Luckie conviction latest in growing FBI crackdown on corruption

Recent investigations

January 2013: Former state representative Clayton Luckie, a Dayton Democrat, pleaded guilty to eight felony counts and an ethics charge and is sentenced to three years in prison.

June 2012: Former state representative W. Carlton Weddington, a Columbus Democrat, pleaded guilty to bribery and elections falsification charges and is sentenced to three years in prison.

June 2012: Carl W. Shye Jr., of New Albany, pleaded guilty in U.S. District Court to one embezzlement count, admitting that he illegally took $472,579.90 in federal funds between 2005 and 2011 while serving as treasurer for four charter schools.

May 2010: Former Attorney General Marc Dann, a Democrat was convicted of ethics violations for filing false financial disclosure statements and for using his campaign account to make supplemental payments to two top aides, Anthony Gutierrez and Leo Jennings III. Gutierrez, Jennings, Dann’s former chief of staff Edgar Simpson, and Dann’s now ex-wife Alyssa Lenhoff were each convicted of ethics violations.

September 2007: Ohio Bureau of Workers’ Compensation former chief investment officer James McLean was charged with an ethics violation for failing to disclose gifts.

July 2007: Former chairman of the Ohio Bureau of Workers’ Compensation oversight board, George Forbes, is charged with ethics violations for accepting and failing to report freebies from BWC vendors.

April 2007: Three former Ohio Bureau of Workers’ Compensation investment officials are charged with ethics violations.

November 2006: Thomas Noe, a Republican and rare coin dealer from suburban Toledo, is convicted on 29 felony counts including theft, money laundering, forgery and corrupt activity and is sentenced to 18 years in prison. Noe ran a $50 million rare coin investment portfolio for the Ohio Bureau of Workers’ Compensation. Noe was also convicted in federal court for violating campaign finance laws for funneling more than $45,000 into George W. Bush’s 2003 re-election campaign.

September 2006: Four former board members of the State Teachers Retirement System are sentenced to probation and community service for ethics violations. The board members received meals, gifts and entertainment tickets from STRS vendors, investigators found. Three other STRS officials had been previously convicted of ethics violations: board members Jack Chapman and Hazel Sidaway and former executive director Herb Dyer.

June 2006: Terrence Gasper, former chief financial officer at the Ohio Bureau of Workers’ Compensation, pleaded guilty in federal court to a racketeering charge and in state court to money laundering and failing to report gifts.

August 2005: Then-Gov. Bob Taft pleaded no contest to four misdemeanor charges of filing incomplete financial disclosure statements when he failed to report golf outings and other gifts from 2001 to 2004. He was found guilty, fined $4,000 and ordered to apologize to Ohioans.

July 2005: Brian Hicks, former chief of staff to Bob Taft, pleaded no contest to one misdemeanor ethics count stemming from when he paid less than fair market value for stays at rare coin dealer Tom Noe’s $1.3 million Florida home. He failed to report the stays as gifts on his financial disclosure statements. Hicks’ former assistant also was convicted of receiving free meals from Noe.

• June 2005: Former Dayton firefighter David Harker pleaded guilty to four misdemeanor ethics counts for trips and gratuities received while serving as an Ohio Police and Fire Pension Fund trustee. Six months earlier, former Dayton police detective Tom Bennett was sentenced to probation and community service for violations committed as a pension trustee.

• August-September 2004: Matthew Borges, former chief of staff for then-state treasurer Joe Deters, pleaded guilty to giving preferential treatment to some investment brokers. Eric Sagun, Deters’ fund-raiser, was convicted of an election law violation. Lobbyist Andrew Futey pleaded guilty, was fined and put on probation for helping a stockbroker get business with Deters’ office.

• February 2004: Luther Heckman, chairman of the Ohio Racing Commission, resigned after a report accused racing commissioners of accepting food, drink, travel and gifts from racetracks they oversee.

• November 2003: Ohio Consumers’ Counsel Rob Tongren resigned after a report criticized him for destroying a document and taking free meals and golf from utility companies. In 2005 he pleaded guilty to four misdemeanor ethics violations.

