Sunday, March 10, 2002
Donation to GOP challenged
Investment fraud suspect gave $50,000 to party
By Ron Liebau, rliebau@enquirer.com
The Cincinnati Enquirer
An undisclosed $50,000 donation to the Hamilton County Republican Party by a suspect in a $277 million investment fraud scheme in Cleveland has cast a new light on a dark corner of campaign finance in Ohio.
It has also renewed a call for disclosure of all political contributions, regardless of where the money comes from and for what purpose it will be used.
Under state law, political parties do not have to disclose the source of contributions that they don't use directly on behalf of a candidate or a ballot issue.
That includes money to pay for such things as staff salaries, get-out-the-vote activities, sample ballots, communications with party members about endorsements and political surveys.
In December, a fund-raiser for the county GOP solicited Frank Gruttadauria for a contribution for general operating purposes. He wrote a check for $50,000.
Party chairman Mike Barrett said he did not know until press accounts in mid-January that Mr. Gruttadauria was wanted by federal authorities on suspicion of swindling investors. He has since surrendered and is in jail.
Once the party learned that Mr. Gruttadauria was implicated in the investment scandal, a representative of the party contacted the FBI office in Cleveland for advice on what to do with the money.
We're going to make sure we're in a position to return it, Mr. Barrett said.
The existence of the donation was first reported by the Cleveland Plain Dealer, which noted that the fund-raiser also worked for state treasurer Joe Deters, who is seeking re-election. Since 1999, the newspaper said, two companies for which Mr. Gruttadauria worked, SG Cowen Corp. and Lehman Brothers, completed $5.9 billion in trades for the treasurer's office.
A spokesman for Mr. Deters said the former Hamilton County prosecutor and former chairman of the Hamilton County GOP had nothing to do with getting the Gruttadauria contribution.
The operation of the Hamilton County party is separate and apart from the Deters campaign committee, said Mark Weaver.
He also said Mr. Deters, who met Mr. Gruttadauria in 1999, did not grant him any favors.
That company was getting work for a long time in Republican and Democratic administrations, so there would be no need to pony up anything.
Mr. Weaver said the party asked Mr. Deters what to do with the money.
The first time Joe Deters heard about it, he said, "Call the FBI.'
Mr. Deters' campaign received tens of thousands of dollars from the Hamilton County GOP in 2001 when he was running for the Republican nomination for attorney general. Mr. Deters reported receiving $262,223 from the so-called candidate funds of the county and state GOP.
Mr. Barrett, who runs one of the most potent party organizations in the country, declined to explain the circumstances of the donation, reiterating that money not used to benefit candidates directly is exempt from disclosure.
That's the problem, says Secretary of State Ken Blackwell, a Republican whose office administers elections in Ohio. Mr. Blackwell, a former Cincinnati mayor, said big-money contributions that are hidden from view become automatically suspect. His solution: Disclose everything.
Every dollar should be fully and immediately disclosed, he said.
He said state officeholders generally agree with him. Most state lawmakers do not. Senate President Dick Finan, R-Evendale, just this week said he thought there was already enough disclosure.
That sentiment will probably doom a bill introduced by State Sen. Dan Brady, D-Cleveland, which would make all funds raised by political parties disclosable on campaign finance reports.
A similar reform bill introduced in 2000 was ignored in the Republican-controlled House. The measure was drafted by Mr. Blackwell's office and declared that any use of a contribution by a state or county political party must be considered to be made for the purpose of influencing the results of an election and therefore had to be disclosed.
Ohio is one of 15 states that does not require disclosure of all funds. Indiana and Kentucky require disclosure,
The reality is, we need to find some clear-thinking Republican who has the courage to step up on this, Mr. Blackwell said.
Mr. Barrett has no qualms with such a bill.
As long as it applies to all sides, we don't really see any real problem with it, he said.
State Rep. Bryan Flannery, D-Lakewood, a candidate for secretary of state, said all money contributed by political parties to candidates should be returned.
Nobody really knows where it's coming from, he said.
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