DDN Reporter Laura Bischoff Shows How DeWine’s “Pay To Play” Scheme Awarded Contributor Valuable Contract

In Ohio’s Attorney General Contest, challenger David Pepper is accusing the incumbent Mike DeWine of unfairly rewarding contributors with valuable contracts. In her DDN article this morning — Charges fly in spirited AG race — Laura Bischoff reports about Pepper’s “pay to play” accusation and cites a great article that she wrote in July that somehow I had missed.

Bischoff’s July article — Vendors gave big to DeWine, GOP — deserves a lot of attention and discussion. The article obviously was the result of many hours of research and outlines a strong a strong case that Mike Dewine, Ohio’s current Attorney General, used his office inappropriately.

Bischoff summarizes her research in the first paragraphs of the article:

In doling out lucrative collections contracts, Ohio Attorney General Mike DeWine passed over more experienced vendors in favor of a friend’s new collections agency.

His campaign and the state Republican Party received hundreds of thousands of dollars in campaign donations from collectors as they sought work from the state.

And DeWine involved his former fundraiser and other politically connected people in a process that is supposed to independent from political influence.

Debt collection generates a lot of money for the state and a lot of money for the collectors. The Attorney General decides who to hire to do the collection and the work pays very well. The article reports, “The DeWine administration hires between six and eight third party vendors and between 74 and 118 attorneys each year to handle debt collection work. The state paid those agencies and attorneys a total of $137.9 million between 2011 and 2013.”

The right to hand out contracts worth millions of dollars provides a big opportunity for corruption. We can be thankful that Bischoff spent the effort to do the research which involved “reviewing hundreds of pages of state documents, campaign finance reports and other records relating to the attorney general’s role in picking outside attorneys and collections agencies that go after back taxes, defaulted student loans and other money owed to state government and public universities.”

Bischoff reports, “Of the 30 collections attorneys who contributed more than $10,000 to that total, the average annual earnings on debt collection work was $796,500 between 2011 and 2013. Of the 89 who contributed less than $10,000, the average earnings during that time period were $192,000.”

The article focuses on Dewine’s friend, Pete Spitalieri, who landed a contract to collect debt worth millions regardless that his brand new company had no experience in doing the work. Bischoff  shows that Spitalieri gave money to the Republican party — $35,000 to the Ohio Republican Party, plus $23,000 to the Summit County GOP — which has sent Mike DeWine’s campaign $405,500 since 2010.

Bischoff writes:

Spitalieri formed CELCO Ltd. on April 11, 2012 — just two days before DeWine’s office put out a request for proposals from collections agencies for the upcoming fiscal year. Three weeks later, CELCO turned in a proposal that acknowledged the company had no experience handling collections accounts.

Nonetheless, CELCO beat out several bigger, more established bidders, including ones that had a national footprint and licensing.

“We were absolutely flabbergasted,” said Barry H. Fromm, chief executive of Columbus-based Value Recovery Group, or VRG, which was founded in 1993 and had worked for the past five attorneys general. His firm got edged out by CELCO.

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