Tag Archive for: Lehman Brothers

9/04/1996
by Bob Fitrakis

All evidence suggests that since the onset of the George Voinovich administration in January 1991, the governor’s recently resigned chief of staff, Paul Mifsud, systematically engineered the steering of contracts and public funds to political backers and Voinovich family members.

The firing of Joseph Gilyard on July 22, 1991 by the Voinovich administration was a clear harbinger of the governor’s current problems. Gilyard, who had been director of the Office of Criminal Justice Services and a long-time loyal supporter of the state’s Republican machine, was canned shortly after he alleged that he was under political pressure to give the governor’s brother’s company valuable state prison construction contracts.

The firing paved the way for Mifsud, formerly vice president of the Voinovich Cos., to operate with virtually no restraints within the governor’s administration. As chief of staff, Mifsud was put in charge of the Ohio Department of Transportation, the Commerce Department and the Development Department, and used that position of power to serve the interests of political backers and personal favorites.

Recent allegations that contracts were steered towards the Banks-Carbone Construction Company may be just the tip of the iceberg. It’s an open secret in the local construction and architecture industry that over the last five years most major design and construction management contracts have been awarded in a blatantly partisan manner. Many contractors believe that the state’s Department of Administrative Services has repeatedly gone through a charade of soliciting proposals and later interviewing qualified architectural construction management companies for state projects prior to steering the contracts to what appeared to be predetermined winners. According to construction industry insiders, projects that seem to fit this pattern include:

· Five prison contracts totaling $150 million awarded to Knowlton Construction Company to build or renovate five state prisons, despite the company having little or no previous experience as a prison construction manager.
· The $80 million Max Fisher Business School, the $85 million Schottenstein Arena at Ohio State, and the $110 million Hilltop Office Complex to the Gilbane Building Company. In all three cases, the Banks-Carbone Construction Company was selected as the minority partner.
· The $65 million new COSI building to the Ruscilli Construction Company.
· The $20 million reconstruction of the riot-damaged Lucasville prison to the Sherman R. Smoot Company.
· Various contracts to the Voinovich Cos. and Voinovich-Sgro to build and renovate jails, including the Franklin County jail.

Following George Voinovich’s electoral victory in November 1990, Lieutenant Governor Michael DeWine appointed Gilyard director of the Governor’s Office of Criminal Justice Services in January 1991. Gilyard’s previous experience included being executive assistant to George Forbes, Cleveland City Council president; chief of staff for Cuyahoga County Commissioner Virgil Brown; court administrator for Chief Justice Thomas Moyer; and director of the Ohio Court of Claims. As director of the Office of Criminal Justice Services, Gilyard’s tasks were to coordinate planning and funding for all of Ohio’s criminal justice agencies and dispense state funds for area jail construction projects. Over the eight-year period from 1983 to 1991, the Office of Criminal Justice Services awarded some $200 million in jail construction monies.

Within six months of his hiring, Gilyard was disgraced and hounded by several charges-theft in office, lying to the Voinovich administration about his past, and allegations of sexual harassment-that were later all summarily dismissed. Gilyard’s termination and public humiliation served as a head on a spike to all who dared cross Mifsud.

Gilyard’s tenure turned tenuous immediately after an early “get acquainted” meeting with lobbyist Phil Hamilton, head of the Voinovich transition team and former executive vice president of Voinovich Cos.; and Bennett J. Cooper, Gilyard’s predecessor in the administration of Governor James A. Rhodes.

“[Hamilton] had been bugging me and bugging me to come over,” Gilyard said in an interview with Columbus Alive. When he walked up to the office at 8 E. Long Street, Gilyard said he noticed a plaque over the door. “In gold leaf it says ‘Hamilton and Associates, The Voinovich Cos.’ I about passed out.”

In fact, Candace Peters, a criminal justice administrator, had warned Hamilton during the 1990 campaign that the Voinovich Cos. was facing a potential conflict-of-interest situation over the building of local jails in Ohio.

