Coins For Change: Returning Trust to Ohio

Petro Changes Course...Again...

Letter to Senator Dann. 

We need leadership in these difficult times. What will it take?

Dann Demands Proof / Probe of Workers' Comp Lacking

Here is follow up on yesterday's letter Senator Dann sent to Republican Attorney General Jim Petro.

First, from the Blade:

“Jim Petro has been so busy covering the tracks of the other constitutional officers of the state, he forgot that the constitution requires he exercise independent judgment,” Mr. Dann said. “I’m not asking him to do anything differently than any public corporation in the world expects their general counsel to do.”...

“We have a consistent pattern of an attorney general unwilling to stand up to anybody even when they’re wrong,” Mr. Dann said. “If he wants to stand up to me that’s great. But I think it’s more important for him to stand up to state agencies engaging in pay-to-play.”

From the Dispatch:

"Jim Petro has forgotten what his job is: He’s the people’s lawyer first," said state Sen. Marc Dann, a Youngstown-area Democrat.

New: Today's Follow up: August 31, 2005 The Honorable Jim Petro Ohio Attorney General 30 E. Broad St., 17th Fl. Columbus, OH 43215-3428 VIA HAND-DELIVERY Dear Mr. Petro: I am writing to follow-up on this morning’s newspaper reports in which you are paraphrased as saying that your role “with the [Bureau of Workers’ Compensation] was more as attorney than investigator.” (see “Legislator asks Petro for proof of probe,” The Plain Dealer, Wednesday, August 31, 2005). I was astonished to read how narrowly you view your office’s duty to Ohio taxpayers. I hope I am wrong, but you seem more concerned about defending the BWC than protecting Ohioans from public corruption. In response to your belief that you lacked the authority to investigate BWC in 2004, I suggest you review Section 109.84(A) of the Revised Code, which states: Upon the written request of the governor, the industrial commission, the administrator of workers’ compensation, or upon the attorney general’s becoming aware of criminal or improper activity related to Chapter 4121. or 4123. of the Revised Code, the attorney general shall investigate any criminal or civil violation of law related to Chapter 4121. or 4123. of the Revised Code. Note this authority was available to you when the SEC first notified your office about the alleged malfeasance at BWC. As you may be aware, Chapters 4121 and 4123 of the Revised Code regulate the Ohio Bureau of Workers’ Compensation. Specifically, these chapters include sections establishing standards, rules and operating procedures of BWC and the BWC Oversight Commission. The SEC’s allegation, if true, that BWC abused its discretion in paying out unlawfully excessive fees would certainly constitute a violation of one these sections, including, but not limited to, the requirement that BWC funds be invested in the same manner a reasonable, prudent investor would invest. As I am sure you will see after your review of R.C. 109.84(A), the Office of Attorney General had ample authority to investigate the SEC’s allegations in 2004. As I have said before, the Attorney General is—first and foremost—the People’s lawyer. I urge you to stop hiding behind mischaracterizations of Ohio law and ethical rules, and start putting the people first. Sincerely, Marc Dann

Noe's Saturday Release email from his Lawyer

DID TOM NOE "MAKE A GREAT EFFORT TO CONCEAL" HIS
ASSOCIATION WITH
THECOIN FUNDS AS ALLEGED BY GOVERNOR TAFT?

NO. ON AUGUST 24, MR. NOE RELEASED PUBLIC
GOVERNMENT RECORDS AND
ADVERTISING MATERIALS THAT PROVE HE PUBLICLY
DISCLOSED AND EVEN
PUBLICIZED HIS ASSOCIATION WITH THE COIN FUNDS.

STILL, GOVERNOR TAFT REFUSES TO RETRACT HIS
IRRESPONSIBLE ACCUSATION.
THUS, MORE INFORMATION IS BEING RELEASED TODAY TO
DEMONSTRATE THE
ABSURDITY OF THE GOVERNOR'S POSITION.

