Coins For Change: Returning Trust to Ohio

Petro Continues to Cover Up MDL Investment

Republican Attorney General Jim Petro finally released some MDL records this evening. According to a press release:

Petro said none of the redacted information is related to the magnitude of the investment loss linked to MDL, no names are redacted at all, and of the names listed none are attorney general staff members. Petro said his office has 30,000 open cases and depends on clients and appointed counsel to keep him informed of major legal problems and developments.

How many cases out of 30,000 have cost Ohio $215 million dollars?

I implore the Attorney General to not only release MDL administrative correspondence between his office and BWC, but all MDL records shining light on MDL investments, who knew about the $215 million dollars lost, when did they know it,  and what was done to stop the loss of money.

Another 200,000 Reasons Petro Should Have Filed Suit Earlier

Today's Dispatch reports that Noe paid himself$ 200,000 from the Rare Coin Fund after the Toledo Blade reported problems with the fund:

Maumee coin dealer Thomas W. Noe took a $200,000 advance in expected profits from a state coin investment in mid-May — days before a shortfall of up to $13 million in the fund was reported, a source close to the case said yesterday.

Check out the article here.

Its Not the Crime its the Coverup

In every bowling alley and barbershop in my district (and throughout the State of Ohio) it is easy for every person to understand how wrong it is that the elected leaders of our state reward a $150,000 campaign contributor and prolific Republican fundraiser with a contract to invest the $50 million of money owed to injured workers and hard earned premiums paid by small employers in Rare Coins with virtually no oversight.  Ohioans are correctly becoming outraged to learn that Governor Bob Taft's best argument for why the investment was made and not supervised was ignorance that it existed despite acknowledging a close relationship with Rare Coin Dealer Tom Noe that included hanging out in his coin shop on multiple occasions and playing golf with him at the prestigious Inverness Country Club.

What's more offensive than Taft's ignorance or more likely corruption has been the unwillingness of  Auditor Betty Montgomery and Attorney General Jim Petro to stand up to their campaign contributors and the politically connected investment managers who have cost the BWC more than a quarter of a billion dollars and counting.

Petro failed to act when a 2001 audit of the Rare Coin Investment raised red flags about related party transactions.  Montgomery failed to act when a 2004 audit showed 119 coins missing worth more that $400,000.  It took Montgomery 5 weeks after the Toledo Blade broke the story about Tom Noe to even agree to conduct an audit.  It took Petro 54 days to sue Noe, when he did sue his lawyers went to court hand in hand with Noe's lawyers and agreed to an injunction that Noe violated the next morning. for the latest example of why Petro's coverup and delay will cost the state money see the Plain Dealer's story on how Noe, not the state will keep the proceeds from the sale of his boat.

Another failed investment with MDL that cost injured workers and employers $215 million was know to Jim Petro's special Counsel, the politically connected Dave Robinsion on September 30, 2004, yet Petro failed to take action to protect the state's interest until June 10, 2005.

The watchdogs turned out to be lap dogs, or worse guard dogs for these Republican Campaign Contributors.

It would be bad enough if this was limited to the BWC but sadly it is not.

Petro and Montgomery didn't even consider special counsel or auditors who had not contributed to their campaign.  Contributing is the price of admission to be awarded legal or accounting work by the State of Ohio.

This same phenomenon is repeated throughout state government from the selection of voting machine vendors to dispensing of prescriptions to seniors, to food stamp cards to the tax code.

Why Coins for Change

As an elected official and someone at least one half generation removed from totally understanding blogs, I am an unlikely choice to start Coinsforchange.  However, it has become clear to me that a need exists to create a "go to" site for the latest developments the in broadening corruption scandal that is gripping Ohio's government.  I also hope that this becomes a place to explore ideas for how we can lead Ohio in the future if we are able to rid the state of elected officials who put the interests of their campaign contributors ahead of the interests of the State of Ohio.

In my short time in the State Senate ( I was appointed to replace Congressman Tim Ryan in 2003 and elected last fall) I have been astounded by impact of the "pay to play" environment that controls the making of public policy in Ohio.  Good legislation is stymied if no monied constituancy exists to promote it.  Special interest bills fly through the legislature sometimes with only days between introduction and enactment.

But, the tacit corruption that controls the flow of legislation in Ohio pales in comparison to the open corruption that envelopes the executive branch.

While I have tried to explain this phenomenon to my constituants and supporters, it has been difficult to do so without sounding like a sore loser, or worse paranoid.

