CARSON CITY — So what does Lt. Gov. Brian Krolicki say when asked if he’s got any regrets about appearing in all those TV ads, radio spots and fliers promoting Nevada’s college savings programs? Those ads, paid for with money that belonged to the state of Nevada, which clearly and unambiguously helped Krolicki politically?

He had to do it. You know, to give the plan some cred. “There was a reason of validity,” Krolicki said. “This is something that treasurers do throughout the country.”

Hell, if he didn’t do it, it’s highly likely that nobody would have signed up! We can just see the scene now: A couple sits at home, eagerly anticipating the season finale of Lost. They see a Krolicki-free ad for the college savings program, turn to each other, and say: “What? A college savings plan, run by the state? That’s total bullshit! Why, I’d by buy the ThighMaster before I’d by buy that!”

But the next day, they see well-known celebrity political personality Brian Krolicki on TV and it’s another story. “Oh, hey, that’s Brian Krolicki, state treasurer! He says the college savings plan is great! Well, that’s good enough for us! We’ll take two!”

C’mon, people! If Krolicki had that kind of star power, wouldn’t he have his own TV show and be doing product endorsements for vacation homes in Florida, like one Erik Estrada? (Oh, Erik. Our freeways are so unsafe since you left!)

Sadly, however, ego and political ambition are hardly the end of this story. There’s the small matter of repeated and flagrant violations of state law to consider, not to mention flawed contracting procedures and a virtual shadow accounting system run by private contractors and overseen by the office of one Brian K. (for Kriminey, this looks bad!) Krolicki.

That was the subject of an audit of the Nevada College Savings Program presented to the Legislative Commission’s audit subcommittee Monday, a hearing that made Krolicki look worse than a ream of our previous blogs. (We’ve made much fun of Krolicki for complaining about having to give up his old office space in the Capitol and then trying to steal a whole bunch of his old office furniture, which prompted us to christen him “weasel-in-chief” of the state of Nevada.)

Sit back, then, while we regale you with a tale of a system run amok, of a Legislature totally ignored, of slush funds and a shadow government headed by Krolicki.

To begin with, a quick explanation: In 2001, the state established a college trust fund that allowed people to save money tax-free to send their kids to college. They hired a firm to “advise” them on how to set it up, G.I.F. Services LLC, a Georgia company that just by coincidence has close ties with Krolicki’s friend and mentor, former state Treasurer Bob Seale.

Also in 2001, the state hired a company called Strong Capital Management Inc. to invest money, distribute money and administer the program.

Then, in 2002, the state hired a company to manage the investments, UPromise Investments Inc., which in turn hired three other companies to do the actual investing, one of which was called Vanguard Group Inc. (If you’re wondering why in the hell the state needed to hire all these people, you’re not alone.)

Got it?

Now, the state makes money two ways from the program. First, it gets a percentage of the total money invested, known as “asset fees.” And then, the state gets a portion of a per-account fee on some accounts, known, obviously, as “account fees.”

Over the life of the program, the state was entitled to $11.2 million in these fees. But it only got $5.2 million.

So what happened to the other $6 million? A great question. And here’s the answer: It was diverted to pay for advertising and administration, totally outside the state’s system of accounting and in violation not only of state budget laws, but also the laws that govern the college savings program itself.

In other words, it was stolen.

Now, some may argue (and Krolicki did) that the money was spent properly, on efforts to publicize and run a very successful program. But the fact is, the money was not deposited into state accounts and was spent without the approval of the Legislature, which means it was spent extra-legally, a fancy way of saying it was stolen.

And who, pray tell, stole it? Krolicki did, that’s who.

How? Instead of allowing the companies that were advising and running the program to send their fees into state coffers, Krolicki’s office told them to keep the fees. Later, Krolicki’s office would tell the companies precisely how to spend the money, whether on advertising, legal work or administration.

Since the money never came in to the state, it was never accounted for by state officials. As a result, there were positively no controls whatsoever on how it was spent. And, as you can imagine, record-keeping wasn’t exactly a big priority.

And not only did the state not get $6 million that it would have used to support the program through proper, legally authorized expenditures, it also lost out on $38,000 in interest, since UPromise put the diverted money into a non-interest bearing account, auditors found.

So why, if the state would have used the money on the program anyway, would Krolicki go to all the trouble of breaking state budget laws? Perhaps because of this: If the money had come in, the Legislature’s Interim Finance Committee would have been able to look over Krolicki’s shoulder. Instead of Krolicki deciding how the funds would be spent, lawmakers would have.

“If the state treasurer’s office had processed these transactions through the state’s accounting system, revisions to the program’s administrative budget would have been required,” the audit report says.

