This content is from: Corner Office

Marc Dann: The Flawed Reformer

Ohio attorney general, who resigned in 2008, says his failure to change the system was a result of his own misdeeds.

Marc Dann believed something was wrong with the $19 billion Ohio Bureau of Workers’ Compensation as far back as 1998, when he was working as a campaign strategist for a local Democrat running for the U.S. Senate. He had heard rumors about his candidate’s opponent getting campaign contributions from managers and brokers working with the BWC.

Then in 2005 an Ohio newspaper discovered that the BWC had invested in two rare-coin funds managed by Thomas Noe, a well-known major contributor to Republican campaigns. That story kicked off a multiagency investigation, and Dann, by then a state senator, emerged as an outspoken critic of the BWC’s investment practices, parlaying his call for change into a successful dark-horse run for Ohio attorney general in 2006.

Noe had given four local Republicans (known to investigators as “the Toledo Four”) money that they then donated in their names to the reelection campaign of President George W. Bush. According to the findings of an investigation by the Ohio Ethics Commission, one of the Toledo Four had set up a meeting for Noe with then–BWC chief executive and political appointee James Conrad. The bureau later made a $50 million investment in Noe’s funds.

In May 2007, Terrence Gasper, the longtime chief financial officer of the BWC who reported to Conrad, became the highest-profile name in the investigation when he was sentenced to more than five years in prison after having pleaded guilty to racketeering. Gasper admitted to taking bribes from placement agents and money managers, including payment toward his son’s college tuition and use of a luxury condominium in Florida.

Gasper went to jail, but he didn’t go quietly. “There was a small group of political appointees in senior management whose agenda was totally political in nature, often to the detriment of what the bureau was trying to do,” he told the court. Gasper claimed that he had tried to be honest by turning down investments he knew were politically motivated, but he’d been overruled by his superiors.

Ohio inspector general Tom Charles, a Republican, whose office spearheaded the BWC investigation, dismissed Gasper’s courtroom finger pointing. Charles said that Gasper “was the person at the center of pay-to-play.”

But Gasper’s accusations jibed with what Dann had long believed. “The BWC became a veritable ATM machine used by Republican political appointees to reward campaign contributors,” he said at the time.

Noe was also convicted of theft, money laundering, forgery and corrupt activity, and is serving an 18-year sentence. But proving criminal behavior by anyone at the BWC more senior than Gasper has been impossible.

It is not for lack of trying, says Paul Nick, chief investigative attorney for the Ohio Ethics Commission. One problem, Nick explains, is the difficulty in demonstrating that investment decisions are being made as a result of political duress.

As for Dann, he never got a chance to prove his theory. In 2008 he resigned as attorney general after admitting to having an extramarital affair with a staff member. He says his failure to change the system was a result of his own misdeeds, but it was his efforts at reform that left him few friends. “A lot of people were pleased to see me get out of the way,” Dann says now.

See related story, "Pension Pay To Play Casts Shadow Nationwide".

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