The AP released a huge story on the unfolding DeWine pay to play scandal yesterday, revealing that the Ohio Attorney General’s office has no documented process for selecting law firms for lucrative special counsel contracts for securities fraud cases.
DeWine’s Chief Legal Aide Mary Mertz told the AP that the office had decided to forgo to traditional process of using “judging forms and scoring sheets” in favor of having “top staffers” review the firms and then share their recommendations with DeWine verbally. As a result, there are almost no public records available showing how the firms were selected. “A public records request by the AP turned up no judges’ notes, scoring sheets, email exchanges on firms’ qualifications or recommendations made to DeWine,” writes the AP.
Plunderbund also investigated the selection process for special counsel firms last May and ran into the same surprising results.
According to emails we received from DeWine’s office, a five person committee that included both Mary Mertz and Michael Hall, DeWine’s Director of Outside Counsel, were in charge of selecting the firms and making recommendations to Mike DeWine in 2012. And in 2013, an even “less formal” process was followed:
In Fiscal Year 2012, the Securities Litigation Committee was composed of Michael Hall, Mary Mertz, Dennis Smith, Paula Paoletti, and Peter Thomas. Each member of the Committee reviewed the RFQ’s submitted by law firms and various members of the Committee met with firms that requested meetings. The Committee had two meetings to discuss each of the firms during which it agreed on the top candidates. The Committee made a verbal recommendation to Attorney General DeWine that he approved. In making its decision, the Committee took into account the fact that there were several firms that had been chosen by the previous administration continuing to work on pending cases on behalf of the office. The office followed a less formal process in Fiscal Year 2013 because there was already a panel in place and firms working on pending cases, the decision-making process was not as involved.
If the names of Mertz and Hall sound familiar, it’s no surprise. We wrote about both of them a few months back in our DeWine Pay-To-Play Cookbook series. During the first few weeks of his administration, both Mertz and Hall were personally tasked by DeWine (via emails from his iPad) to hook up meetings with, and work for, his friends and campaign contributors.
In March 2011, for example, DeWine emailed his assistant and asked her to “call pat. schedule appt for him.” “Pat” referred to Pat Flanagan, former head of the Montgomery County Republican Party. Flanagan and the employees at his law firm have contributed a total of $19,450.00 to DeWine’s campaign since July 2010. “I will take him down to see Mary. And Michael Hall,” DeWine wrote later in the email. “Discussion will include future work.”
And in an email from May 2011, DeWine wrote directly to Hall and Mertz: “we need to meet in re gonadakis. he says security firm does have extensive experience. Please schedule time next week to look at all this.” DeWine’s friend Mike Gonadakis, besides being a lawyer, is also a highly paid lobbyist and the head of Ohio Right to Life.
In 2012, two members of the selection panel, Dennis Smith and Paula Paoletti, both long-time and high-ranking employees of the Ohio Attorney General’s Office, left for other jobs. We can only assume this left DeWine insiders Mertz and Hall almost exclusively in charge of the selection process in 2013, with the final decisions being made by DeWine himself.
The AP also found an increase in campaign donations from firms competing for the special-counsel jobs during the bidding process, with some previously rejected firms winning after making large donations. For example, “one contender for special counsel work, Dayton-based Dyer, Garafolo, Mann & Schultz, was rejected in 2011, then submitted virtually the same application a year later after donating $25,000 to the Ohio Republican Party and was picked.” They also found that in “April, a winning firm from 2012, New York City-based Kaplan Fox, donated $50,000 to the party.” And these aren’t isolated cases.
The AP also revealed that firms were circumventing campaign finance limits on DeWine’s campaign by contributing large sums of cash to the Ohio Republican Party (ORP) which may be making its way back to DeWine’s campaign. According to the Ohio Secretary of State’s website, the Ohio Republican Party has given over $1.5 Million directly to Mike DeWine’s campaign since 2011, including over $450,000 in the latest reporting period alone.
Back in February, the Dayton Daily News reported that firms seeking work with DeWine’s office have contributed $1.3 million to DeWine, the Ohio Republican Party and and also to Mike DeWine’s son, Hamilton County Appellate Court Judge Pat DeWine. And the contracts these firms received can be worth A LOT. In one case, a firm earned over $152 million in fees for a security fraud settlement with Bank of America.
