06/02/02

Columbus

- After months of denying that his campaign directed bankers and brokers to give to the Hamilton County Republican Party, State Treasurer Joe Deters now concedes that both he and his fund-raiser directed donations to the county party that Deters once headed.

The admission came Friday as he was questioned about a Plain Dealer investigation that showed his campaign has received almost dollar for dollar from the Hamilton GOP what the county party has received from bankers, brokers and others with business ties to the state treasury.

Deters denied that the county agreed to a dollar-for-dollar match - a practice banned under Ohio law - but he did say that donors understood that any giving to his home-county party in Cincinnati, where GOP Chairman Mike Barrett is one of his closest political allies, could benefit his campaign.

"I never sat down with Mike Barrett and said, 'Mike, if I raise this much money for the county campaign fund, will you give it to me?' " Deters said.

State law limits contributions to individual candidates but allows almost unlimited giving to political parties.

The parties then can give nearly unrestricted amounts to candidates.

Deters said that he did not intentionally deceive anyone and that he was unaware that his fund-raiser, Eric Sagun of Columbus, had directed donors to Hamilton County.

He said Sagun did not target people doing business with his office, but when people called and asked how to be helpful, Sagun sometimes suggested that they give to the Hamilton County GOP.

A candidate may not raise donations for county parties with the understanding that the candidate will get the money, said Carlo LoParo, a spokesman for the Ohio secretary of state's office.

The contributions to the Hamilton County Republican Party totaled $304,020 during 2001, a year when the party reported cutting checks to Deters' campaign totaling $303,620, according to a Plain Dealer analysis of campaign donations.

The big contributors had ties to Bank One, which is authorized by the treasurer to handle billions in state deposits, and two brokerage houses, Raymond James & Associates Inc. and Lehman Brothers Inc., which together bought more than $10.6 billion in bonds from Deters' office.

Deters vowed on Friday that he and the county GOP fund-raiser would no longer direct people doing business with his office to contribute in Hamilton County.

The treasurer said he chose to end the practice to avoid any appearance of impropriety, but he said that his campaign will continue to employ Sagun, who also is fund-raiser for the Hamilton County GOP.

Deters also pledged that, starting in mid-June, he would post on his Web site contributions to him within 48 hours of their receipt.

Deters' announcements come as his Democratic opponent in the November election, Mary Boyle of Cleveland, continues to talk of the "Deters-Hamilton County Republican Party Laundromat" and accuses him of intentionally circumventing campaign finance laws.

Legislators changed Ohio law in the mid-1990s to prohibit individual donors from giving more than $2,500 to a candidate during a primary election campaign and $2,500 to a candidate during any general election campaign. Individuals can give twice as much - $5,000 per election cycle - to a party's account for statewide candidates and can give unlimited amounts to county parties' local and operating funds.

Some donors - including a group of Columbus-area brokers and since-jailed Lehman Brothers broker Frank Gruttadauria - did just that in Hamilton County.

Broker Robert Meeder Sr., for example, gave the Hamilton County GOP $12,500 last October. His son, Robert Meeder Jr., made an identical donation on the same day.

Their firm, Meeder Financial, brokered $20 million in trades for Deters' office from 1999 to 2001, state records show.

In addition to examining Hamilton County Republican donations, The Plain Dealer looked at money that went into other GOP county parties, the state party and Deters' campaign. Overall, the newspaper connected two-thirds of Deters' donations to firms with financial ties to his office.

Deters questioned the newspaper's analysis.

"The flaw in your methodology is to assess everyone connected to a financial institution that they're doing it for the benefit of Joe Deters," Deters said. "They have other interests in the state besides me."

For example, he said, many of his longtime supporters - and many prominent Cincinnati Republicans in general - have ties to financial institutions yet are not giving because of their financial stake in his office.

"The fact of the matter is, until we have public financing of campaigns, total public financing, the money is going to get into the campaigns," he said. "And [fund-raisers] are going to use the tools and laws available to them to raise as much money as possible."

A close review of the pattern of giving to Deters' campaign suggests that clusters of people gave in amounts permitted - but perhaps not contemplated - by the authors of Ohio's campaign finance law.

Donations by people who are related by work or family and that add up to significant amounts have created loopholes in the law that aims to curb the effect of big money in politics.

Here are some examples:

Helping to raise money

Deters has received political support from financial executives whose businesses have ties to the treasury. While the law limits what a number of those individuals can give - depending on their ownership stake in a company - it places no limits on what they can raise.

For example, top executives of National City Corp., Fifth Third Bank and KeyCorp, all banks authorized by the treasurer to handle billions in state deposits, served on a host committee last September for a fund-raiser that the Deters campaign billed as the "only major event of the year in Cleveland." The amount raised: $38,000.

Giving by lobbyists

Marketing firms and lobbyists whose clients received work from Deters' office helping to invest Ohio's portion of the tobacco lawsuit settlement showed up as donors to Deters and Republican Party accounts.

Deters said that even he is "intrigued" by the interest that lobbying firms show in work overseen by his office. He added that whether firms hire lobbyists "doesn't affect the decisions of this office."

Lawyers and lobbyists were the third-largest class of givers to Deters, contributing $589,364. The Plain Dealer found that every law firm doing work for Deters' office - some during a period when he was running for attorney general - gave directly to his election campaign. That totaled more than $233,721.

Lobbyist Robert Lambert was among them, giving Deters $650 since 1999. Lambert received a monthly salary plus a 10 percent contingency fee for helping Harris Management Investment win a tobacco-investment contract. Ohio law prevents lobbyists from being paid on a contingency basis for contracts they help their clients get.