1. TOM NOE'S OPERATION OF THE COIN FUNDS WAS
WIDELY KNOWN IN THE TAFT
ADMINISTRATION...BY AT LEAST 16 MEMBERS OF HIS
SENIOR STAFF, CABINET
MEMBERS, AND APPOINTEES. PEOPLE LIKE:

DOUG MOORMAN, DEPUTY CHIEF OF STAFF WHO
HAS KNOWN FOR 5 YEARS
JIM SAMUELS, DEPUTY CHIEF IS STAFF WHO
HAS KNOWN FOR 7 YEARS

IF 16 PEOPLE IN THE TAFT ADMINISTRATION KNEW OF
NOE'S OPERATION OF
THE COIN FUNDS, IT WAS NOT BEING CONCEALED BY TOM
NOE.

2. MR. NOE OFTEN HOSTED DINNERS IN COLUMBUS WHICH
WERE ATTENDED BY
MEMBERS OF THE GOVERNOR'S STAFF. THEY CAME TO BE
REFERRED TO AS
MEMBERS OF THE "NOE SUPPER CLUB". THE COIN FUNDS
WERE FREQUENTLY
DISCUSSED THERE. IF IT WAS DISCUSSED AT THE NOE
SUPPER CLUB, IT WAS
NOT BEING CONCEALED. AND GOVERNOR TAFT KNEW ALL
ABOUT THE NOE SUPPER
CLUB.

3. MR. NOE'S LAWYERS HAVE COMPILED AN EXTENSIVE
LIST OF OTHERS ACROSS
OHIO WHO KNEW OF HIS COIN FUND OPERATIONS. PEOPLE
IN GOVERNMENT AND
THE PRIVATE SECTOR. PEOPLE LIKE JIM DREW OF THE
TOLEDO BLADE, WHO HAS
STATED THAT HE KNEW OF NOE'S OPERATION OF THE
COIN FUNDS BY 2003. IF
NEWSPAPER REPORTERS AND NUMEROUS OTHERS KNEW OF
NOE'S OPERATION OF THE
COIN FUNDS, THEY WEREN'T BEING CONCEALED BY NOE,
WHO OPENLY DISCUSSED
THEM WHENEVER CONTACTED BY THE MEDIA WHILE HE
SERVED AS COIN FUND
MANAGER. IF NEWSPAPER REPORTERS AND OTHERS IN
GOVERNMENT AND INDUSTRY
KNEW ABOUT THE COIN FUNDS, THEY WERE NOT BEING
CONCEALED.

4.MR. NOE HAS NOT AUTHORIZED THE RELEASE OF THE
FULL LISTS OF THE
NAMES OF THESE PEOPLE WHO KNEW OF THE COIN FUNDS.
MOST OF THEM, LIKE
JIM DREW, ARE GUILTY ONLY OF KNOWING OF THE
EXISTENCE OF THE COIN
FUNDS, AND OF NOE'S MANAGEMENT. THEY ARE
SUSPECTED OF WRONGDOING BY NO
ONE. HOWEVER, IF THEIR NAMES WERE RELEASED, MANY
WOULD SUSPECT THEM OF
SOME CONNECTION
TO ALL THE WRONGDOING WHICH HAS BEEN RECENTLY
ACCUSED. TO PREVENT SUCH
UNTOWARD EFFECTS ON SO MANY INNOCENT BYSTANDERS,
MR. NOE HAS DECIDED
NOT TO ALLOW HIS LAWYERS TO RELEASE THE LISTS
THEY HAVE COMPILED.