• September 2003: Ohio State Fair Director Richard Frenette resigned after being accused of accepting freebies from fair vendors.

• August 2002: Ohio Turnpike Commission Director Gino Zomparelli is forced out of office after an investigation concludes he and his staff accepted gifts from contractors.

• July 2002: Ohio School Facilities Commission Director Randy Fischer resigns after news articles about how he took freebies from state contractors. Fischer entered a no contest plea to two misdemeanor conflict-of-interest charges in 2003.

— Sources: The Associated Press, Dayton Daily News research, Ohio Ethics Commission

In just eight months, the Ohio House of Representatives has seen two of its lawmakers indicted, convicted and sentenced to years in prison for bribery and theft — felony activity that may have gone undetected had it not been for the FBI’s decision to assign five agents to dig into public corruption.

Last week, former state Rep. Clayton Luckie, a Dayton Democrat, pleaded guilty to eight felony charges and one misdemeanor and was sentenced to three years in state prison.

“Public corruption is a top priority for the FBI in order to maintain an honest and accountable form of elected government. Corrupt public officials can undermine public confidence in our government, misuse tax dollars, and impact the safety and security of our nation,” said FBI Special Agent in Charge Edward J. Hanko of the Cincinnati field office.

The anti-public corruption squad formally began working out of its Columbus office in October but before that, the team worked on three high-profile cases that led to convictions of two state lawmakers and a charter school treasurer in the last eight months.

Authorities found that Luckie siphoned off as much as $130,000 from his campaign account between 2006 and 2012 for spending at casinos and on furniture, jewelry and clothing and then submitted bogus documents to cover his tracks.

Luckie will join former state lawmaker W. Carlton Weddington, a Columbus Democrat, in the state prison system. In June, Weddington pleaded guilty to bribery and elections falsification charges. He is currently serving a three-year sentence in the Allen Correctional Institution, a minimum and medium security prison in Lima.

Records in the Weddington case led federal investigators to Luckie.

Local and state officials expect the FBI squad to bring forward more public corruption cases.

“I am confident that will happen, which is a good thing,” said Ohio House Speaker William Batchelder, R-Medina, who is chairman of the Joint Legislative Ethics Commission and co-author of the most recent overhaul of Ohio’s ethics laws. “People (in public office) really ought to understand they’re very much in the focus of the newspapers and of the public. And some people shouldn’t be here. Their motivations are not good ones … This is just not a situation that is acceptable at all.”

Batchelder hopes to hold hearings on legislation to reform campaign finance reporting requirements to prevent the kind of fraud perpetrated by Luckie. Franklin County Prosecutor Ron O’Brien suggested that periodic submission of underlying bank records may help auditors at the Secretary of State’s office confirm the legitimacy of campaign expenditures by hundreds of officeholders and candidates.

The bank records — as well as an FBI forensic accountant — were key to building the case against Luckie, O’Brien said.

Ohio Secretary of State Jon Husted, a Republican, said all campaign finance reports are screened by auditors for reporting errors but not whether those errors indicate wrongdoing. Husted said they check for missing information, such as required receipts or proof money was spent as reported, and first reach out to campaigns to correct the errors.

“We definitely try to play it strictly by the book — what is allowed, what isn’t allowed,” Husted said. “We don’t make judgments whether it’s a wise use of funds, we make judgments whether it’s a legal use of funds.”

The campaign finance department sent Luckie multiple letters since 2008 related to three routine audits of his campaign account. Luckie took at least eight months to comply with the first audit, which listed several expenditures verified by receipts or canceled checks and instances where Luckie reimbursed himself for $750 and $1,700.

Subsequent letters show Luckie provided some of the requested information, such as receipts for stays at German Village Inn in Columbus or an invoice for $4,000 from Dayton Printery.

FBI investigators later discovered Luckie created and submitted fake receipts and invoices for those purchases. They also found Luckie made 169 ATM and other cash withdrawals totaling nearly $19,000 and used at least $1,700 in cash at Indiana, Florida and West Virginia casinos.

