Ohio Bribery Investigation Turns to State Pension Funds

June 15, 2006 (PLANSPONSOR.com) - An investigation of the Ohio Bureau of Workers' Compensation regarding bribery for investment contracts has expanded to include the state's five public pension funds and the Ohio Treasurer's office.

The Associated Press reports that Franklin County Prosecutor Ron O’Brien confirmed that the funds are being looked at because the top 10 or 15 brokers doing business with the Bureau contain many of the same firms that handle investments for the funds. “However, whether there is anything illegal is as yet unclear,” O’Brien said, according to the AP.

A large law enforcement task force is investigating a state investment scandal that began with rare-coin dealer Tom Noe’s contracts with the workers’ comp agency. Noe is accused of stealing more than $1 million from the coin fund, the AP reports. The former executive in charge of investments at the workers’ comp agency says Noe bribed him to help secure the coin contract, but Noe denies that.

The first bureau official to be convicted in the year-long scandal was Terrence Gasper, the Bureau’s former chief financial officer. He pled guilty in state and federal court to accepting stays at a Florida condo, money for his son’s tuition and other gifts in exchange for doling out investment business. Prosecutors say more charges are expected this month.

Other convictions in the scandal include:

  • In 2004, three associates of then-Ohio Treasurer Joseph Deters were convicted in a pay-to-play scandal, in which preferential treatment of brokers was linked to campaign contributions.
  • In August, the former chairman of the Ohio Police and Fire Pension Board pleaded guilty to three misdemeanor ethics violations over receiving and improperly reporting similar gifts (See Former Chairman of Ohio Police and Fire Pension Board Fined ).
  • The former executive director of the State Teachers Retirement System (STRS), Herb Dyer, was found guilty last fall of accepting golf outings and other gifts from a firm that advised the fund on its investments (See Ohio STRS: Dyer Charged with Taking Consultant Gifts ).
  • In April, STRS board member Hazel Sidaway was convicted of ethics violations for taking gifts from clients of the pension fund while she oversaw their contracts (See Former OH Pension Board Official Sentenced to Community Service ).

A 2005 voluntary audit by the Ohio Public Employees Retirement System (OPERS) found that a new, more stringent ethics policy adopted in 2002 significantly reduced gift-giving to employees. The review found that before the policy members of the investment staff were regularly entertained by those doing business with OPERS, but after the new policy was adopted, there were fewer occurrences.