Lawyers who gave to GOP got state work

3/26/2006
BY STEVE EDER
AND JAMES DREW
BLADE STAFF WRITERS
The GOP state campaign fund sent $1.49 million to Jim Petro, top, and $1.27 million to Betty Montgomery.
The GOP state campaign fund sent $1.49 million to Jim Petro, top, and $1.27 million to Betty Montgomery.

COLUMBUS - Lawyers who contributed more than $1.8 million to an obscure Ohio Republican Party fund that backed the campaigns of Jim Petro and Betty Montgomery for attorney general have received more than $170 million in legal fees working for the attorney general's office since 1998, a Blade investigation shows.

An analysis of payment records from the attorney general's office to "special counsel" - private-sector lawyers hired to do legal work for the state - reveals that the firms that contributed the largest amounts of money to the Ohio Republican Party state candidate fund received among the most in fees from the state.

Lawyers, many of whom contributed the maximum amounts allowed under state law to Mr. Petro and Ms. Montgomery, also contributed tens of thousands of dollars to the Ohio GOP's candi-date fund, an account created in 1998. In turn, the party has directed contributions totaling $1.49 million to Attorney General Petro, a candidate for governor, and $1.27 million to State Auditor Montgomery, a former two-term attorney general who is running this year to become attorney general once again.

Allegations of "pay-to-play" in the special counsel program reach back nearly two decades. Before the state enacted limits on campaign contributions, outside lawyers working for the attorney general's office directly gave more than $410,000 to the campaigns of Democrat Lee Fisher, who served as attorney general from 1991 through 1994, and now is U.S. Rep. Ted Strickland's running mate in the Democratic primary for Ohio governor.

With campaign contribution limits in place since 1995, the lengths that lawyers will go to curry favor with the attorney general are disturbing to some critics. Lawmakers voted in late 2004 to increase contribution limits from $2,500 to $10,000 per election cycle.

State Sen. Tim Grendell (R., Chesterland), who is challenging Ms. Montgomery in the Republican primary for attorney general, said it appears that his opponent, along with Mr. Petro, and Ohio GOP Chairman Bob Bennett are trying to "circumvent" the system by laundering contributions through the party fund.

"They are not dumb enough to say publicly that they are doing it, but when you have two and two, it does equal four," said Mr. Grendell, whose campaign has not received any money from the state candidate fund.

Last week, the Ohio GOP endorsed Ms. Montgomery over Mr. Grendell in the May 2 primary election.


State Rep. John Boccieri (D., North Middletown) said that special counsel firms that use the Ohio Republican Party state candidate fund to contribute more money to Mr. Petro and others are "crossing the ethical line."

"There's an undercurrent that if you want a contract, you have to pony up with regards to campaign contributions, to the candidate directly or to the political parties. There is no question in my mind that swimming around in this pond there are sharks and alligators out there who are forcing this situation," he said.

Ohio Republican Party spokesman John McClelland said GOP candidates encourage donors to contribute to the state candidate fund.

"They are encouraged by all of our candidates, not necessarily on behalf of one candidate specifically or to get around any rules. It is transparent and open, and we have had people doing it for a long time."

Asked about the concern that the practice encourages a proliferation of money in campaigns, Mr. McClelland replied: "That debate will be had forever. There are people on every end of that spectrum, in saying people should be able to spend as much as they want, to the other side that thinks everything should be state-funded. I have no comment on that."

In an election year when government corruption is taking center stage with the indictment of GOP fund-raiser Tom Noe and the fallout from the Coingate scandal, the political and business relationships between officeholders and their contributors are under intense scrutiny. As Mr. Petro faces accusations he withheld state business from lawyers who did not contribute to his campaign, the relationships with lawyers formed in the attorney general's office have emerged as a key issue in the Republican primary for governor.

In February, Mr. Petro vowed that his first act as governor would be to call on legislators to ban state contracts for political contributors - a move he said would "end the culture of looking to vendors as the source of campaign contributions - a culture going back decades with both political parties."

On Friday, Mr. Petro's spokesman, Kim Norris, reacted to The Blade's findings in this story by saying, "I can only tell you we have followed the law, and we will continue to follow the law."

An aide to Ms. Montgomery said she "has always made special counsel decisions based on who can provide the best legal services to the state of Ohio."

"Lots of people who gave money to the party and to Betty never received a dime in special counsel contracts, and lots of people who received special counsel contracts didn't give," said Mark Weaver, a political consultant and high-ranking aide when Ms. Montgomery was attorney general.

Through its lawyers, lawyers' families, and political-action committees, Calfee, Halter & Griswold, a Cleveland-based law firm, has contributed at least $186,000 to the Ohio GOP's state candidate fund since 1998. In that same period, the firm has collected more than $17 million in fees from the attorney general's office.

"The party is not shy about asking for money," said Thomas Wagner, a lawyer with Calfee, Halter, who said he has received special counsel contracts since Democrat Anthony Celebrezze was attorney general in the 1980s. The work involves several attorneys from Calfee, Halter, the former law firm of Republican U.S. Sen. George Voinovich, said Mr. Wagner, who served as law director when Mr. Voinovich was mayor of Cleveland.

