Report Ties Assigned Investment Work To Deters Contributors

CLEVELAND (AP) - State Treasurer Joe Deters arranged Ohio investment work to go to a Pennsylvania company that splits its fees with a business owned by two donors to Ohio Republicans, a newspaper reported Friday.

Deters, a Hamilton County Republican, is running for re-election in November against Mary Boyle, a Democrat, who is a former state lawmaker and Cuyahoga County commissioner.

The Plain Dealer reported Friday that Richard Ireland and Brian McElwee are the sole donors to the Concerned Citizens Political Action Committee, based in Valley Forge, Pa.

According to the report, $58,000 of the $371,500 the two gave the committee since 2000 found its way to the Hamilton County Republican Party and to other Ohio Republican accounts that have supported Deters' campaign.

The political action committee's first Ohio donation arrived in December 2000, as Deters' office was putting together terms for selecting companies in which to invest the state's $358 million tobacco settlement.

More than $42 million eventually went to Valley Forge Asset Management Corp., which occupies the same office building and shares a post office box with the PAC, the newspaper reported.

According to a disclosure form filed with Deters' office, half of the fees the state pays Valley Forge Asset Management go to its marketing consultant, VFIM Corp. -- a company owned by Ireland and McElwee that also is based in the same office building. The fees total an estimated $211,000.

VFIM's agreement indicating it helped Valley Forge Asset Management land the state deal is on file with the state, said Tim Clark, a spokesman for Deters' office.

Deters said Valley Forge Asset Management and the other tobacco money managers were selected based on their qualifications and past performance following an evaluation by The Consulting Group, a division of Salomon Smith Barney.

"The proof is in the results," Deters said, citing a study he commissioned that shows Valley Forge Asset Management outperformed the other winning firms in the first quarter.

"Because someone is active politically does not make them incompetent to be active professionally, and that's the inference you guys are making," Deters told The Plain Dealer.

Thirteen other firms were selected by Deters' office to invest tobacco money. Employees and others associated with 11 of those firms or their affiliates donated to his campaign or to other key Republican accounts, according to a Plain Dealer analysis of contributions.

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