Despite the warning, the pressure from Hamilton and his associates was “never-ending,” Gilyard insists. For example, he says, at “a reception for all the Voinovich criminal justice people, Hamilton is bothering me again. Cooper’s coming over [to his office] every other two, three days. He’s calling me. He’s going on trips with me,” Gilyard recalls.

Both Cooper and Hamilton are on record denying having pressured Gilyard to receive jail construction grants and contracts.

In a memo to DeWine dated February 1, 1991, Gilyard outlined his problems with the initial meeting with Cooper, Hamilton, and his wife, Patricia Hamilton. According to Gilyard, the talk immediately turned to jail construction contracts and Gilyard said he felt he had to excuse himself. Gilyard said he believed the meeting “raised a significant question as to its propriety” since there was a 1987 Attorney General’s opinion that jail construction grants were state contracts and candidate George Voinovich had pledged that his brother Paul’s company would receive no state contracts.

Patricia Hamilton was soon thereafter appointed the chairperson of State Board of Personnel Review, the board that would later approve Gilyard’s ouster as director.

While others mulled the memo, Gilyard’s attention was drawn to Sheriff Earl Smith. In late March, early April, Gilyard began investigating allegations of impropriety surrounding Sheriff Smith’s Franklin County Drug Enforcement Network (DEN). Gilyard’s now-famous April 12, 1991 memo to DeWine basically summarized various allegations of illegal activity by DEN agents. DeWine froze the funding for the program and, Gilyard later claimed, ordered him to “destroy the memo.” The DEN missive-together with the February 1 memo-unwittingly set the stage for Gilyard’s later dismissal.

At about this time, Sharon Downs, an assistant deputy director of Administrative Services-and wife of John Downs, then-personnel director for Earl Smith and a protege of Voinovich transition director Hamilton-accessed a computer file on Gilyard’s personnel history. Prior to accepting his position, Gilyard had interviewed with Secretary of State Bob Taft’s office where he talked openly about a 1975 incident at Indian River School, a juvenile detention facility where he was fired from the staff and convicted for hitting a youth. The misdemeanor conviction was later overturned. Despite the fact that Gilyard made no secret of the incident, DeWine claimed that Gilyard had failed to disclose the incident during his background check and subsequently he fired Gilyard in July of 1991, even though he later conceded that he was aware of the 1975 incident when Gilyard was hired.

As Gilyard recalls, he was originally offered the job to protect DeWine because, like Mifsud, he was raised in the hardball political scene in Cleveland. Gilyard said he was told: “You were in Cleveland politics, and Mike’s afraid that those guys are going to eat him alive.” Gilyard claims that early on, Mifsud surrounded himself with ambitious “young Republicans….We used to call them ‘brown shirts’ like in Germany.” Politically, you couldn’t make any mistakes in dealing with Mifsud, according to Gilyard: “Mifsud would cut your throat off.”

In June, Smith, angered at Gilyard for freezing his drug task force funds, met with Mifsud about instituting a thaw. Smith gave Mifsud an investigation file on Gilyard. In a two-pronged strategy, Hamilton-who was on Smith’s payroll as a $1,000 a month management contractor-met with DeWine and offered to mediate the dispute between Smith and DeWine over task force funding.

In the meantime, pressure from Hamilton and Cooper mounted, Gilyard claims, adding that he felt compelled to approach Mifsud about the Voinovich Cos.’ apparent conflict of interest. He said he went early to a Cabinet meeting. “I said ‘Paul, you have to do something about this jail stuff….I’m telling him this story and literally…he put his hands over his ears like a little kid. ‘I don’t want to know, get away from me, stay away from me,’ and he ran around the Cabinet table to the other side and turned his back on me.”

Around the first of July, Paul Voinovich sent his brother 14 pages of material-including copies of Gilyard’s personnel history-with handwritten comments to the effect that there were problems with Gilyard. It was virtually the same package Smith had given Mifsud in June.

Gilyard had confronted Sheriff Smith about the allegations against the DEN agents. While Smith denied them and insisted that he get his funding back, both he and Gilyard have confirmed that, during the conversation, Smith made Gilyard aware of illegal campaign contributions that the trash haulers had made to the 1990 Voinovich campaign.

