- Associated Press - Friday, February 5, 2016

COLUMBUS, Ohio (AP) - Other individuals inside Ohio’s treasury knew or should have known that a former deputy treasurer was committing fraud, according to the findings of an independent review that suggested a host of safeguards against future wrongdoing.

The 60-page report by BakerHostetler LLC released Friday addresses activities of Amer Ahmad in 2009 and 2010, under then-Treasurer Kevin Boyce, a Columbus Democrat.

Current Treasurer Josh Mandel, a Republican, ordered the investigation after a 2013 indictment in a pay-to-play scheme sent Ahmad and three others to federal prison, after Ahmad had fled to Pakistan. A Boston bank also agreed last month to pay $12 million to the federal government for its role in the setup.

BakerHostetler interviewed 24 people, including current and former Treasurer’s Office employees, and worked with accounting firm KPMG on a forensic analysis of transactions that sent money from Ohio’s treasury to and from the shell corporations, vendors and banks involved. Ahmad “agreed to share his insights” from a jail cell, the report said.

The Harvard-educated Ahmad told investigators that the initial plan was for him to work as an adviser to both then-Gov. Ted Strickland and Boyce’s predecessor, Richard Cordray.

The report said Ahmad observed a “troubling ‘lack of sophistication’” at the state treasurer’s office, which was only made worse after a massive staff migration following Cordray to the attorney general’s office.

Ahmad didn’t make the move. According to the report, he saw following Cordray as “career suicide,” because Cordray had vowed to go after the major financial institutions responsible for the national financial crisis. Cordray now heads the Consumer Finance Protection Bureau.

The report faults Strickland - a 2016 U.S. Senate candidate - with appointing Boyce, at the time a young Columbus city councilman inexperienced in finance, to succeed Cordray. BakerHostetler found “the lack of financial expertise meant that only a few employees had the understanding to see the signs of the crime.”

The firm recommended that the office hire and retain more people with financial expertise to oversee Ohio’s $250 billion treasury. It also urged the state to make costs associated with state financial transactions more transparent, so that high commissions with the potential to be diverted elsewhere are easily seen.

The report also called for strengthening the internal audit process, which might have caught the unusual volume of trading activity and the payment of inflated commissions or spreads.

Prosecutors say that Ahmad conspired with three others to use his position to enrich themselves and their businesses by securing lucrative state business.

Ahmad and Chicago mortgage broker Joseph Chiavaroli hid payments made by Canton-based financial adviser Douglas E. Hampton using the accounts of a landscaping business, and Hampton also funneled money through Ahmad’s friend, lobbyist Mohammed Noure Alo. Hampton paid more than $500,000 in bribes to receive about $3.2 million in commissions for securities trades on behalf of the treasurer’s office, prosecutors said.

Ahmad told investigators that Hampton, who contributed to Boyce’s 2010 campaign for treasurer, also gave to Cordray’s attorney general campaign and to the Ohio Democratic Party. He described the party sharing such large donations with Strickland’s gubernatorial campaign and David Pepper’s auditor campaign in what are called “cross-payments.”

Boyce, who lost that race to Mandel, told investigators such sharing isn’t illegal and so would have no reason to be shielded. He denied any knowledge that the party contributions were being structured between his campaign, Cordray’s and Pepper’s.

The report recommended requiring contractors to certify they haven’t given anything in exchange for state work in order to avoid pay-to-play risks in the future. Investigators said outlawing the payments would probably run up against a court challenge.

Mandel spokesman Seth Unger said the report was not politically timed, though both Boyce and Strickland are on 2016 ballots. He said the report’s recommendations will be carefully reviewed in the coming months.

Mandel has appeared jointly with Boyce over the past year to promote his Online Checkbook initiative.


Online: https://ohiotreasurer.gov/documents/cms/Report-of-the-Independent-Investigative-Counsel.pdf

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