5. FURTHER INFORMATION IS, HOWEVER, BEING
RELEASED ABOUT THE MAY 2001
MEETING AT WHICH MR NOE DISCUSSED THE COIN FUNDS,
BECAUSE OF GOVERNOR
TAFT'S FAULTY MEMORY OF THE EVENT. IN THE SPRING
OF 2001, MR NOE
RECEIVED A TELEPHONE CALL FROM GOVERNOR TAFT'S
ASSISTANT. NOE WAS TOLD
THAT THE GOVERNOR WAS GOING TO BE IN TOLEDO ON
MOTHER'S DAY WEEKEND,
THAT HE WANTED TO GOLF AT THE FAMOUS INVERNESS
COURSE, AND WANTED NOE
TO ARRANGE IT FOR HIM. THE GOVERNOR INVITED
HIMSELF TO PLAY GOLF AT
INVERNESS BECAUSE HE AND HIS WIFE WERE GOING TO
BE IN TOLEDO THAT
SATURDAY FOR AN ART MUSEUM EVENT, BUT MRS TAFT
WAS RECEIVING AN HONOR
IN CLEVELAND ON MOTHER'S DAY, WHICH THE GOVERNOR
WAS NOT GOING TO
ATTEND, MAKING HIM AVAILABLE FOR GOLF, EVEN
THOUGH EVERY ONE ELSE HAD
MOTHER'S DAY COMMITTMENTS. NEVERTHELESS, MR NOE
LOCATED A GOLF MEMBER
AT
INVERNESS TO HOST THE OUTING, AND THE OUTING
OCCURRED THE MORNING OF
5-13-01. MR NOE HAD ARRANGED FOR HE AND THE
GOVERNOR TO SHARE
ADJOINING LOCKERS ON THE SECOND FLOOR OF THE
INVERNESS MEN'S LOCKER
ROOM. THEY SHOWERED, AND WERE CHANGING FROM GOLF
ATTIRE INTO BUSINESS
SUITS FOR THE BRUNCH AND PHOTO SESSION TO FOLLOW.
AS THEY DRESSED, MR
NOE DISCUSSED

WITH GOVERNOR TAFT HIS OPERATION OF THE FIRST $25
MILLION COIN FUND,
AND TOLD THE GOVERNOR ABOUT HIS PENDING
APPLICATION FOR THE SECOND $25
MILLION COIN FUND. THE SECOND $25 MILLION COIN
FUND WAS APPROVED TWO
MONTHS LATER, IN JULY 2005.

THE CUMULATIVE WEIGHT OF ALL THE MATERIAL
RELEASED TO DATE SHOWS THAT
THE GOVERNOR'S ACCUSATION IS FALSE. TOM NOE DID
NOT CONCEAL HIS
ASSOCIATION WITH THE COIN FUNDS. 16 MEMBERS OF
THE TAFT ADMINISTRATION
KNEW, THE GOVERNOR KNEW, NEWSPAPER REPORTERS
KNEW, NUMEROUS OTHER
GOVERNMENT OFFICIALS AND PRIVATE CITIZENS KNEW,
THE WHOLE COIN
INDUSTRY KNEW. AND TO TOP IT OFF, NOE ADVERTISED
HIS ASSOCIATION WITH
THE COIN FUNDS 23 TIMES IN FOUR NEWSPAPERS. THE
GOVERNOR'S ACCUSATION
IS FALSE
AND SHOULD BE RETRACTED

Petro Forgets Again that he is the People's Lawyer

Link: Petro asks SEC for proof of excessive commissions .

The Plain Dealer reports that a SEC Lawyer doesn't understand Petro's response to the Agency inquiry about excessive fees charged to BWC by politically connected stockbrokers.

We have an independently elected Attorney General so that he can ask questions about agency problems and possible corruption. Petro insists his role is to blindly defend stupid, corrupt or downright illegal practices.

Ohio deserves better from the People's Lawyer.

My Letter to Petro Today:

August 30, 2005

The Honorable Jim Petro
Attorney General
30 E. Broad St.
Columbus, OH 43215

Dear Mr. Petro:

I am writing in response to your request, reported in today’s Cleveland Plain Dealer, to United States Securities and Exchange Commission (SEC) chair Christopher Cox to produce evidence that the Ohio Bureau of Workers’ Compensation (BWC) paid excessive brokerage fees. Specifically, I am writing to request that you produce evidence that your office actually conducted a formal investigation of the SEC’s allegations when they first came to your attention.

