03/14/02

Columbus

- Although State Treasurer Joseph Deters has downplayed his fund-raising ties to Frank Gruttadauria, Deters' campaign used the now-jailed broker to help raise campaign contributions from Cleveland's business elite.

Gruttadauria served on a 27-member "host committee" for a fall fund-raiser the campaign billed as its "only major event of the year in Cleveland." The event generated $38,800 for Deters' campaign.

And Gruttadauria, who helped land SG Cowen and Lehman Brothers $5.9 billion in state trades, wasn't the only major business associate of the State Treasury tapped to help raise dollars for Deters.

The list of hosts reads like a Who's Who of Cleveland financial leaders.

It includes top executives of National City Corp., Fifth Third Bank and KeyCorp - all banks authorized by the treasurer's office to handle billions of dollars in state deposits.

Ohio law limits to $2,500 per election cycle the amount individuals can give to state candidates, but there are no limits on what individuals can raise - just as there is no way for the public to learn who is raising the money.

The fund-raising event shows that Deters' campaign actively recruited political help from those doing business with his office, a practice Deters has said did not take place.

He made the comments last week, after The Plain Dealer reported that Gruttadauria had donated $50,000 to the operating fund of the Hamilton County Republican Party in Cincinnati, which can collect unlimited money from undisclosed donors.

Gruttadauria made the donation at the request of Eric Sagun, a fund-raiser who is employed by both Deters' campaign and the party.Deters said he was unaware of the donation and the solicitation until Gruttadauria's disappearance.

Deters said it was only then that Hamilton County GOP officials notified him of the donation and asked his advice.

Deters, a former chairman of the county GOP, told them to contact the FBI, which advised the party to hold onto the money and await further instructions.

Deters has emphasized that the state - unlike dozens of private citizens - made millions on deals that Gruttadauria arranged.

Deters spokesman Matt Borges said Gruttadauria did not attend or raise money for the Cleveland-area event but did allow his name to be used to help promote it. When asked why Deters failed to disclose Gruttadauria's role, Borges said, "I doubt that he even knew about it."

Hundreds of others were asked to serve on the host committee, Borges said. Twenty-seven made the final cut, and committee members were encouraged but not required to sell at least four $250 tickets to the event.

So why, if Gruttadauria raised no money, did the campaign choose to list him among the hosts? Sagun "would go through his database and call out any names of any Clevelanders" because the event was in Shaker Heights, Borges said.

"Another thing to consider is . . . at the time, if you recall, we were in a heated primary situation with a guy from Cleveland," he said. "And we were trying to promote our event, generally, with as many Cleveland business people as possible."

The event took place Sept. 24 at the home of retired Sherwin Williams CEO Jack Breen. Deters was still planning to challenge Ohio Auditor Jim Petro for the Republican Party nomination for attorney general. Deters is a Cincinnati native. Petro is from Rocky River.

Deters dropped out of the attorney general primary in December and is now running for re-election.

Other host committee members included Henry Meyer III, chairman and CEO of KeyCorp.; Robert J. King Jr., president and CEO of Fifth-Third Bank; David Daberko, chairman and CEO of National City Corp.; National City lobbyist and Deters adviser Andy Futey; and Carnegie Management Co. CEO George Mateyo.

NatCity Investments and Fifth-Third Securities, investment arms of two of the banks, helped co-manage with Deters' office a deal last year to refinance $475 million in outstanding state bonds. Mateyo's firm co-administers STAR Ohio, a $9 billion investment pool for local governments run by the Treasurer's Office.

A candidate for treasurer cannot accept campaign contributions from lending institutions, except through PACs, said Kurt Mayhew, campaign finance director for the Ohio Secretary of State. But he said top executives are not prevented under Ohio law from giving, just like other individuals, up to $2,500 each election cycle - unless they own a greater than 20 percent interest in the company.

Mayhew said the law prohibits a state agency from giving an unbid contract to a political donor who has contributed more than $1,000 to the head of that agency over the previous two calendar years. In instances where an institution has no contract per se, as is the case in many of the financial relationships maintained by the Treasurer's Office, Ohio law is silent.

Deters told The Plain Dealer last week that he views political contributions from institutions doing business with his office as an endorsement of his job performance but does not actively solicit them.

He said donors are not supporting him to get business in a so-called "pay-to-play" arrangement, but because their dealings with the agency have been good.

Contact Sandy Theis at:

stheis@plaind.com, 800-228-8272