And lawmakers probably also would have found that the contracts that Krolicki’s office used in connection with the program were terribly mismanaged. (Yes, even the extra-legal contracts were extra-legal! It’s like a layer cake of corruption, people!)

The law firm that did work for the program was paid $985,000 for its efforts, which works out to about $428.64 per hour, instead of the contracted rate of $225 per hour. Not only that, but invoices were submitted that covered huge swaths of time, 21 months to be precise. (Auditors revealed that officials in Krolicki’s office said the law firm agreed to hold off on billing because the program didn’t have enough money to pay in its early days.)

G.I.F. — owned by a friend of Seale’s, who is a good friend of Krolicki’s — got payments of about $500,000 that were either highly questionable or not even required under the state’s contract, according to the audit report.

And the Rose/Glenn Group, which prepared all those ads, got $1.3 million more than was contemplated in its contract, which by the way was never officially approved by the savings program’s board of trustees. (That group was apparently out of the loop on a host of other issues, as well: “Furthermore, information presented to the board and minutes of board meetings contained no indication that the board had ever been informed of how the marketing and administrative support payments were being handled,” the audit says.)

Now, some of you may recall that Krolicki and office staffers once said that the money they used in marketing belonged to UPromise and G.I.F., not to the state. Auditors, however, said that was a lie: E-mails from the treasurer’s office “…included specific instructions that payments were to be made from state funds being held by the program manager [UPromise] and the plan advisor [G.I.F.].” E-mails back to Krolicki’s office said the same thing. And the contract provision that required UPromise to spend money on marketing had been deleted in September 2005. “Therefore, payments made after that date could not have been related to the above provision,” the audit report says.

Had enough? No? Good because there’s a little bit more. It seems that as Krolicki’s term as state treasurer (and overseer of this program) was coming to a close, he was moving to clean things up. Just three days before his tenure ended, the state Board of Examiners approved a contract amendment with UPromise that essentially eliminated asset-based fees in favor of a flat fee or one adjusted for inflation. This was a windfall for UPromise and Vanguard, done “…to keep Nevada’s program competitive with other states,” according to the audit report.

In addition, the contract amendment stipulated that all future fees would be deposited into the program’s administrative account in state government, where the money should have been going all along. And it also stipulated that no money would be spent for the program unless it was spent from the state budget.

That’s right: The contract amendment stipulated that the program would start following the law.

When incoming Treasurer Kate Marshall tried to find documents related to the program, they were gone. And e-mails from the Krolicki administration were mysteriously erased, as well. (To be sure, auditors said they had to seek documents about the program from the private companies that ran the program!)

So what did Krolicki have to say for himself? (Granted, Krolicki had not seen the final audit until Monday, but he did attend the hearing and mount a defense.)

First, he noted, no money was missing. “I really want to dwell on the good news,” he said. “All the money’s accounted for.” He added, “This has been balanced to the penny.”

No doubt: Nobody ever said Krolicki pocketed the money. They have said he misused state money in violation of law.

Second, Krolicki said, he received authorization for everything he did from the attorney general’s office. “On every occasion, every occasion, we adhered very strongly to the recommendations that were provided to us,” he said.

The attorney general’s office authorized a pattern of spending that violated state law, and signed off on contracts that went awry? Really? We’ll soon find out: The audit report has been forwarded to the attorney general for follow up, which sounds suspiciously like a referral for potential criminal wrongdoing to us.

“We built something extraordinary and we can’t lose sight of that,” Krolicki said. (Indeed, the audit found that all the money invested in the program was safe; it was only the state’s fees that were diverted.)

“We left that office impeccably and with all the documents they need to do their job,” he concluded. (Perhaps by “all the documents they need to do their job” he meant “a couple of blank notebooks and some stationery,” because there was hardly any paper at all in Marshall’s office when she moved in, we hear. Hell, there was hardly any furniture when she moved in!)

Answering questions by reporters later, Krolicki defended himself. “[There’s] nothing I did personally that was [criticized] in those audit procedures,” he said. But during the hearing he said he takes “full responsibility,” adding, “I know where the buck stops.”

Hmmm. Perhaps by “full responsibility” he means “partial responsibility,” and by “where the buck stops” he means, “elsewhere”?

It’s the only explanation for this rather devastating audit report. Something tells us you will see this material again, if not in a criminal charging document, then at the very least on the campaign trail.

Audit subcommittee chairwoman Assemblywoman Sheila Leslie, who was clearly outraged by the report, said during a break, “I would think he’d be very embarrassed by this.” We asked Krolicki if he was embarrassed, and he demurred, talking once again about the program. So, we’ll just put that down as a “no.” But isn’t it curious that everything that went wrong in this scheme benefited Krolicki?

Curious, indeed.