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Published: Wednesday, 10/7/2009

Audit questions GOP spending

BY TOM TROY
BLADE STAFF WRITER
Current party chairman Jon Stainbrook, left, maintains that Joanne Wack should have borne the full cost of her legal defense. Former party executive director Wack says she believed the legal bills could be paid out of the restricted account. Current party chairman Jon Stainbrook, left, maintains that Joanne Wack should have borne the full cost of her legal defense. Former party executive director Wack says she believed the legal bills could be paid out of the restricted account.
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The Lucas County Republican Party under its former leadership illegally spent more than $3,000 for legal bills last year, Ohio Auditor Mary Taylor states in two tentative audit findings against the party.

The two "proposed findings," dated Oct. 2, allege that the party spent money illegally out of its "restricted" fund.

The proposed findings are part of an audit of the party that is not complete, said Emily Frazee, a spokesman for Ms. Taylor.

In both cases, the auditor could refer the findings to the Ohio attorney general for collection.

Jon Stainbrook, the current party chairman, said it is a routine annual audit of party funds, and that he believes the bills were not for legitimate debts of the party.

"If this becomes a final report from the auditor of state, then the attorney general will pick it up from there. If they do not pursue it, we will," Mr. Stainbrook said.

The auditor cited two improper expenditures:

•$1,000 on April 1, 2008, to Isaac, Brant, Ledman & Teetor LLP, a Columbus law firm, for defending former party executive director Joanne Wack.

•$2,035.90 to Robison, Curphy & O'Connell LLC, a Toledo law firm, to defend the party in a 2005 lawsuit relating to disgraced party fund-raiser Tom Noe.

Under state law, political parties are limited in how they may spend money from their "restricted" accounts. Allowed are headquarters expenses such as rent and utility bills and costs of get-out-the-vote efforts.

The money comes to the parties from the state from taxpayers who check off the "Ohio Political Party Fund" box on state tax forms, agreeing to give $1.

"Checking 'yes' will not increase your tax or decrease your refund," taxpayers are told on tax forms, but the funds are not intended to provide money for local political parties to pay lawyers to fight party squabbles.

Current GOP Chairman Stainbrook said that's what former officials of the Lucas County Republican Party did.

The $1,000 to pay the Wack legal bills stemmed from a case filed by Mr. Stainbrook with the Ohio Elections Commission alleging that Wack had forged a candidate's signature on a postcard that was mailed to voters in the candidate's district.

Wack and other former Republican Party officials were fighting in 2008 to stop Mr. Stainbrook from taking control of the local party.

Wack said yesterday that she was sued individually and as executive director of the party, and so she split the $2,000 legal expenses with the party.

Mr. Stainbrook said Wack testified before the Ohio Elections Commission that she acted as an individual, so she should have borne the full cost of her legal defense.

The $2,035.90 legal bill to the Toledo law firm was for defending the local party against a 2006 lawsuit in Lucas County Common Pleas Court.

The suit contended that $58,000 lent to the party by former party fund-raiser Tom Noe should have been paid back because it came from stolen state coin-fund money.

That case was filed by a Holland business owner and was represented in court by Ben Konop, now a Lucas County commissioner, who was then in private practice as a lawyer.

Noe is serving an 18-year sentence in an Ohio prison for stealing $13 million from two rare-coin funds he created and managed for the state's injured-workers trust fund.

Mr. Stainbrook said former party officials cut the illegal checks when it became clear they were going to be voted out of power. Mr. Stainbrook defeated former GOP Chairman Bob Reichert shortly after the legal fees were paid in 2008, but before he took control of the party.

"Bob Reichert and Diane Haupricht [then party treasurer] OK'd the release of funds from the Lucas County Republican Party in the waning days to pay past debts. They had to take it out of the restricted fund because they didn't have enough money in the general fund," Mr. Stainbrook said.

He said if the debts were legitimate, they should have appeared on the party's campaign finance reports filed with the Lucas County Board of Elections.

Mr. Reichert, Wack, and Ms. Haupricht all said yesterday that they believed legal bills could be paid out of the restricted account, and that there is a simple fix: transfer money from the party's current general fund into the restricted fund.

"If that was the case the other fund needs to reimburse the restricted fund and be done with it," Mr. Reichert said.

Wack had a similar comment.

"I'm sorry that we paid it out of the wrong fund. What else can I say. Ask any business person and they would agree legal fees is a normal operating expense," Wack said.

Ms. Haupricht said "legal bills are a cost of operating a business or whatever. We really felt it was acceptable. We are not the only people that have interpreted it that way."

She said the auditor's office told her the mistake could be corrected by moving money from the general fund to the restricted fund.

Mr. Stainbrook said he intends to seek reimbursement from the former party officials who made the illegal expenditures, and not use current party funds.

"They said they could spend money out of any party account as they wished," Chairman Stainbrook said last night. "That's the same argument that Tom Noe made to justify his spending out of the state's rare-coin funds. He's now sitting in prison."

Contact Tom Troy at:

tomtroy@theblade.com

or 419-724-6058.



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