A Dayton Daily News examination of Luckie’s finance reports shows he spent freely from his campaign since 2006.

Using money donated to the campaign, Luckie bought $13,000 in sports and entertainment tickets, spent $1,192 on car maintenance and covered thousands of dollars in incidental expenses that included expenditures such as a $67.41 propane tank over Memorial Day weekend, the reports show.

Luckie spent more than $15,000 on food — some transactions were noted as food for volunteers and events but more than half the reported food expenditures were less than $20 at fast food restaurants. He reported spending nearly $3,000 on “gifts,” including $760.68 at Babies “R” Us.

So why wasn’t Luckie caught by campaign finance auditors?

Expenses at Best Buy, Kroger and Donatos don’t, on the surface, violate Ohio campaign finance law. And there was no way auditors could check what Luckie reported against what was actually spent. Husted said requiring candidates to submit bank statements with their campaign reports would allow auditors to catch misspending.

Phil Richter, executive director of the Ohio Elections Commission, said those details often aren’t unearthed until the commission investigates the expenditures. For example, a dry cleaning tab could be for a politician’s personal laundry (illegal) or to clean a donor’s suit jacket that the candidate spilled coffee on at a campaign event.

“There are always going to be those kinds of gray areas that only additional evidence can demonstrate whether they’re proper or not,” Richter said. “All the additional laws in the world aren’t going to clarify every single thing.”

Unlike other states, Ohio’s commission does not have authority to initiate investigations; it can only act on formal complaints or advisory requests. Richter said commissioners would be willing to work with lawmakers to give them more authority to investigate suspicious campaign finance behavior.

O’Brien, who prosecuted Luckie, Weddington and dozens of other state politicians and appointed officials since he took office in 1997, said Ohio has a history of strong and aggressive ethics law enforcement, even though the effort is chronically underfunded. He added that the new FBI resources will add to the long-standing efforts by the Joint Legislative Ethics Commission, state auditor, attorney general, state Inspector General, Ohio Ethics Commission and others to root out public corruption.

Even before the FBI set up its anti-public corruption team in Columbus, Ohio has seen its share of elected and appointed officials fall to scandals both big and small.

* In the mid-1990s, lawmakers were convicted of failing to disclose speaking fees.

* In the early 2000s, nine trustees and officials at the Ohio Police & Fire Pension Fund and State Teachers Retirement Fund were convicted of ethics violations for taking freebies from vendors.

* In 2004, three people associated with Republican state treasurer Joe Deters were convicted for helping certain investment brokers get preferential treatment.

A double-barreled investigation into ethics and investments in former Gov. Bob Taft’s administration and the Ohio Bureau of Workers’ Compensation led to the sitting governor pleading no contest to a misdemeanor charge in 2005 and Tom Noe, a rare coin dealer, being convicted on 29 felony counts and sentenced to 18 years in prison in 2006.

The BWC and Taft investigations left such a bad taste in the mouths of voters that the GOP lost nearly every statewide office in the 2006 elections.

One of the loudest crusaders against public corruption was Democrat Marc Dann, a state senator from the Youngstown area who won a surprise victory in the attorney general’s race. But less than two years into his administration, Dann was pressured to resign as news leaked that he hired friends who then misbehaved in office. Dann, his then wife, and three top aides were all convicted of ethics charges.

Ohio Ethics Commission Chairman Merom Brachman said in the past 10 years, the commission has seen a “massive” uptick in the number of officials seeking advisory opinions. A unique feature in Ohio ethics law grants immunity to those who seek an advisory opinion and follow the advice, he said.

The Ohio Ethics Commission receives annual financial disclosure statements from more than 11,000 officeholders and appointed officials and has jurisdiction over all public officials and employees statewide.

Brachman said, “The Ohio ethics law simply requires, in common sense ways, no failure of personal honesty in the use of the public purse … It may not stop all wrongdoing but where we have help from serious prosecutors, as in Franklin County, the public certainly sees greater confidence about requiring proper activity than a generation ago.”

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