Paul Kostyu: Ex-STRS board members face ethics charges

By Paul E. Kostyu, Copley Columbus Bureau chief

Canton Repository, August 30, 2006

COLUMBUS -- Ten charges of violating state ethics laws were filed Tuesday against four former board members of the State Teachers Retirement System. One of those under investigation said he would not contest the charges.

The news comes in the midst of another controversy brewing at the retirement system over the payment of legal bills to three staff members who testified at the trial of former board member and Canton City Schools teacher Hazel Sidaway. She was convicted in April of two counts of violating state ethics laws.

Joseph I. Endry, a retired teacher and former retirement system board chairman from Westerville, said he would either plead guilty or no contest to one count of filing a false financial disclosure statement and one count of conflict of interest.

“It’s unfortunate,” Endry said. “We were following the rules that STRS told us that were in effect. Apparently, a judge says those are wrong rules. When we did it, we thought it was all right. We find out now that it isn’t.”

Similar charges were filed against Eugene E. Norris of Columbus and Deborah Scott of Cincinnati. Both are former leaders of the board.

“I’ve got nothing to say,” Norris said.

A message left for Scott was not returned.

Messages for Michael N. Billirakis of Pickerington also were not returned. Billirakis, an executive committee member of the National Education Association and a current board member, was charged with four counts of ethics violations — two for conflict of interest and two for filing a false disclosure statement.

All four are accused of accepting and failing to disclose tickets to the Broadway show “Hairspray” from the Frank Russell Corporation/Russell Real Estate Advisors. Billirakis also is accused of accepting and failing to disclose tickets to a Cleveland Indians game that he got from Salomon Smith Barny. The retirement system was doing business with both firms at the time.

The charges, all first-degree misdemeanors, are similar to the two Sidaway was found guilty of and the three Jack H. Chapman of Reynoldsburg pleaded guilty to in June. Each charge can bring a maximum penalty of up to a $1,000 fine and six months in jail. Both Sidaway or Chapman received suspended jail sentences, were placed on probation, ordered to pay fines and perform community service.

The board members received “multiple meals, gifts and entertainment from investment firms managing STRS funds,” according to Paul M. Nick, the chief investigative attorney for the Ohio Ethics Commission. The charges represent specific examples of wrongdoing, Nick said.

All four are scheduled to appear in Franklin County Municipal Court at 9 a.m. Sept. 19 in courtroom 4C.

The ethics commission investigation began in October 2003 after media reports, including many by Copley Ohio Newspapers, raised questions about travel, bonuses, artwork and other items.

Nick said the latest charges represent the end of the investigation against board members, but an investigation of senior staff continues. He would not provide names saying it was less than a dozen. “You have reported one before,” he said.

That would be Stephen A. Mitchell, deputy executive director of investments. In September 2005, the pension fund’s top executive, former Executive Director Herbert L. Dyer, was charged with four counts of conflict of interest, pleaded no contest to and was guilty of one count of failure to disclose a golf outing. He was fined and ordered to reimburse the retirement system.

The Sidaway trial sparked another controversy at the retirement system. This month the board, in a closed meeting, approved reimbursing Mary Ellen Grant, Stephen W. Ehlers and Eileen Boles for their legal costs when they were called to testify. They hired private attorneys instead of using in-house counsel, who attended but did not participate in the trial.

Responding to a public records request, Executive Director Daymon Asbury told a STRS retiree the current board, including Billirakis, gave him permission to pay $900 for Grant, $500 for Ehlers and up to $6,000 for Boles. All three had gone on the trip to New York when the board saw “Hairspray.” All three were granted limited immunity from prosecution.

“STRS has no business whatsoever paying the private personal legal fees of these employees,” said board member Dennis Leone.

He also said “it is my understanding” the board turned down a Sidaway request that her legal fees, estimated to be several thousand dollars, be paid by the retirement system.

Reach Copley Columbus Bureau Chief Paul E. Kostyu at (614) 222-8901 or e-mail: paul.kostyu@cantonrep.com