Voinovich denies diversion of funds

By Joshua Benton
Blade Columbus Bureau

Page 1

COLUMBUS — Governor Voinovich has formally denied approving a 1994 transaction that has landed him in legal trouble with the Ohio Elections Commission.

But the governor’s campaign treasurer continues to say that the governor personally OK’d a money-laundering scheme to hide thousands of dollars that would end up in the hands of his brother, Paul Voinovich.

The men made their statements in affidavits filed yesterday with the election commission. Their accounts differ in large and small ways from the versions given to federal investigators earlier this year.

Five men have been accused of illegally diverting $60,000 from the governor’s 1994 re-election campaign committee. The campaign’s finance reports said the money was used for “voter program development” by a political consulting company, Mamais & Associates.

But documents obtained in a federal grand jury investigation this year show that the money ended up in the hands of Paul Voinovich and lobbyist Michael Fabiano, to pay them back for work done for the governor’s campaign.

The varying accounts the men give in their affidavits focus on a supposed meeting in the summer of 1994, at which the governor allegedly approved the deal. Campaign treasurer Vincent Panichi said the meeting included the governor, Paul Voinovich, and himself.

But the governor and Paul Voinovich, in their affidavits, deny that any such meeting took place.

Mr. Panichi’s memories of the circumstances of the meeting are sketchy. He said that it happened outdoors, but does not remember where, or when. He said that he “was not focusing on what the two brothers were saying” during a key part of the conversation. And he said that the governor might not have heard everything said, because “Governor Voinovich often wears a hearing aid, and I really do not know what he did or did not hear.”

But Mr. Panichi said he is clear on the substance of the meeting.

Paul Voinovich said he had somehow provided money to pay for the work of Ray Gallagher, a Cleveland-area union leader who had been lining up union support for the governor, Mr. Panichi said. And Paul Voinovich “wanted or expected to be reimbursed.”

Mr. Gallagher had been doing Voinovich campaign work while working for Mr. Fabiano. Mr. Fabiano, under an unrelated business deal, had been paying Paul Voinovich $6,000 a month. According to an IRS investigation, Paul Voinovich agreed to lower that amount by $2,500 a month so that Mr. Fabiano could use the balance to pay Mr. Gallagher for his campaign work.

According to the paper trail gathered by federal investigators, the reimbursement to Paul Voinovich arrived that fall. The Voinovich campaign wrote a $60,000 check to Mamais & Associates, which allegedly acted as the deal’s middle man. Then, Mamais & Associates transferred $28,500 to Mr. Voinovich’s companies and $28,500 to Mr. Fabiano’s, keeping $3,000.

Mr. Panichi backtracked on a few points in his affidavit, saying that some of his statements before the grand jury were “what I assumed or believed,” not “what I knew or heard.” But he stood by his statements that the governor specifically approved the deal at the summer meeting.

The Voinovich brothers, in their own affidavits, deny that version of events. The governor said he had no knowledge of any relationship between his brother and Mr. Gallagher, or between Mr. Fabiano and Mr. Gallagher. He said he did not know Mr. Gallagher was getting paid to work for his campaign, and thought that the payment to Mamais & Associates was for services performed by the company.

“I have read the Grand Jury testimony by Mr. Panichi. … I have absolutely no recollection of any such meeting and, to the best of my knowledge, do not believe that any such meeting occurred,” the governor said in his statement.

Had he known about the alleged money laundering, “I would never, never have approved payment to Mr. Mamais,” he said.

In his statement, Paul Voinovich said that the cutback in Mr. Fabiano’s monthly payment to him was not intended to pay for Mr. Gallagher’s campaign work. He said he did not know Mr. Gallagher was doing campaign work at the time.

The cutback was given to Mr. Fabiano because he was having trouble paying all his bills, Paul Voinovich said. And it was made clear to Mr. Fabiano that Paul Voinovich expected to be paid back, he said.

Paul Voinovich said he had a single phone call with his brother over the matter after discovering that Mr. Gallagher was doing campaign work, but after that he “had no further discussions with anyone else concerning this matter” – including Mr. Panichi.

In contrast, Mr. Panichi said that the subject came up at the supposed meeting.

Nick Mamais, the head of Mamais & Associates, was named in the original complaints, filed in October by Secretary of State Bob Taft.

But Mr. Mamais died in January, 1997, of a head injury when he slipped on ice at a wrestling tournament.

Governor Voinovich won election to the U.S. Senate on Nov. 3. He potentially faces a fine and loss of office if found guilty, although it is unclear legally if the loss of office could apply to his new Senate seat.

Francis Fela, vice president of Paul Voinovich’s companies under the umbrella The V Group, was named in the complaint. He filed an affidavit supporting Paul Voinovich’s version of events.

Mr. Fabiano was required to file a response to the allegations yesterday, as well, but he did not. There likely won’t be any penalty for his not filing, said Philip Richter, executive director of the election commission.

The commission could choose to accept his response sometime between now and Thursday, when the election commission will hold a preliminary hearing on the entire matter.

Mr. Richter said the commission has never refused to accept a late response.