Investment Broker Under Probe Gave $50,000 To GOP In December

CLEVELAND (AP) - A Lehman Brothers Inc. investment banker suspected in a $277 million scam donated $50,000 to the Cincinnati GOP organization just weeks before he became a fugitive, a newspaper reported.

The Hamilton County Republican Party, which was helping finance Ohio Treasurer Joseph Deters' campaign for state office, received the money from Frank Gruttadauria (pictured, right) in December, The Plain Dealer reported.

Gruttadauria, 44, of suburban Gates Mills, had previously done work for the treasurer's office, according to the paper.

Deters said he "never, ever solicited a dime" from Gruttadauria. The solicitation was made by Eric Sagun, a fund-raiser employed by both Deters' re-election campaign and the Hamilton County party.

Sagun said his fund raising was legal. Deters, who defended Sagun as "the most ethical fund-raiser I've dealt with," said he did not know Sagun had asked Gruttadauria for money.

"I have never discussed that with Gruttadauria in my life. Nothing like that," Deters said.

Deters and Cincinnati GOP officials could not be reached for further comment early Wednesday. Messages seeking comment were left at their offices by The Associated Press before regular business hours.

Gruttadauria wrote his personal check to the Hamilton County GOP just weeks before his Jan. 11 disappearance.

He surrendered Feb. 9 after spending a month as a fugitive. He is being held without bond on a charge of making false statements to a financial institution and the FBI said more charges are possible.

Gruttadauria allegedly swindled wealthy investors by diverting account statements to his post office box and replacing them with statements that falsified account information over a period of years.

Deters, when he learned about the Gruttadauria probe, said he directed the party to set aside the Gruttadauria donation and call the FBI. The agency told the party to hold the money and await further directives.

Deters said the state made millions on fixed-income deals Gruttadauria arranged. Deters said that, helped by recommendations from a GOP consultant and business leaders, Gruttadauria qualified for state work.

Since 1999, the SG Cowen Corp. and Lehman Brothers, where Gruttadauria worked in successive management jobs in Cleveland, completed a combined $5.9 billion in trades for the state treasurer's office.

Deters said his investment advisers found nothing improper in deals Gruttadauria arranged for the state.

There was no estimate of how much Gruttadauria made on deals for the state but it probably generated "a pretty nice" bit of money, said Lehman spokesman William Ahearn. Gruttadauria collected referral fees as a broker for firms competing for fixed-income securities business.

Ohio Citizen Action campaign finance director Catherine Turcer said the apparent links between Deters, Gruttadauria and the donation are troubling.

"When you look at large contributions and wonder, is there a quid pro quo, it can be very complicated to discern," she said. "But this is like that old Mitch Miller show, where you follow the musical notes. In this case, it's not beautiful music."

Chip Gerhardt, executive director of the Hamilton County Republican Party, said his party "is widely regarded as one of the most successful political fund-raising organizations in the state, if not beyond. It is not unusual for us to get donations from around the state."

Deters was the primary beneficiary of the Hamilton County party's fund-raising efforts. Of the $284,262 raised by the party's state candidate fund last year, Deters received $203,622.

(Copyright 2002 by The Associated Press. All Rights Reserved.)