Falsely Accused: State Highway Patrol Seeks Straight Story from SEC

May 31, 2000 (PLANSPONSOR.com) - Richard Curtis, Executive Director of the $700 million Ohio Highway Patrol Retirement System defined benefit plan, has been battling the Securities and Exchange Commission over a corruption charge. The fight began last December 16 when he received a complaint alleging one of his board members accepted a $79,000 bribe. It appears he is winning.

Language about the alleged board member bribe-taking has been removed, an amended complaint is about to be filed, and a letter was sent to Curtis from the SEC saying, “We apologize for any inconvenience.” But, like any plan sponsor worried about his plan?s reputation would, Curtis wants the SEC to publicly acknowledge its mistake and restore the system’s good standing.

Timed line

The SEC complaint focused on the activities of money manager Bond, Procope (later renamed Albriond), whose markups and commission recapture actions involving $6.9 million may or may not have violated the law. The original complaint charged that an unnamed Highway Patrol board member accepted a $79,000 bribe from Bond, Procope through a “dummy” corporation named Satchmo.

The timeframe for these activities, Curtis said, contradicted the SEC’s claims in its own report. It showed:

  • July 1993 – the Ohio Highway Patrol Retirement System hired Bond, Procope as an investment manager.
  • December 1994 – the board member accused of accepting the bribe quit the board.
  • March 1995 – Bond, Procope was fired for poor performance by the Ohio Highway Patrol Retirement Board.
  • At an unclear time, the ex-board member joined Bond, Procope as an employee.
  • December 1996 – the $79,000 payment to the ex-board member by Bond Procope via Satchmo was made as a salary payment, not a bribe.

In essence, while some of the Ohio plan’s assets were managed by the money manager under investigation, the payment in question:

  • was made nearly two years after its services were terminated by the Ohio Highway Patrol system,
  • to a person unaffiliated with the Ohio Highway Patrol system at the time of the payment (two years after the person quit the board of the Highway Patrol system)
  • who was reportedly an employee of the money manager under investigation at the time of payment.

No indictments were handed down from the SEC’s complaint, nor from other investigations. Curtis asked the Ohio State Police and the US Attorney’s office to conduct an inquiry to see if the board member had in fact been involved in criminal dealings.

Whole again

Curtis is angry about the slur against his operation and his board. “We can never make our reputation whole again,” he said. “By leaving one board member accused and unnamed, they dumped on all seven.  Someone at the SEC made a mistake, and they should step up to the plate.”

So, Curtis sent SEC Chairman Arthur Levitt a registered, return receipt letter as a formal complaint. He also sent copies of the letter to Ohio’s US Senators Michael DeWine and George Voinovich, as well as the entire Ohio Congressional delegation.

Curtis wants three things from the SEC:

  • An internal SEC investigation about what happened, publicizing how his fund was erroneously charged
  • Action taken against the person or people responsible for the erroneous accusation
  • A public retraction

“I doubt the attorneys will be prone to do that,” said Curtis. At the SEC, spokesman John Heine said: “We’re in the process of filing an amended complaint that will take care of the errors in our original complaint. We are currently in process of preparing this amended complaint.”

Meanwhile, another Columbus, Ohio fund, the $21 billion Ohio Bureau of Workers’ Compensation, continues to retain Albriond as part of their 100-manager stable acco