Politics, State Attorneys General

Is Something Rotten In The State Of Ohio?

What are the allegations against Ohio attorney general Mike DeWine regarding his awarding of contracts for outside legal work?

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If you were to ask people to name states known for corrupt politicians, the top contenders would probably be Louisiana, Illinois, and New Jersey (my home state, so I can say that). But a scandal brewing in the state of Ohio, involving the sitting attorney general, could help the Buckeye State moving up in the rankings.

Attorney General Mike DeWine stands accused of running a “pay to play” operation in awarding lucrative contracts for outside legal work. What are the allegations against him?

The lead on the story has been taken by the Dayton Daily News, which recently published a big investigative piece on the apparent connections between supporting DeWine campaign efforts and receiving contracts to perform legal work from the AG’s office. An editorial by the Akron Beacon Journal offer a concise summary of the controversy:

One area where the attorney general makes outside hires involves selecting attorneys and collection agencies to pursue back taxes, defaulted student loans and other money owed to the state and public universities. This can be bountiful work. The state paid the attorneys and agencies $138 million between 2011 and 2013.

What [a Dayton Daily News investigation] revealed is the timing of contributions, some of the bidding companies making campaign donations just as hiring decisions were being made. In the two months before the most recent selections, attorneys and debt collectors sent more than $215,000 to the DeWine campaign and the Ohio Republican Party.

That doesn’t sound great, but could be defended as par for the government contracting course (i.e., “everybody else does it”). But these specific allegations sound so much worse:

Then, there is the good fortune of CELCO. The company was formed in April 2012, just days before the attorney general issued requests for proposals from collection agencies. A few weeks later, the firm submitted a bid, even though it lacked any experience and appropriate licensing credentials. Then, it prevailed, winning a contract for debt collection.

The Daily News noted that Pete Spitalieri of Hudson, a DeWine supporter and longtime contributor to the Summit County Republican Party, formed CELCO. He met four times with DeWine during the attorney general’s first 16 months in office, joined by Alex Arshinkoff, the county party chairman, lobbyist and fundraiser.

Finally, the Daily News pointed out that just-conceived CELCO would not have prevailed without a change to the scoring sheet, a 23 for experience written over with a 24 (out of 25).

Sponsored

Now that sounds sketchy. As the Beacon Journal editorial observes, it’s “[h]ard to shake the impression of a deal wired to a favored bidder.”

DeWine denies any pay-to-play scheme or any connection between campaign donations and contracts, noting that many contracts have gone to non-donors and stating that his office’s goal “is to find the best people that we can and to put the best combination of people out in the field to get the job done.” Regarding CELCO, a DeWine spokesperson notes that even though CELCO was a new company, other business of Spitalieri’s had significant collections experiences, and the apparently altered scoring sheets were just “personal notes of individual staff members.”

Still, these findings from the Dayton Daily News investigation are quite interesting:

Since 2010, the pool of 119 outside attorneys handling debt collection for DeWine, their firms and their close family members contributed $1.38 million to the campaign coffers of Mike DeWine, his son Pat DeWine, who is a First District Court of Appeals judge, and the Ohio GOP.

Of the 30 collections attorneys who contributed more than $10,000 to that total, the average annual earnings on debt collection work was $796,500 between 2011 and 2013. Of the 89 who contributed less than $10,000, the average earnings during that time period were $192,000….

Records show DeWine has been actively involved in the debt collection process. A review of his calendar shows he has met routinely with debt collection attorneys, vendors and their lobbyists, many of them with close ties to DeWine’s political operation.

In fairness to DeWine, allegations of improper ties between campaign giving and contract awards have been made against Ohio AGs in the past, including Jim Petro (a Republican) and Richard Cordray (a Democrat, now heading the Consumer Financial Protection Bureau). So the problem may be partly DeWine but partly institutional.

Sponsored

Which is why DeWine’s opponent in the upcoming AG election, David Pepper, is proposing institutional reforms. They include a “blackout period” on soliciting or accepting campaign donations for two months before and after state contract bids are solicited, usage of better and more-specific criteria to award contracts, publicly listing attorneys and firms that win contracts, and a ban on lobbying AG staffers during the period for bid evaluation.

Ohio lawyers and law firms should support these reforms — not just because they’re steps towards good government, but because they might protect lawyers who do outside work for the state from having to convert their fees from government contracts into campaign contributions. In the challenging legal economy of 2014, anything that lets lawyers hold on to more of their hard-earned fees is a good thing.

P.S. David Pepper and I went to law school together (but we don’t share the same politics and haven’t seen each other in years).

UPDATE (7:40 p.m.): The Pepper campaign responds to DeWine’s defenses — here (regarding the “personal notes” claim), here (regarding meetings between DeWine and one of his fundraisers to discuss debt-collections work), and here (regarding Pete Spitalieri’s qualifications (or lack thereof) to perform debt-collections work).

Vendors gave big to DeWine, GOP [Dayton Daily News]
Where legal work meets political money [Akron Beacon Journal]
Rival Candidate Wants Probe Of DeWine Bid Process [Associated Press]
Pepper: DeWine shouldn’t give donors priority for collecting debts [Cincinnati Enquirer]
Challenger accuses DeWine of ‘pay-to-play’ [Toledo Blade]
3 takeaways from Pepper’s attacks on DeWine’s ‘pay-to-play operation’ [Cleveland Plain Dealer]
Democratic candidate accuses DeWine of ‘pay-to-play operation’ [Columbus Business Dispatch]

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