BWC probe expands into pensions: Something about to hit the fan again at STRS?
The investigation of bribes at the Ohio Bureau of Workers’ Compensation has provided ammunition in the probe of possible illegal gifts going to officials involved with multibilliondollar investments at the state’s pension systems, The Dispatch has learned.
Investigators won’t comment on the matter, but one source said more than a dozen vendors and as many or more public officials and employees are under scrutiny.
Authorities are trying to determine whether gifts provided by brokers and vendors violated laws requiring public officials to disclose such items to the public, or whether the gifts led to conflicts of interest or even constituted bribes.
Board members at the Ohio Police & Fire Pension Fund and State Teachers Retirement System already have been prosecuted for improperly accepting freebies from vendors or failing to disclose those gifts.
But the investigation of investment scandals at the bureau is uncovering other information, including situations in which brokers or vendors giving gifts to bureau officials possibly were doing the same at some pension systems, The Dispatch was told.
The news follows last week’s guilty pleas to corruption charges in both federal and state courts by Terrence W. Gasper, the former chief financial officer of the Bureau of Workers’ Compensation.
Gasper admitted accepting thousands of dollars in gifts, including free stays at an oceanfront condominium in Florida and a $9,000 college-tuition check for his son, from brokers and others in exchange for handing out lucrative bureau investment business.
He is cooperating with investigators as part of his plea agreements, and authorities say charges against others are likely soon.
Authorities already had been investigating allegations of improper gift-giving at pension systems that led to prosecutions of three members of pension-system boards.
Two members of the Ohio Police & Fire Pension Fund board, Thomas Bennett and David Harker, pleaded guilty to illegally taking thousands of dollars worth of gifts from vendors — including a golfing trip to Scotland and another to Ohio State’s 2002 national championship football game in Arizona.
Last month, former State Teachers Retirement System board member Hazel Sidaway was sentenced after being convicted of accepting four free tickets to a Cleveland Indians game in 2001 and two free tickets to a Broadway production of Hairspray in 2003.
Other current or former board members and at least one high-level State Teachers Retirement System administrator reportedly accepted similar perks and have been questioned by Ohio Ethics Commission investigators. Charges are likely to be announced against one of those officials soon, a source said.
Dennis Leone, a retired schools superintendent who was elected to the teachers system board as part of a reform slate, said the charges would be welcome news.
"There are a number of retirees who have been wondering when other former board members would be charged for doing the same things Hazel Sidaway did," Leone said. "It’s common knowledge those things happened."
Laura Ecklar, spokeswoman for the State Teachers Retirement Fund, said the accusations against Sidaway and other board members differ significantly from those against Bureau of Workers’ Compensation officials. Unlike bureau officials, pension leaders are not accused of trading investments for perks or favors, Ecklar said.
But as part of a sweeping investigation into bureau investments by an unprecedented task force including the Ohio inspector general, the Ethics Commission and other federal, state and county entities, additional information surfaced that provided new details on vendors at the bureau, some pension systems, or both, sources said.
There are cases in which brokers or investment firms that did questionable business at the bureau also did work for one or more pension systems.
For example, the bureau terminated two hedge-fund investments last year worth $550 million that it had with American Express Asset Management. Bureau officials have said they were funded in 2000 and 2002 in a blatant violation of the bureau’s investment policy, which didn’t allow hedge funds at the time.
The Police & Fire fund also fired American Express and a firm that did marketing for it, Northwinds Marketing Group, for poor performance. Both were named in court documents as vendors who provided gifts to board trustees.
Northwinds paid $84,320 to the pension fund and American Express paid $39,680 as part of settlements. The firms also paid $20,000 each to the Ethics Commission to cover their share of the costs of the investigation.
The federal bill of information filed against Gasper cites two unnamed brokers and a marketer who provided gifts to Gasper in exchange for investment business. Those names remain under seal.
Click on image to view larger version.
mniquette@dispatch.com
jnash@dispatch.com
posted by Kathie Bracy at 2:35 PM
<< Home