeal.
"This decision impermissibly narrows the prosecutorial authority of the office of the attorney general," Nevada Attorney General Catherine Cortez Masto said in a statement. "The court's order decrees that my office can no longer prosecute public officers who commit crimes while in office. This is a fundamental change to the laws of this state."
Krolicki's attorney Kent Robison had asked for the complete dismissal of the indictment handed up in March. He declared a partial victory Wednesday.
"There's an obvious, apparent conflict of interest for several significant reasons," he said. "This is a step in the right direction and it's the right decision, and we expect more to come."
Krolicki is charged with two counts of misappropriation and falsification of accounts by a public officer, and two counts of misappropriation by a treasurer.
Besser is charged being a principal to misappropriation and falsification of accounts and being a principal to misappropriation by a treasurer.
The charges arose from a 2007 audit of a more than $3 billion, state-run college savings program. Auditors found Krolicki skirted budget controls and spent more on an advertising campaign than allotted by the Legislature. No money is missing and he is not accused of embezzlement.