Along with the members of the BWC Oversight Commission, I was shocked last week to learn that the SEC had contacted BWC and your office about the SEC’s concerns that Ohio was paying excessive brokerage fees to certain firms. I was as disappointed as the SEC apparently was to hear that there was little to no follow-up from your office.

An SEC attorney last week expressed her “disappointment” at your “response and inaction” to possible abuse of discretion at BWC. Rather than admitting any failure by your office or conducting a full investigation, you resorted to attacking the SEC lawyer as “unprofessional.”

If you have evidence to suggest the SEC and Ohio taxpayers should be anything but disappointed, you should produce it immediately. Although only one month elapsed between your office receiving the SEC’s original letter and your office responding, The Plain Dealer reports that your letter to the SEC indicates that a formal investigation was conducted.

I am writing to request paper copies of evidence indicating that any such formal investigation was conducted within that month or at any other time. Specifically, I am requesting the following records:

Any and all memoranda, email, faxes, reports, or other documents or correspondence pertaining to your office’s alleged investigation of the SEC’s November 2002 and March 2004 allegations of possible abuse of discretion by BWC in paying excessive brokerage commissions to certain brokerage firms.

In responding to this request, please note that any record kept by a public office is considered a public record. R.C. 149.43(A)(1). A “record” includes any item that: 1) contains information stored on a fixed medium, including, but not limited to, paper, computers or film; 2) is created, received, or sent under the jurisdiction of a public office; and 3) documents the organization, functions, policies, decisions, procedures, operations, or other activities of the office. R.C. 149.011(G).

In addition, upon receiving a public records request, copies must be made available within a reasonable amount of time. These copies must be made available in the medium specified. R.C. 149.43(B)(2). The foregoing provisions must be interpreted liberally in favor of disclosure. State ex rel. Warren Newspapers v. Hutson, 70 Ohio St. 3d 619 (1994).

I would appreciate a status response to this request by 5:00 p.m. on Friday, September 2, 2005.

Sincerely,

Senator Marc Dann
32nd District

Miller: Petro outsourcing special counsel work at taxpayer expense

Item 1
Today, State Senator Eric Fingerhut (D-Cleveland) sent a memo to the State Controlling Board asking that it reject a request proposed by Attorney General Jim Petro’s office to approve a no-bid contract with the Groom Law Firm to serve as fiduciary counsel for the Bureau of Workers Compensation (BWC) and the Workers Compensation Oversight Commission (WCOC). The contract was for $175,000 which would be billed at $350 per hour.

In the memo, Senator Fingerhut, who is a non-voting member of the WCOC, wrote that he had two main objections to the contract. First, he said that the fiduciary counsel should not represent both the BWC staff and the WCOC, and the counsel should not be appointed without consent of the WCOC.

Senator Fingerhut went on to say that much of the reason the WCOC failed to uncover bad investments in the past was due to the lack of independent sources directly accountable to the WCOC. Instead, the information and advice the WCOC received came from the BWC staff. Although the WCOC has worked with the General Assembly to take steps to correct this problem, Senator Fingerhut said state law makes it clear that the WCOC has independent fiduciary obligations that are different from the fiduciary issues confronted by the BWC.

“In light of this situation, it is improper, and quite frankly, a step backward, for the Ohio Attorney General to retain a single fiduciary counsel to represent the BWC staff and the WCOC,” Senator Fingerhut said in the memo.

Senator Fingerhut’s second objection to the contract was that the entire WCOC had not been consulted about the hiring of the special counsel. He said the WCOC was not consulted on hiring the special counsel on a no-bid basis, thus giving them no choice or opinion on the matter.

“The Ohio Attorney General’s decision to make a selection of a fiduciary counsel for the WCOC without consulting the full WCOC, and without allowing the WCOC to consider more than one source for the contract is inappropriate and can lonely perpetuate the lack of accountability that has gotten us into this problem in the first place,” Senator Fingerhut said in the memo.

