Boyle asks vote certification delay; This election linked to money-laundering allegations against Voinovich

By Joshua Benton
Blade Columbus Bureau

Page 3

COLUMBUS — Hours before losing her race for the U.S. Senate, Democrat Mary Boyle called on Secretary of State Bob Taft to delay certification of the election’s outcome pending a full investigation into allegations of money laundering by Governor Voinovich after the 1994 election.

In a letter to Mr. Taft, Boyle campaign manager Marc Dann yesterday asked the Republican secretary of state to start an immediate investigation into the allegations, filed last week with the Ohio Elections Commission but not made public until Monday, the day before the election.

“This is the most serious allegation ever made against a sitting governor,” Boyle spokesman Steve Fought said. “The voters have a right to know if this election needs to be invalidated.”

Among the possible punishment for misrepresenting a campaign expenditure – the misdemeanor offense the governor is accused of – is “forfeiture of office.” But it is unclear if that could extend to the federal position of U.S. senator.

John Bender, chief legal counsel for the secretary of state’s office, said that only the election commission has the authority to start an investigation, and that Mr. Taft could not hold up election certification.

“Bob Taft’s job is to ensure that the election runs smoothly and follows all elections laws,” he said. “This office has no jurisdiction over the complaint [against Mr. Voinovich].”

After casting his vote in Cleveland, Governor Voinovich reiterated that he would cooperate with the state investigation into the alleged campaign money laundering.

But he did not deny the charge against him: namely, that his 1994 re-election campaign funneled $60,000 through a fund-raiser to pay his brother, Paul Voinovich, and a lobbyist.

“I don’t know what’s in the complaint” filed by the election commission, the governor said. “I’m not going to respond to anything until I’ve read the complaint and seen what everybody has had to say. I want you all to know that I am going to fully cooperate with the elections commission.”

The complaint was generated by a federal corruption investigation under way in Cincinnati. That investigation, being conducted with assistance from FBI and IRS officials, was looking into potential tax law violations by Michael “Tony” Fabiano, a Worthington, O., lobbyist, when it uncovered evidence about the alleged money laundering.

Although the complaint was filed last Wednesday, it became public knowledge only Monday, when Democratic Party leaders learned about the documents and released them to the press. Mr. Voinovich said his attorney was out of the country and had not been able to read through the accusations.

The charges are set forth in a stack of documents produced by the federal investigation and filed with the election commission. They have spent much of 1998 being shuffled between federal, county, and state officials.

The allegations center around Ray Gallagher, a pipefitters union official from Cleveland who supported Mr. Voinovich’s candidacy for governor in 1990. According to documents filed with the complaint, the governor had appointed Mr. Gallagher to a spot on the Ohio Industrial Commission, but his name was withdrawn when it was discovered he had been convicted of felony theft in office while in a state government job in the 1970s.

Suddenly jobless, the documents show, Mr. Gallagher was hired by an old friend, lobbyist Michael “Tony” Fabiano. The plan was that Mr. Gallagher would spend most of his time helping out the Voinovich re-election campaign, but Mr. Fabiano could not afford to pay Mr. Gallagher a $60,000 salary while he worked for the campaign, according to the complaint.

So Mr. Fabiano asked The V Group – a set of companies controlled by Paul Voinovich – to reduce the amount Mr. Fabiano paid every month as a retainer to The V Group, and Paul Voinovich eventually agreed to let the monthly payment be reduced by $2,500 so that the money could go to help pay for Mr. Gallagher, according to the documents.

After a few months, though, Paul Voinovich, according to the grand jury testimony of several people, became angry at what Mr. Gallagher was costing him and demanded that his brother’s campaign reimburse him and Mr. Fabiano for what they had paid, which, by that point, was about $30,000 each.

According to a transcript of campaign treasurer Vincent Panichi’s grand jury testimony, Governor Voinovich and Mr. Panichi met and decided that the campaign would make the reimbursement.

But, the documents show, writing a check directly to The V Group would have almost certainly caused public scrutiny from the press. So the governor allegedly approved of a plan to use a middleman, Columbus fund-raiser Nick Mamais. On Dec. 5, 1994, the Voinovich campaign wrote Mr. Mamais a check for $60,000. Mr. Mamais allegedly kept $3,000 for himself, and wrote two checks for $28,500 each to two companies controlled by Mr. Fabiano. Mr. Fabiano then wrote a $28,500 check to The V Group.

In his grand jury testimony, included with the complaint, Mr. Panichi testified that the governor personally approved using Mr. Mamais as a middleman because, as Mr. Panichi said, “politically it doesn’t look good” to have the money going straight to The V Group.

According to an IRS agent’s memorandum filed with the complaint, it was important for Paul Voinovich that it be known that “the governor approved the reimbursement. Paul Voinovich stated that he needed to dirty his brother’s hands.”

The governor repeatedly has tried to distance himself from his brother, who has been investigated for involvement in several scandals in northeast Ohio.

In 1997, the governor said Paul Voinovich “has no role in state government” and added, “I have no role in any of his businesses. He has his own life to lead and so do I. And that’s it. Period.”

This is the first time that the governor has been implicated in a corruption investigation. Paul Mifsud, the governor’s former chief of staff and a former V Group executive, served six months in jail last year for concealing $100,000 in improvements to his home done by a state contractor.

Mr. Voinovich predicted that Ohioans will interpret the last-minute accusation as an attempt to derail his Senate campaign. “Most of them will see it as a last-minute type of effort to make reference to something that happened four years ago,” he said.

Mr. Voinovich is charged with misrepresenting the campaign expenditure, along with his brother, Mr. Fabiano, Mr. Panichi, and a company run by Mr. Mamais. That offense carries a maximum penalty of a $10,000 fine and removal from office.

In addition, Mr. Fabiano, The V Group, V Group Vice President Francis Fela, and two companies run by Mr. Fabiano are charged with illegal use of corporate funds in a political campaign. Conviction on that charge carries a maximum $1,000 fine and up to a year in state prison.

The election commission has scheduled a preliminary hearing on Dec. 10 to decide if a full hearing on the complaint is justified.

Blade staff writer Jeff Cohan contributed to this report.