Mismanagement of Public Funds

MISMANAGEMENT OF PUBLIC FUNDS -- (House of Representatives - June 07, 2005)

The SPEAKER pro tempore. Under a previous order of the House, the gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.

Ms. KAPTUR. Mr. Speaker, there is a major political scandal that is unfolding in the State of Ohio; and I am sure Americans remember how important Ohio was in this recent Presidential election.

If citizens wish to know more about it, they should go to the Toledo Blade Web site, the major newspaper that has been involved in helping to put information out to the public and help Ohioans and, indeed, people in this country, understand what is happening.

In Ohio what is happening is that the Governor of our State has permitted millions and millions of dollars of workers' money from the Ohio Workers Compensation Fund to be invested in high-risk instruments, coins and we think perhaps what is called collectibles, although we are not sure yet. And these investments are ones that no other State in the Union has allowed. But what happened was that some of these so-called high-risk investments when they went to try to find them, it appears as though millions of dollars of these coins are now missing.

There is a grand jury that has been seated in Ohio now that is beginning to call people forward because some of these same individuals involved in this scandal were used to channel money to the Bush campaign in Ohio. In fact, the President of the United States has already returned $4,000 to one of the givers. We do not know where this is all going to lead, but it is a huge, huge story.

Our Governor, when asked, what do you think about this, that the State of Ohio has taken all of this money, over $50 million initially and given it to this coin dealer to put into these high-risk investments, what do you think of it, the Governor of Ohio said, hey, we are making money on that. I think it is a pretty good idea.

He thought he was making money on it? Well, think about it. How is it secured? No other State in the Union permitted investments in coins and collectibles. He was only looking at what he thought was yield. But the cardinal rules of investing public money are safety first; liquidity, can you get it back over night if you need it; and only running a distant third, yield.

This is a very serious issue and yesterday in the State of Colorado there was a search warrant that was issued on one of the related individuals involved in this scandal, and they were in his house for over 12 hours pulling out investments in cigars, wine, over half a million dollars of wine I guess in that house alone.

The State of Ohio is now, through the Inspector General of Ohio, trying to find where is the workmen's compensation money that was improperly invested by those responsible, who had public responsibility for this.

Then today a story broke in Ohio that this same Bureau of Workers Compensation admitted it has lost $215 million in a high-risk fund that few people knew about. The bureau had invested $355 million with a Pittsburgh investment firm called MDL Capital Management beginning in 1998. But last year after diverting $225 million into a fund that works like a hedge fund, the fund itself lost $215 million. And although the bureau says it knew about the loss since last year, Governor Taft was only notified about it today.

There are investigations going on, including the Ohio Inspector General, the bureau spokesman, Jeremy Jackson told the Toledo Blade today. But the news came to light as a handful of agencies are looking into the bureau and its dealings with the Toledo area coin dealer, Mr. Tom Noe, who is one of the people that took some of this $50 million and put it into coins and purportedly collectibles.

The Ohio Ethics Commission on Monday said it was looking into other investments held by the bureau, the agency charged with providing assistance to injured workers.

This is where I want to say in my district, the ninth district of Ohio, we have had four deaths of people, iron workers trying to build the largest transportation project in Ohio history over the Meumee River. These were unnecessary deaths because the State of Ohio was not inspecting the project properly. In fact, though the project was a year and a half ahead of schedule, they signed an acceleration agreement with the company to try to make the workers finish the project faster, even though it was a year and a half ahead of schedule. And the cranes that were used in this project collapsed because the company was not securing the foot of the cranes properly.

So the State of Ohio not only has taken workers' compensation money and misinvested it, they have not even done their job in protecting the lives of citizens who are trying to build Ohio forward in a very rough economy. It is unbelievable what is going on in our State.

At the center of this new loss of money was a man named Terry Gasper who was the former chief financial officer for Ohio's Bureau of Workers Compensation that is supposed to be there for the workers. The money is set aside by the companies for the workers, not to be put in these crazy investments that can never be recovered, but for workers who are injured on the job.

By the way, on that transportation project in our district, we have many injured workers who would benefit from that money. I will be submitting for the RECORD the most recent article about additional losses from the State of Ohio.

Shame on the Governor of Ohio. Shame on the State officials of the State of Ohio. What a tragedy they have perpetrated on the people of our State.

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