With all that money moving to DeWine, and with so much money to be made by the firms he selects, you’d think DeWine would be extra careful about how the firms were chosen to avoid accusations of pay-to-play. Instead, as we’ve seen, the whole process was secretive and non-transparent, and no records were kept. Even more disturbing: the people put in charge were key political staffers who were specifically instructed to meet with DeWine’s friends. These same staffers were then tasked with reviewing and rating long and complex applications without using any kind of formal guidelines. Then these recommendations were supposedly communicated “verbally” to DeWine who then, during all of his free time, magically absorbed this information and then personally chose the best firms for the job.
“We pick lawyers based on their qualifications. Everything is transparent,” DeWine told reporters when asked about the process earlier this year. But investigations conducted by the AP and emails received by Plunderbund prove this clearly is not true. In fact, there appears to be only one real “qualification” for getting work with DeWine’s office: the amount of money you contributed to his campaign.
David Pepper’s spokesman Peter Koltak told the AP that “DeWine is engaged in a major pay-to-play scheme to award lucrative legal work. And the lack of any documentation supporting these selections is one more red flag on this corrupt process.” Pepper has promised to clean up the AG’s office and prevent political contributions from influencing the selection process. His website outlines the full proposal.
Below are copies of the emails we received from the AG’s Office in response to our requests for public records:
Email received from the Attorney General’s Office on March 15th, 2013:
On behalf of Ohio Attorney General Mike DeWine and the Outside Counsel Section, I am writing to the public
request that this office received by email on March 14, 2013. Specifically, you requested the following items in
reference to Securities Litigation Panels: (1) “a copy of the criteria (discussing or laying out the selection or
evaluation process) along with any emails discussing the criteria or their implementation;” (2) “documents
discussing who is on the Securities Litigation Committee;” (3) “a schedule of the actual committee meetings,
who was in attendance, and a copy of any notes or minutes taken at the meetings;” and (4) “any written
recommendations…of formal or information recommendations…made to AG DeWine [by the committee].”
The records responsive to this request will be forthcoming in subsequent emails through a secure file transfer
Moreover, you requested information regarding the composition of the Securities Litigation Committee and the
criteria for the selection of the panel. Please note that a public office has no obligation to create new records by
searching for and compiling information. See State ex rel. White v. Goldsberry, 85 Ohio St.3d 153, 154, 707 N.E.2d
496 (1999); State ex rel. Kerner v. State Teachers Retirement Bd., 82 Ohio St.3d 273, 695 N.E.2d 256 (1998).
However, as a courtesy, we are providing an outline of the panel selection process, for your reference. In Fiscal
Year 2012, the Securities Litigation Committee was composed of Michael Hall, Mary Mertz, Dennis Smith,
Paula Paoletti, and Peter Thomas. Each member of the Committee reviewed the RFQ’s submitted by law firms
and various members of the Committee met with firms that requested meetings. The Committee had two
meetings to discuss each of the firms during which it agreed on the top candidates. The Committee made a
verbal recommendation to Attorney General DeWine that he approved. In making its decision, the Committee
took into account the fact that there were several firms that had been chosen by the previous administration
continuing to work on pending cases on behalf of the office. The office followed a less formal process in Fiscal
Year 2013 because there was already a panel in place and firms working on pending cases, the decision-making
process was not as involved.
Accordingly, there are no records that are responsive to your request for “documents discussing who is on the
Securities Litigation Committee;” “a schedule of the actual committee meetings, who was in attendance, and a
copy of any notes or minutes taken at the meetings;” and “any written recommendations…of formal or
information recommendations…made to AG DeWine [by the committee].”
One of the records that you will receive is a blank evaluation form that was distributed to each Committee
member for his or her own personal use, if they were used at all. These evaluation forms were not collected or
circulated to other employees and other employees had no access to these forms, to the extent these forms were
at all used. As such, any personal notes taken on these forms, to the extent that any Committee members took
notes, do not constitute records. State ex rel. Cranford v. Cleveland, 103 Ohio St.3d 196, 2004-Ohio-4884, ¶ 22.
Email from Ohio Attorney General’s Office on May 9th, 2013:
Please note that there are no records responsive to your request for the following categories of records:
- Communications from the AG’s office selecting and/or rejecting those entities who had expressed an interest or formally bid to serve as the claims administrator
- Documents describing the formal or informal selection criteria
- Documents describing the scoring, rating or final review of entities seeking to serve as claims administrator
- Communication to AG DeWine relaying the results of any selection process
- Any notes or minutes from meetings related to the selection process