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10/23/1996
NEWS BITES
Campaign questions
by Bob Fitrakis

What really happened in the 1992 sheriff’s election in Franklin County? This question is currently being probed by the Ohio Elections Commission. On Monday, the Commission found insufficient evidence to investigate money-laundering allegations against Sheriff Jim Karnes, former Franklin County Democratic Party Chair Fran Ryan, and the Franklin County Democratic Party. The commission will investigate allegations against Karnes’ 1992 campaign manager and former Elections Commission member, Greg Kostelac, and has suspended him as an investigator for the commission.

New information obtained by Columbus Alive sheds more light on the Kostelac investigation. Kostelac admits that he personally delivered $14,000 in checks made out to the Franklin County Democratic Party to Ryan on October 26 and 27, 1992. He acknowledges that Mark Wolfe, Franklin County kingpin in the adult entertainment industry, arranged for seven contributors to give $2,000 apiece.

An audiotape of a conversation between former Franklin County Republican Party Executive Director Terry Casey-now a private political consultant and associate of Kostelac-and a member of the Smith campaign crew reveals that there was a falling-out between Karnes and Kostelac immediately following the election. “Greg’s no fan of Karnes,” Casey informed the Smith campaign earlier this year, and there was “…no deal with Karnes” and Mark Wolfe. The campaign donations solicited from Wolfe by Kostelac were “motivated by wanting to screw Earl…. Karnes [was] kind of oblivious” to Greg’s deal, according to Casey.

Casey lobbied hard to keep Kostelac from being investigated: “…he’s not a dumb guy, [it’s] very, very important to keep Greg out of it.” In Casey’s analysis, then-Party Chair Ryan “didn’t have a clue” on how the 1992 Franklin County campaigns were going. “[She]…didn’t think Karnes had a chance. [She thought] Farlow could beat Miller,” Casey said. The latter is reference to the race for county prosecutor between Bev Farlow and successful incumbent Michael Miller.

Casey implies that Kostelac was forced in desperation to go to the pornography industry because of poor political decisions on the part of Ryan.

In her defense, Ryan says: “Everyone knows how hard I worked to get out the sample ballot and the election tabloid. And if I did something wrong, why would I list every donation from Greg right down to the dollar; and why would I have left that file in the Democratic Party headquarters if I had something to hide?”

Ryan insists “that Greg approached me. It was my understanding that he wanted to work for the party. After all, he wanted my job.” After Ryan’s resignation, Kostelac applied to chair the Franklin County Democrats and was not selected. Later, he applied to be chair of the Ohio Democratic Party, also unsuccessfully.

Casey also said that Kostelac went so far as to “whet Wolfe’s appetite” with a nasty, negative “TV script” about Smith to entice the donations. Casey refers to “Karnes’ stupidity,” as Kostelac circumvented his candidate’s wishes and cut a deal directly with Ryan.

Ryan is on record stating that Kostelac asked her for a loan and she told him: “…if he raised money for the party, then I would give him a loan.” The problem is that Ryan’s statement just doesn’t add up unless Kostelac was trying to launder money. Kostelac raised $14,000; he gives it to Ryan; she loans him $8,000, which the Karnes campaign pays back. That equals $22,000 for Fran and $0 for the Karnes campaign. The question remains, why didn’t Kostelac simply put the $14,000 into the Karnes campaign?

Alive has learned that other factors played into Kostelac’s decision as well. Kostelac was having financial problems at the time he took the money from the porn industry. An invoice dated November 18, 1992 from Kostelac to Ryan refers to an “oral agreement” between the two that would result in Kostelac being paid $6,000 if three conditions were met. First, Kostelac must raise the money to pay himself; second, Karnes must win the election; and third, the Karnes campaign had to pay back the $8,000 loan to the Franklin County Democratic Party.

According to Sheriff Karnes, his campaign paid Kostelac nothing. “I kept asking him ‘What do I owe you?’ and he kept saying ‘You don’t,'” Karnes recalls. Party insiders and Karnes campaign workers report that at the post-election victory party at La Scala Restaurant, Kostelac took possession of the Karnes campaign cash box instead of turning it over to the treasurer, reportedly to “settle up with Fran.” Sources report that this was the beginning of a falling-out between Karnes and Kostelac. Highly placed Karnes campaign sources and Franklin County staffers all report that the final break between Karnes and Kostelac came after Kostelac asked the Karnes campaign committee for a personal loan.

Sources in the Karnes campaign report around “five hundred dollars in bounced checks” from Kostelac. Alive has also learned that Kostelac bounced checks to various political campaigns and organizations. Check #1412 for $100 from Greg Kostelac and Associates dated October 25, 1993 to the Franklin County Democratic Party was returned for “insufficient funds.”

Tapes released by the Smith campaign indicate that at least two of the contributors lined up by Mark Wolfe may have gotten some or all of their campaign money from other individuals, possibly in violation of campaign law. One of the individual contributors who was given part of the $14,000 from Wolfe, Dr. Joanna Demas, states that “…It’s possible that he [Tom Wolfe, Mark Wolfe’s brother] gave me a majority of the money. But I made that donation because I believed in what I was doing. Now, maybe I was naive in not asking why is this made out to the Democratic Party and not to Jim Karnes.”

Cynthia DeSantis, a local hairdresser, was tapped while staying at Tom Wolfe’s house in Los Angeles. DeSantis, who also was one of the $2,000 contributors, states that she was “doing a favor for my best friend.” That friend was identified as Mark Long, an employee of Mark Wolfe. DeSantis says that, “I believe it was cash.”