The silver lining in the Scandal involving Worker's Compensation Investments is that it  creates a vivid picture of how "pay to play" in Ohio has become "Pay to Steal".

This is a work in progress. I'm interested in creating a dialogue that will go beyond looking at problems in Ohio Government to looking at how by creating an ethical and accessible government we can bring Ohio out of our economic dispair and move it forward to a brighter future. Ending our culture of corruption will hopefully create a culture of innovative government that focuses on the investment in human capital and economic innovation that will recharge our faltering economy and once again make us competitive with the rest of the world.  Let the debate begin.

 

Petro Continues to Cover Up MDL Investment

Attorney General Jim Petro simply failed to answer key  questions about the nine-month delay in bringing suit against  MDL on behalf of Ohio's Bureau of Workers' Compensation.  Petro needs to tell the truth about what he knew and when he knew it.  Petro  and BWC should waive the attorney client privilege and provide all documents from the special counsel to the Attorney General's office to everyone immediately.

By the way, why don't the billing records provide any time billed by Schottenstein, Zox and Dunn attorney David Robinson, who Petro assigned the special counsel appointment?  Why wasn't he personally working on the file?

Doesn't Petro make special counsel appointments personal and not to a firm (see Jim Petro's defense of hiring William Bodoh) Why then, are only other members for the firm working on the MDL assignment?

Petro called this a "screw-up" not a cover-up.

It is in his power to come clean and prove me wrong. 

His response to my request for the Schottenstein, Zox and Dunn correspondence will tell us all.

Petro Leads with his Chin

Attorney General Jim Petro, who hesitated 54 Days to sue his major donor and friend, rare coin dealer Tom Noe to the state's great detriment remarkably reassures Republican contributors that his is now going to get tough on Noe.

Petro and Noe  Before Petro Decided to Get Tough

(See http://www.cleveland.com/news/plaindealer/index.ssf?/base/news/111995106086060.xml&coll=2)

Petro waited 54 days from the first Toledo Blade story outlining problems with the $50 million investment placed by the Bureau of Worker's Compensation with the politically connected Noe. He failed to act as Auditor when concerns were raised about related party transactions in an internal audit in 2000. The related party transactions proved to be a big party of the problem with the investment that Noe has admitted has lost at least $13 million.

When Petro finally did sue, he went hand in hand to court with Noe's lawyer to obtain and "agreed" to an injunction that Noe ignored the next morning.

Anyone who contributes to Petro based on his most recent letter should be able to sue for a refund under Ohio's Consumer Sales Practices act that prohibits false statements in advertising.

 Today's game plan to get to the truth about the state's investment scandal:

1. We will begin a campaign to convince Acting Insurance Committee Chair Jay Hottinger to hold hearings on SB 151 that will prohibit BWC contracts to contributor and prohibit those under contract from contributing. Email Hottinger at SD31@mailr.sen.state.oh.us.

 2. Continue our efforts to persuade the Speaker of the House and the President of the Senate to appoint a truly bi-partisan (equal numbers of Democrats and Republicans) investigatory committee with staff lawyers, accountants and actuaries to begin immediately to use subpoenas and depositions to get to the bottom of this scandal and make comprehensive public policy recommendations to the general assembly. Email Speaker John Husted at district37@ohr.state.oh.us, Bill Harris at SD19@mailr.sen.state.oh.us, or your own house and senate members.

 3. We will continue to fight to prod Governor Taft to produce records of internal memos that we have requested. If our request for public records is not honored a lawsuit will be filed.

 4. We also continue to request that Attorney General Jim Petro explain why he delayed 9 months in suing politically connected MDL Investments who ripped the state off for at least $170 million. Perhaps he'll announce plans to get tough on MDL in his next gubernatorial fundraising letter.

 5. We will continue to ask questions about the latest reduction in benefits to injured workers as the pharmacy benefit manager represented by former Taft Chief of Staff Brian Hicks implements a formulary that will limit injured worker's access to pain medication.

Time for Hearings on Real Reform

Despite the almost unbelievable revelation in Sunday's Plain Dealer that BWC Investment Managers have contributed over $5 million to Republican coffers, there was one ray of hope.

Tom Hayes, appointed by Governor Taft as the head of a team to "review" BWC investment operations (his day job is Director of the Ohio Lottery) told the PD that he thought we should prohibit the awarding of investment contracts to campaign contributors who had contributed to any state candidate in the preceding 24 months and to prohibit contributions from managers under contract.