Mr. Wagner said he has never received pressure to contribute to the attorney general to get or keep contracts.

"Most of these candidates seem to want you to contribute to them," said Mr. Wagner, adding he recalled the Ohio GOP seeking contributions for its state candidate fund, but he does not remember any specifics.

Columbus attorney Michael Scoliere, whose law firm has received $7.45 million in special counsel fees for collecting debt owed to state government, said the "pay-to-play" allegation is "ridiculous."

He said he has worked for three attorneys general - Democrat Fisher, and Republicans Montgomery and Petro.

"They retain me because we do good work," he said.

Mr. Scoliere and his family have contributed more than $255,000 to political candidates and committees in Ohio, including $182,000 to the Ohio Republican Party's state candidate fund.

Asked about his political contributions, Mr. Scoliere replied: "That's public record. I don't get caught up in that."

Mr. Scoliere said he started contributing to the Ohio Republican Party state candidate fund "years ago," and said he did not remember who asked him to give. He said he did not contribute to the candidate fund to avoid the limits on how much he can contribute to the attorney general.

"I just contribute to the party for the whole ticket," he said.

In addition to the Ohio GOP's state candidate fund, some lawyers have contributed to county parties that are allied with a candidate for attorney general.

It was in the middle of Democrat Fisher's single term as attorney general that he decided it was "inappropriate and unwise" to solicit or accept campaign contributions from special counsel.

"The result was it became more difficult for me to raise money to defend my re-election in 1994. I believe that officeholders need to be focused not just on what is improper and illegal but to avoid the appearance of impropriety," he said in an interview last week.

Despite his self-imposed moratorium on contributions from special counsel during the second half of his term, Mr. Fisher accepted more than $410,000 from special counsel from 1990 to 1997. Many of the checks arrived via the political-action committees of law firms that worked for the state.

During her successful 1994 campaign to unseat Mr. Fisher, Ms. Montgomery said Mr. Fisher had assigned special counsel to raise money from their clients for his campaign - and Ms. Montgomery's campaign called him a hypocrite.

Last week, Mr. Fisher said he "never directed anyone to do anything, but lawyers offered to raise funds and I said I would appreciate it."

When she took office in 1995, Ms. Montgomery accepted contributions from special counsel and pledged to examine how attorneys were chosen and whether the cost was too high. Many of the Democratic lawyers who worked for Mr. Fisher were not retained by Ms. Montgomery, who replaced them with Republicans.

In addition to the appearance of influence-peddling, some express concern that the state is overpaying for legal work.

Last year, Mr. Petro's office authorized more than $48 million in legal fees, more than double the $23 million doled out by Mr. Fisher's office a dozen years ago. In total, the state of Ohio has spent about $430 million on special counsel legal fees since 1992.

Paul Tipps, a former lobbyist and ex-chairman of the Ohio Democratic Party, said the increase in the amount spent on special counsel contracts is more evidence of how the "checks and balances" in state government are gone.

Mr. Tipps said Mr. Petro and previous attorneys general could have assigned state attorneys in regional offices to do most of the work assigned to special counsels.

"But those people would not have been contributors," he said.

"If all of the systems were functioning properly, there would be less money in politics. This is not a Republican thing. If the Democrats had the power, the same thing would have happened," said Mr. Tipps, who is pushing for creation of a state office to audit all procurements of more than $5 million.

The new agency would report both to the governor and the legislature, said Mr. Tipps, who heads a nonprofit group whose mantra is "reform without enforcement is a charade."

D. Michael Grodhaus, first assistant attorney general to Mr. Petro, said attorneys are hired as special counsel to handle collections and specialty topics - such as patents and intellectual property for state-funded universities - because the state can't afford to pay in-house attorneys big salaries.

Mr. Grodhaus said the increase in spending on special counsel is attributed to two trends.

"The legal demands on state government are getting bigger and bigger, and part of it is the hourly rates of lawyers are starting to edge up," said Mr. Grodhaus, noting that the hourly rate for special counsel is $125 but the state frequently must pay more. Special counsel firms that collect state debt are paid a percentage of what they collect.

Mr. Scoliere said the work of his firm supplements what state attorneys do to try to collect debt owed to state agencies.

"At the end of the day, private companies always will beat the in-house staff. It is what we do. We have the expertise and are able to afford the technology to be successful," he said.

Mr. Grendell, whose fund-raising in the attorney general's race is dwarfed by Ms. Montgomery's, said he believes the "public has been harmed" by what he says are excessive fees paid to lawyers who double as campaign contributors.

"Nobody knows how much we've spent in excess dollars because we have been giving these no-bid contracts to folks who have been contributing large amounts of money," Mr. Grendell said. "How much would we have had for education, for senior citizens, that we wasted by giving excessive dollar amounts for these no-bid contracts?"

Contact Steve Eder at: seder@theblade.com or 419-724-6272.