Gilyard claims Smith “sent a direct threat to the governor” to back off his drug task force, and immediately Smith began to crack down on overloaded garbage trucks in Franklin County. “Now, what actually happened was, when Earl had told me about the illegal campaign contributions, he actually was making trash trucks dump their trash in the city streets of Columbus. There’s pictures in the Dispatch. Nobody could understand why. I, of course, knew why, and I’m telling the governor and I’m telling these people why and Mifsud’s pooh-poohing me, although he knew better,” Gilyard explained.

In what even he describes as an end run to get to the governor the information about the activities of his brother Paul, Hamilton and Mifsud, Gilyard said he arranged a meeting with David B. Bailey, a Cleveland Republican Ward Committeeman and Voinovich confidante for over 30 years; and former Cuyahoga County Republican Party Chair, Robert Hughes.

Hughes, one of the state’s most powerful Republicans, had recently formed his own political consulting company. “We met with Hughes in Hughes’ basement. It was Hughes, Hughes’ wife, Bailey, my wife and myself. Bob took prodigious notes. Five pages of notes on a yellow pad. He agreed to see the governor, and I believe he made a phone call to Columbus that night,” recalled Gilyard.

Whether or not the governor got the information is unknown. Hughes died in November of 1991 under mysterious circumstances, the victim of carbon monoxide poisoning.

On July 15, 1991, Gilyard sent another troubling memo to DeWine questioning the propriety of the Voinovich Cos.’ lobbying efforts. Within a week, he was suspended and then fired by DeWine, who accused him of withholding information about the 1975 Indian River incident. DeWine also claimed that he hadn’t received any memo from Gilyard regarding the Voinovich Cos.’ intense lobbying efforts. Earl Smith had in the meantime filed theft-in-office charges against Gilyard.

On August 7, Curt Steiner, chief spokesman for Voinovich, stated that DeWine was aware of the 1975 Indian River incident when he first interviewed Gilyard in December. Late in August, a nearly 1,000-page Ohio Highway Patrol report substantially supported Gilyard’s claim that he had sought to repeatedly warn Mifsud of ethical problems.

A little more than a week after Gilyard’s departure, the Columbus Dispatch reported that, “Two well-connected Statehouse lobbyists- one with ties with Governor George V. Voinovich’s brother and another appointed by Voinovich to a state commission-helped clients land unbid contracts as part of a $350 million state bond issue.” Hamilton was the lobbyist for Goldman Sachs & Co., which, along with Lehman Brothers, received the unbid contracts to handle about $175 million in bond issues on behalf of the Ohio Housing Finance Agency.

On October 3, Franklin County Judge Richard Ferrell dismissed Smith’s charges against Gilyard, citing “no probably cause.” On October 18, after months denying its existence, DeWine turned over a copy of Gilyard’s July 15 memo, claiming that he had recently discovered it in a desk at his second home. DeWine dismissed Gilyard’s thoughtful memo as “a goofy, long narrative.” The memo remains a must-read for anyone seeking to understand the current contract-steering allegations against Mifsud.

After Hughes’ death in November 1991, the Ohio Ethics Commission-with new Voinovich appointees-ruled that it wasn’t a conflict of interest for the governor’s brother to take state jail construction funds.

One monument to the political machine that steamrolled over Gilyard stands in Franklin County: the renovated Franklin County jail, built in 1970 by Pringle and Pratt. According to former Sheriff Smith, now running again for his old job, the Voinovich Cos. originally did the architectural assessment for the renovation at the Franklin County jail. They were paid $75,000, and received another $18,000 for their estimate that the jail could be renovated for $2 million. The $2 million renovation has turned into an $11 million-plus project.

Smith said that the Voinovich Cos. recently renovated a kitchen at the jail that had already been renovated “down to leveling the floors” in 1990.

“There was no bid from the Voinovich Cos. They said that since the Voinovich Cos. had done the original architectural assessment, that constituted a bid,” Smith said.