Senator Fingerhut’s colleague, Senator Marc Dann (D-Liberty Twp.), issued a similar memo maintaining that the fiduciary counsel should not represent both the BWC staff and the WCOC and should not be appointed without consent of the WCOC. Senator Dann’s memo also asked the Board to reject the Attorney General’s request to approve a $375,000 no-bid contract for work related to the investigation of MDL Capital Management, one of the BWC investment managers.

“Petro needs to stop the outsourcing of his office so he can reap campaign contributions,” said Senator Dann.

AG's Office Responds to Fingerhut and Senator Miller from Gongwer: When Sen. Miller raised the same objection during the meeting, Ms. Hertel pointed out that Mr. Lanoff was assigned to the Bureau of Workers’ Compensation. She said the Oversight Commission was part of the bureau, not separate from it.

Item 2
Attorney General requests $19 million in special contracts from Controlling Board today

(Columbus)- This afternoon State Senator and Ohio Controlling Board member Ray Miller (D-Columbus) voted against awarding more than $19 million in special counsel contracts to Ohio Attorney General Jim Petro’s office. The request, however, was ultimately approved with a final vote of 4-2.

Petro’s office requested 123 unbid contracts adding up to a grand total of $19 million. Of the total amount of unbid contracts, 97 are headed to firms that have made contributions to Petro’s campaign. A total of roughly $803,000 in contributions was made to Petro’s campaign by the firms in the last few years.

“These special counsel contracts certainly seem to indicate a pay-to-play pattern,” said Senator Miller. “Take a look at the pattern of contributions to the Attorney General Petro. The bottom line here is that more often than not, firms that made contributions to Attorney General Petro got special counsel contracts.”

In the past, Petro has touted his efforts to save the state money to the tune of $10 million by reducing the size of his office. However, if the special counsel contractors are any indicator Petro will spend at least $9 million more of taxpayer money to outsource jobs that could have been done by Attorney General staff at less cost to taxpayers.

“While our State Attorney General claims to be in favor of government efficiency, his actions clearly show otherwise,” said Senator Miller. “Instead of doing the work in-house at lower costs, Petro is outsourcing high cost contracts to firms that give him money. The special counsel gravy train needs to come to a halt.”

Recently, Senator Miller introduced a measure to ensure the Controlling Board is split evenly by party lines so that contracts are not given a carte blanche approval every time agencies ask for state funds. The proposed legislation is Senate Bill 173.

“Often times a state contract is waived through without any serious discussion or answers to potent questions. This legislation would seek to prevent that practice from continuing," he said.

Download memo_to_bd_special_counsel_contracts_81.29.05.doc

Download memo_to_bd_special_counsel_contracts_81.29.05.doc

How Ironic

Bob Taft to welcome participants and launch the Ohio Capital Fund:

The Ohio Capital Fund Seed & Early Stage Summit is an opportunity to learnabout the importance of, and current state of, venture capital in Ohio. Participants will hear from venture capitalists who have raised funds and invested in Ohio-based companies. They will also learn about The Ohio Capital Fund and how it aims to increase venture capital investments in Ohio.

Ohio Governor Bob Taft will welcome participants and launch The Ohio Capital Fund at a featured luncheon. A series of keynote speakers will then speak to the history and future of venture capital.

TAFT-NOE TIMEFRAME CRITICAL

Link: - toledoblade.com - .

The Blade describes a detailed exchange between Tom Noe and Bob Taft in the locker room at prestigious Inverness Country Club in Toledo that took place TWO MONTHS before the State of Ohio invested a second $25 million in Noe's famous Coin fund. What Taft knew and when he knew remains the critical question.

Opinion - Palladium-Item - www.pal-item.com

Link: Opinion - Palladium-Item - www.pal-item.com.

Admit 'pay-to-play' and end it

Link: Admit 'pay-to-play' and end it.

Anyone want to join Bob Taft in arguing that a pay to play system doesn't exist in Ohio?

Petro's inaction on fees surprised SEC officials

Link: Petro's inaction on fees surprised SEC officials .

Petro not only didn't stop the corruption at BWC--He defended it.