Luckie conviction latest in growing FBI crackdown on 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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