Search warrant: FBI investigated if contractor bribed Dayton mayors

A 2014 federal search warrant unsealed last week shows the FBI investigated claims that Dayton Mayor Nan Whaley and her predecessor Rhine McLin received bribes.

U.S. Department of Justice officials say the investigation is closed. No charges have been filed against the two women, and Whaley issued a statement Wednesday denying any payments took place.

According to the search warrant, as part of a federal corruption investigation in the Dayton region, the FBI examined allegations that former Montgomery County Recorder Willis Blackshear Sr. delivered cash payments from local demolition contractor Steve Rauch to Whaley and that McLin also received payments. Blackshear Sr. died in 2018.

Whaley is now a Democratic candidate for Ohio governor. She responded to a request for comment with a statement through her campaign.

“These seven-year-old claims are baseless and categorically untrue,” she said. “In the course of federal investigations into illegal activity in Dayton, unfounded claims were made against me. Investigators did exactly what they should do: thoroughly looked into it and found nothing. I can only assume investigators saw through these claims because I only learned about them this week, but I’m glad they were taken seriously and I’m grateful for the FBI’s work to root out corruption.”

McLin responded to a request for comment via text: “I have no comment.”

Asked about the status of the investigation, U.S. Department of Justice spokeswoman Jennifer Thornton responded: “The investigation is not ongoing.”

Thornton would not comment on the DOJ’s decision to not prosecute. “DOJ policy prohibits me from commenting outside of what’s detailed in public court documents,” she said.

The statement from Whaley’s campaign says the decision to unseal the document indicates the FBI is no longer investigating the matter, and that Whaley has never inserted herself into the city contracting process.

ExploreConfidential informants, secret recordings reveal ex-city commissioner bribery scheme

Federal agents in 2014 sought and received from a federal judge a search warrant for Blackshear Sr.’s phone records, according to records unsealed last week. In their justification for the search warrant, agents detailed their investigation into Dayton city officials’ dealings with contractor Steve Rauch.

The affidavit says four confidential informants — including three unidentified managers who worked for Rauch — claimed Rauch gave McLin $100,000 a year when she was mayor and $50,000 to Whaley.

Rauch was charged in 2019 in connection with the corruption probe. Charges were dismissed against Rauch, and his company Steve Rauch Inc. pleaded guilty to mail fraud and had to pay a $15,000 fine.

Reached by phone Wednesday, Rauch said he had “no comment” when asked if he gave cash to McLin or Whaley.

“You know if it was true, the FBI would have prosecuted me, and that’s just it,” he said.

ExploreIndictments prompt city of Dayton to strengthen anti-fraud efforts

The federal probe was dubbed “Operation Demolished Integrity” because it focused on federally funded city of Dayton demolition contracts, like those awarded to Rauch’s companies.

The investigation resulted in convictions of a former city commissioner, former city employee and former state lawmaker. Another trucking company owned by a former mayor of Trotwood also pleaded guilty.

Court records say federal agents in 2013 sought and received authorization from a federal judge to place a tracking device on Blackshear’s car. The application for that warrant includes descriptions of recorded conversations with Dan Feucht, controller for Rauch’s company SRI. Feucht did not return a message seeking comment.

According to the affidavit, Feucht said Rauch would order him to leave money out for McLin.

“Steve would say, and you know, we need to get $10,000 in cash. So we would get the money, put it in the envelope, seal the envelope, and put it on the front counter,” Feucht reportedly said.

He said this would be at 5:30 p.m., and Rauch would tell him when he heard the front door bell to, “let it go.”

In another recording, Feucht alleged Blackshear picked up money for Whaley.

“What he (Blackshear) does is he acts as the intermediary, so Nan (Whaley) doesn’t have to come out here. You know, the city of Dayton commission doesn’t have to come out here,” he said. “He (Blackshear) comes out here and collects the money.”

The newly unsealed affidavit from 2014 says federal agents were notified on Nov. 1, 2013, that Blackshear drove to Rauch’s office on Soldiers Home-West Carrollton Road. They followed Blackshear from there, and observed him meet another man at the Donut Palace on Salem Avenue. Blackshear went to Dayton City Hall later that same day carrying a white object and left without it, the affidavit says.

According to the search warrant application, an informant identified as controller for Rauch’s company SRI, told FBI agents in March 2014 that Blackshear “regularly” visited SRI, and described instances where Rauch handed the informant an envelope the informant believed contained cash and directed him to give it to Blackshear.

Feucht isn’t identified by name in the second affidavit, but descriptions and direct quotes indicate he is the controller referenced as an informant.

In one instance in March 2014, the informant said he saw Rauch reach into his pocket and grab a roll of cash that was wrapped with a rubber band, and handed some of the cash to Blackshear.

“Rauch told (the informant) he gave current city of Dayton Mayor Nan Whaley $50,000 in cash, and has ways to get the cash to Whaley that is not detectable,” the affidavit says. “On another occasion, Rauch told (the informant) he is using Blackshear as a ‘go between’ to Whaley.”

“On two occasions, Rauch was having an issue on a project and reported to (the informant) the he (Rauch) gave Whaley money and she needs to take care of it,” the affidavit says. “(The informant) never heard Rauch state that any of the cash provided to Whaley was a campaign contribution or a loan.”