If Hayes’s suggestion is more than vaguely familiar it is because during the debate on the original Bureau of Worker's Comp legislation in 1997 Democrats Senator Tony Latell and Representative Hartley offered exactly that proposal by way of amendment. The amendment was defeated along party lines in both houses.

More recently I offered the same amendment to the budget and to Worker's Comp reform bill S.B. 7. Both amendments were defeated 20-12 with only Tim Grendell of Geauga County as the only Republican joining 11 Democrats.

Senator Tom Roberts and Representative Dale Miller fought for the same amendments in the conference report of the state budget. Their motion was tabled on party lines.

I have also introduced a bill that would ban contracts to contributors and contributions from investment managers. If only the Senate would move the bill, SB 151 would immediately put my Tom Hayes endorsed idea in place. To date, no hearings have been scheduled. I have asked Senator Jay Hottinger, the Acting Chair of the Senate Commerce, Labor and Insurance committee to set hearings in July and move the Bill to the Floor when we reconvene on August 3.

 Please contact Senator Hottinger and encourage him to schedule hearings on SB 151.

Today's Developments: MDL Problems Known Months Ago; Why Aren't Noe's Assets Going to Ohio First?

From the Associated Press:

Financial speculation with state funds hit $5.6 billion last year in an investment strategy far exceeding a company's contract with Ohio's fund for injured workers, according to a report released Friday...

From today's The Columbus Dispatch:

...Petro has proposed that money from any assets that Noe sells be equally divided between paying his lawyers and covering any shortfall in the coin fund. Petro also wants court approval for any payments to Noe’s attorneys...

Questions raised by today's developments:

 1. Why didn't Attorney General Petro take action against MDL when the Callen report was made available in  late January (see today's Associated Press article).  It is just not credible that neither Petro or his campaign contributing special counsel didn't know.

 2. Why is the state proposing to equally split sales (see today's Columbus Dispatch article) of Tom Noe's personal assets? Shouldn't the state be paid before we start worrying about paying Noe's “legal bills'"?

 3. Doesn't the failure to pay $50 million dollars due to injured workers whose payments were wrongly withheld show that the Taft administration and James Conrad politicized the entire agency...not just the investments?

Ohio's Marketplace of Ideas

I spoke today to a statewide group of Passenger Rail Advocates who met in my district. There is a proposal being circulated to build a hub system linking all of Ohio's cities.

I explained what the end of the culture of corruption would mean to them. If the influence of money on policy is eliminated we will open up the marketplace of ideas.

Creating a rail passenger hub linking all Ohio cities with  Pittsburgh, Toronto, Detroit and Chicago would create tens of thousands of jobs,  reduce our state's dependence on foreign oil, improve the air and water  quality of our state, revitalize urban centers and improve the sharing of  creativity and innovation between our far flung urban centers.

 These advocates rightly challenged why their proposals haven't received more serious attention from the legislature and statewide elected officials.

 A big part of the reason why this proposal has failed to get a serious hearing is that the leaders of our state seem to only have time for agenda items brought to their attention by those who contribute.

The end of the culture of corruption will reopen the marketplace of ideas for all Ohioans. That is the silver lining of this scandal.

That's why we need to continue to fight for fair independent truly bi-partisan hearings that will get to the truth of what has happened and to formulate public policy proposals to restore Ohio government openness and ethics. Only then will decision making move from the fundraisers and closed door meetings with special interests to the committee rooms of the statehouse and the floor of the House and Senate.

Brief Recap

It's been  more than 80 days since the scandal surrounding the Bureau of Workers' Compensation and state officials became public.

We have been asking questions, requesting records, and doing what needs to be done to find out what has caused these problems.

The main issues illustrating how corruption has turned Ohio government into not only to a pay-to-play state, but now a pay-to-steal state include:

1.  The BWC invested $50 million dollars with Republican contributor and insider Tom Noe.  We now know that millions of dollars is missing from these inappropriate contracts.

2.  The BWC invested millions of dollars with MDL investments,  then the BWC took money and put it into what has been desccribed as a "hedge fund,"  losing $215 million.

3. Governor Taft went golfing with Tom Noe and failed to disclose it on his ethics statements.

The tentacles of this systemic corruption reach far and deep.

Ohioans demand answers.  Which elected officeholders knew what, when did they know it, and what did they do to protect Ohio?