Topeka ? Thomas Wiggans, who recently announced as a Democratic candidate for governor, was part of a recent $12.75 million settlement in a lawsuit that alleged securities fraud against his former company.

The lawsuit alleged Connetics Corp., a California pharmaceutical company, misled investors about the safety of an acne gel the company was developing. Wiggans was chief executive of Connetics.

The lawsuit also alleged the company issued false financial statements. Throughout the litigation, the company contended its statements were not false, according to court records.

The various lawsuits filed by investors were consolidated with the Oklahoma teachers retirement system designated as the lead plaintiff.

The settlement was signed off in federal court in October in California, just days before Wiggans announced his bid for governor.

If Wiggans were to win the Democratic Party primary in 2010 he would most likely face U.S. Sen. Sam Brownback, R-Kan., who is leaving the Senate to run for governor.

When asked to comment on revelations about the lawsuit and settlement, Brownback’s campaign manager David Kensinger said of Wiggans, “He is exactly the kind of person the Democratic Party claims it wants to protect us from – except in Kansas, where the Democratic Party wants to make him Governor.”

Amy Jordan Wooden, a spokeswoman for Wiggans, issued the following statement: “As a CEO, Tom has had to deal with lots of challenging situations. Anyone who has owned or run a business knows that, unfortunately, legal matters are one of the challenges any business will face from time-to-time. Tom was able to lead Connectics through this situation, with no findings of wrongdoing, and come out stronger on the other side. It’s proof that he

knows how to roll up his sleeves and manage during challenging times.”

1:03 p.m.

State safety and sanitation inspections of hotels, motels and other overnight lodging operations will be suspended because of budget cuts, officials reported Thursday.

“This is the painful reality of our current economic climate,” said Josh Svaty, acting secretary of agriculture.

“Without adequate resources, we are forced to decide which services we can continue to provide and which ones we can’t. The cuts to our budget now mean that we won’t be able to inspect the safety and sanitation of Kansas’ hotels, motels and other overnight lodges,” Svaty said.

The Kansas Department of Agriculture licenses 825 lodging facilities, which includes hotels, motels, lodges and bed-and-breakfasts.

The agency was cut by $303,000 in Gov. Mark Parkinson’s latest round of budget cuts last month. The cost of the lodging inspection program is $240,000 per year.

Food safety inspections will continue, the agriculture department reported.

The state general fund portion of the department’s budget for the current fiscal year is $9.8 million, which is $2.4 million less than was appropriated in 2008. The department said in a news release that it is operating with 92 fewer employees through layoffs and unfilled vacancies.

10:59 a.m.

A new report by the National Governors Association relates more bad news for state governments.

“States are expected to take up to several years after the recession has ended to fully recover and begin expansion,” the report says.

Here’s the full report.