[Congressional Record (Bound Edition), Volume 151 (2005), Part 9]
[House]
[Pages 11760-11761]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     MISMANAGEMENT OF PUBLIC FUNDS

  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

[[Page 11761]]

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.

                     [From the Blade. June 7, 2005]

                   (By Mike Wilkinson and James Drew)

       Columbus.--The Ohio Bureau of Workers' Compensation 
     admitted today that it lost $215 million in a high-risk fund 
     that few people knew about.
       The bureau had invested $355 million with a Pittsburgh 
     investment firm, MDL Capital Management, beginning in 1998.
       But last year, after diverting $225 million into a fund 
     that works like a hedge fund, the fund lost $215 million. 
     Although the bureau has known about the loss since last year, 
     Gov. Bob Taft was notified about it today.
       ``There are investigations going on, including the [Ohio] 
     Inspector General,'' bureau spokesman Jeremy Jackson told The 
     Blade.
       The news came to light as a handful of agencies are looking 
     into the bureau and its dealings with Toledo-area coin dealer 
     Tom Noe. 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.
       At the center of the MDL deal were Terry Gasper, the former 
     chief financial officer for the bureau, and Jim McLean, the 
     chief investment officer. In a memo to the governor, Tina 
     Kielmeyer, acting bureau administrator, said Mr. Gasper did 
     not notify former bureau Administrator James Conrad about the 
     investment.
       In the wake of the growing Noe scandal, Mr. Conrad resigned 
     two week ago and left the agency on Friday. Mr. McLean was 
     put on paid administrative leave today pending a management 
     review of the situation.
       The bureau last year asked the Ohio Attorney General to 
     appoint special counsel in the case and ordered Mr. Gasper to 
     either resign or be fired. He resigned Oct. 6, 2004.

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