Democrats call for investigation, legislation on Treasurer campaign

The Associated Press
5/31/02 5:57 PM

CLEVELAND (AP) -- Democrats Friday called for an investigation into the campaign finances of Treasurer Joe Deters and promised to offer new legislation on campaign contributions.

The Plain Dealer reported Friday that Deters arranged Ohio investment work to go to a Pennsylvania company that splits its fees with a business owned by two donors to Ohio Republicans.

Deters, a Hamilton County Republican, is running for re-election in November against Mary Boyle, a Democrat, who is a former state lawmaker and Cuyahoga County commissioner.

The Plain Dealer reported Friday that Richard Ireland and Brian McElwee are the sole donors to the Concerned Citizens Political Action Committee, based in Valley Forge, Pa.

According to the report, $58,000 of the $371,500 the two gave the committee since 2000 found its way to the Hamilton County Republican Party and to other Ohio Republican accounts that have supported Deters' campaign.

The two are also linked to an investment firm that has received a significant amount of business from Ohio during Deters' tenure, the paper reported.

State Sen. Leigh Harrington, a Ravenna Democrat, sent a letter to Attorney General Betty Montgomery requesting an investigation of the "impropriety of this situation."

Democratic state Sen. Eric Fingerhut said Friday that he will meet with Boyle to draft legislation to create a greater separation between the political and professional obligations of the treasurers office.

"There's obviously an awful lot of 'pay-to-play' in the system," Fingerhut said. "We ought to be able to build in more safeguards."

Lisa Peterson, spokeswoman for the Deters campaign said Democrats are simply trying to distract voters from the fact that Deters is the better qualified candidate for the office.

"Our campaign has followed Ohio campaign finance laws at all times," Peterson said. "Until there is public financing of campaigns, people will have to solicit contributions from individuals."

Peterson said it is no more unusual for bankers give to a treasurer candidate then for lawyers to give to an attorney general's campaign.

The Pennsylvania political action committee's first Ohio donation arrived in December 2000, as Deters' office was putting together terms for selecting companies in which to invest the state's $358 million tobacco settlement.

More than $42 million of Ohio's money eventually went to Valley Forge Asset Management Corp., which occupies the same office building and shares a post office box with the PAC, the newspaper reported.

According to a disclosure form filed with Deters' office, half of the fees the state pays Valley Forge Asset Management go to its marketing consultant, VFIM Corp. -- a company owned by Ireland and McElwee that also is based in the same office building. The fees total an estimated $211,000.

VFIM's agreement indicating it helped Valley Forge Asset Management land the state deal is on file with the state, said Tim Clark, a spokesman for Deters' office.

Deters said Valley Forge Asset Management and the other tobacco money managers were selected based on their qualifications and past performance following an evaluation by The Consulting Group, a division of Salomon Smith Barney.

"The proof is in the results," Deters said, citing a study he commissioned that shows Valley Forge Asset Management outperformed the other winning firms in the first quarter.

Thirteen other firms were selected by Deters' office to invest tobacco money. Employees and others associated with 11 of those firms or their affiliates donated to his campaign or to other key Republican accounts, according to a Plain Dealer analysis of contributions.