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MISSOULA — The Missoula County attorney will decide if criminal charges should be filed against two former University of Montana officials and a former UM employee for potential conflict of interest and nepotism violations within a space research program.

In a letter, John Connor, chief criminal counsel for the state attorney general's office, told County Attorney Fred Van Valkenberg to take whatever action he deems appropriate.

UM's Northern Rockies Center for Space Privatization and the spinoff company it started, the Inland Northwest Space Alliance, were the focus of a state legislative audit that concluded earlier this month. They are also the focus of an investigation by the NASA Office of Inspector General.

In a preliminary report, the state's auditors concluded that three former UM employees may have violated state law — Lloyd Chesnut, UM's former vice president for research and development; his wife, Rollene; and George Bailey, former assistant vice president to Chesnut.

Auditors alleged Bailey and Lloyd Chesnut violated Montana law because they became paid members of INSA after helping create the company with a contract awarded through the university research office where they were employed.

The alleged violations took place during June and July 2003, before Bailey left UM to work full time as INSA's executive director and before Chesnut left UM for a similar position at the University of North Texas.

Auditors also determined that Lloyd and Rollene Chesnut may have violated state nepotism laws, as both were employed in the office of research at UM and both were subsequently employed by INSA.

After being notified of the potential violations, Attorney General Mike McGrath said he would not take any action until the legislative audit was completed and discussed with the Legislative Audit Committee last week.

The Missoula County attorney's office received a letter late Friday saying the matter was being handed over to Van Valkenberg.

On Tuesday, Van Valkenberg said it will likely be a few weeks before he decides how to proceed with the auditors' findings.

"I won't know until I have had a chance to study and find out more information," he said. "It will take a couple of weeks to review everything involved."

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