Ohio Pension Officials Could Face Felony Charges

May 24, 2004 (PLANSPONSOR.com) - An Ohio Ethics Commission report accuses four investment managers of giving staff, family members and friends of the Ohio Police & Fire Pension Fund trustees more than $200,000 in meals, entertainment, golf and travel.

A nine-page summary of an ethics investigation obtained by the Dayton Daily News found potential felony and misdemeanor violations including bribery and improper gratuities, having an unlawful interest in a public contract, theft in office, conflict of interest, and financial disclosure statement falsification. The gifts took place between 1998 and 2003.

Ethics investigators turned their report over to Franklin County Prosecutor Ron O’Brien, who is conducting his own investigation into related pension issues, the Daily News reported.“You can conclude that there were substantial payments made by vendors as gratuities for events at which board members attended. So, we’re going to aggressively pursue that . . . within the next month,” O’Brien told the newspaper.

The Ohio Ethics Commission is still investigating whether the gifts and trips influenced trustees to continue doing business with under-performing investment advisers, the report said, as well as looking into the records of four other fund advisers, O’Brien noted.

Ohio Governor. Bob Taft called for full prosecution of criminal violations. “To me, the abuses are shocking and really amount to an outrageous dereliction of public duty and are cause for real alarm and a renewed sense of urgency in enacting pension reform legislation by the end of next week,” he said.

Last September, Taft asked the Ethics Commission to investigate the fund after the Daily News reported that trustees spent $612,451 on travel and expenses in Ohio and elsewhere between 1998 and mid-2003. More than half of the total was on 170-plus out of state trips.

According to the ethics report:

  • In July 2001, a trustee received free air fare, lodging, meals and golf in Scotland. The value of his pro rata share of greens fees alone is $1,193.55
  • A trustee attended Ohio State University’s Fiesta Bowl championship game in Arizona as the guest of an investment firm representative and told other trustees he stayed with a friend
  • In August 2001, seven trustees and staff and their family members received rooms, golf, bike tours, canoeing, river rafting, jackets and other items in conjunction with a pension conference in Sun River, Oregon. All told, the various pension fund officials brought along 15 relatives plus other guests.
  • On April 29, 2003 after a pension board meeting, investment firm representatives paid $1,115.20 for food and refreshments at Morton’s of Chicago in Columbus for trustees and staff.
  • Vendors spent $10,870.52 for four Christmas parties for trustees and staff in December 2001. Vendors picked up the $4,791.91 tab — including $126.80 for cigars — for a holiday party the following year.
  • In one instance, a trustee specifically asked a vendor for four tickets to a Boston Red Sox game, valued at $600.

The four investment firms received $33 million in fees from the pension fund between 1998 and 2003, according to the Daily News report.

The Ethics Commission issued subpoenas for records and acquired 20 boxes of documents from multiple sources during the course of its eight-month investigation.The police and fire pension fund, one of five public pension systems in Ohio, has $8 billion in assets invested, 52,000 active and retired police officers and firefighters, as well as their survivors.

A similar scandal broke out with a Louisiana state pension fund when its director complained that vendors had improperly given gifts to fund board members (see  LA Ethics Board Ruling Supports Former Director’s Charges ).