Lambert said his contract is permissible because he's also paid a monthly fee, but the man who regulates Ohio's lobbyists disagreed.

"To me, that's a contingency contract, and contingency contracts are banned," said Legislative Inspector General Jim Rogers. He said his office will investigate Lambert's arrangement.

Including the money from Lambert, donations tied to 12 of 15 firms selected by Deters' office to oversee the tobacco-fund investments came directly into Deters' campaign, to the Hamilton County GOP or to the Ohio Republican Party, the Plain Dealer analysis found.

In addition, donations came from a political action committee found to have ties to a 13th firm, Valley Forge Asset Management Corp. in Pennsylvania.

The three GOP party organizations received a total of $181,000 since January 2000 from the firms and affiliates, The Plain Dealer found.

Family giving

People who believe that the candidate should receive more than the law's $2,500 limit on individuals often persuade family members to give the maximum - a practice that is legal. However, it is often hard to trace who is related to whom and what their business ties might be.

In the case of one Cincinnati-area family of Deters supporters - the wealthy Kay Copelin French family - a law prohibiting people from giving in the names of others may have been broken.

At least two family members contacted by The Plain Dealer said they had no knowledge of their $2,500 donations to Deters' campaign.

"I don't know politics. I don't get into them," said Cheryl Copelin, French's former daughter-in-law, who said she didn't give to Deters in 1999 as his campaign records show. "I don't know what he stands for and all that," Cheryl Copelin said. "I just don't care for him personally."

French's son David Copelin is married to Kathi, a Bank One branch manager and a registered broker for Banc One Investments. He said he gave in his own name and on behalf of two family members - his wife and college-age daughter. When asked about the donation in her name, Kathi Copelin deferred to her husband. David Copelin said he gave on her behalf and that "it had nothing to do with Bank One." While campaign reports show daughter Amy Copelin giving a $2,500 donation to Deters, she said she was unaware of the donation and did not recognize Deters' name.

Ten French family members - in 13 separate donations - gave the Deters campaign and Hamilton County state candidate fund $43,500. "We've known Joe for a long time," David Copelin said. "We support Joe particularly, but also we support the Republican philosophy."

Deters said he was unaware of any possible problems with the Copelin donations and said the Frenchs have been longtime supporters. He said Kathi Copelin's employment by Bank One - a firm doing business with his office - should not link the family's money to the business of the treasury. Deters said his campaign began spreading the word that Hamilton County was a friendly depository for contributions after a stern warning from Ohio Republican Chairman Bob Bennett last fall. Bennett was upset that Deters was running for attorney general against fellow Republican Jim Petro, the state auditor, Deters said.

"Jim and I were in a primary against each other, and Bob Bennett made it very clear to both of us that no state candidate funds were going to flow to our respective campaigns while there was a primary," Deters said. (In December Deters dropped out of the attorney general's race in favor of running for re-election as treasurer when he was faced with the prospect of losing two key endorsements for the primary election: from the Franklin County Republican Party and from the state GOP Central Committee.)

Still, state and county Republican parties remain the largest single contributors to Deters' re-election campaign for state treasurer.

The Ohio GOP's state candidate fund took in $1.4 million from individuals and institutions with business ties to the treasury - including employees, relatives, company lobbyists and other affiliates, the analysis determined. The state party alone has donated roughly $800,000 to Deters' campaign since 1998.

Under Ohio law, political parties are not required to report which money goes into the large checks they write to individual candidates. Therefore, it is impossible to tell exactly whose donations went to Deters.

Deters said donors "almost invariably" approach the campaign, not the other way around - and donors are never told they must donate to do business with his office. "I don't do things that way. There may be people in this town that do things that way, but I don't," said Deters, a former Hamilton County prosecutor. "I would rather lose my election than do that stuff."

One unsuccessful bidder for Ohio's tobacco work, however, surmised that it was not a coincidence that nearly all those who received tobacco investment work from Deters' office were political contributors.

Tom Hartland, chief executive officer of Hartland & Co. Financial Consultants in Cleveland, said a lobbyist - whom he declined to identify - approached him and suggested that he needed to donate to Deters' campaign to get state business.

"The lobbyists act as the gatekeepers for a lot of the business, and they are the ones who are insulated enough from the political figures directly," he said.

"They are in the position of saying, 'If you work with us here, we can help you get this business.' "

Deters said he knows very few lobbyists and seldom knows which ones are seeking business from his office. He said any lobbyist who claims he can guarantee business "should be wearing a mask - because they're stealing from their client."

Hartland, whose firm handles $10 billion for a number of large pension funds and nonprofits, said he believes his firm has been unsuccessful in its dozen attempts to get state work because it makes no campaign contributions. "That's how the system works," he said, "and frankly, our firm is not going to do that."

Since Ohio imposed contribution limits in 1995, affluent donors such as those abundant in the financial sector often have directed their generosity to political parties.

Cuyahoga County Republican Chairman James Trakas, a state representative from Independence, said his party coordinates its efforts with the statewide candidates it supports. "If the candidate raises the money for us, we usually give them the money back," said Trakas, who as a party chairman has the discretion under the law to decide who gets county party donations.

"Ever since these state candidate funds started, this has been kind of the way they've worked: If there's a candidate who wants to do an event for the party, or if we have an event and they say, 'Hey, we want to help,' we generally help them back."

Contact Julie Carr Smyth at:

jsmyth@plaind.com, 1-800-228-8272