(C) Ohio Capital Journal
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Ohio Attorney General Dave Yost files lawsuit to remove members of teachers' pension board • Ohio Capital Journal [1]
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Date: 2024-05-16
STRS lost $5.3 billion in 2022 alone. In 2023, it lost $27 million invested in the failed Silicon Valley Bank. In addition to those — the cost of living adjustments, or COLAs, were suspended for more than 150,000 retired Ohio teachers for five years starting in 2017. In 2012, the qualifying retirement number was moved from 30 years to 35 years. Last year, this was changed to 34.
Then, the board approved $10 million in bonuses for their staff.
This has led to a group of pensioners, who have named themselves the “reformers,” to fight for change against the ‘status quo’ members.
Last week, Yost launched an investigation into the teachers’ pension fund after allegations that a “hostile takeover” is putting educator money in jeopardy.
The concerns came from anonymously sent documents sent to Gov. Mike DeWine’s office. The governor’s spokesperson, Dan Tierney, said he believes they were prepared by multiple STRS staff members. Through public records requests, dozens of papers were obtained.
STRS’ consulting firm Aon cut ties with them, prompting a response from the governor.
“This is a huge red flag, calling into question how STRS is operating and providing oversight. The unstated implication is that the governance issues at STRS are so concerning that Aon could not continue its contract in good faith. STRS may now be out of compliance with portions of audit recommendations due to Aon ending the contract.”
The documents allege that Steen and Fichtenbaum, in addition to two former STRS board members, have been doing the bidding of private investment group QED Systematic Solutions.
In brief, QED is a firm that has no clients and no track record. It was started by former Deputy Treasurer Seth Metcalf and Jonathan (JD) Tremmel. Metcalf worked under Josh Mandel in multiple capacities, including as general counsel.
In 2020, they couldn’t impress the board members, mainly because of their lack of experience and also the fact that QED was not registered as a broker-dealer or investment adviser. The men also didn’t own the technology to “facilitate the strategy,” the documents say.
Click here to learn more about QED.
The document accuses the members of directly collaborating with QED and using their documents for QED pitching. Other members raised concerns privately.
“The owner of this shell company continues to peddle to STRS a secretive and untested investment scheme while his own condominium is in foreclosure,” the lawsuit says.
QED teamed up with the Ohio Retirement for Teachers Association (ORTA) to help elect candidates who wanted to reform STRS.
They accuse STRS of being corrupt, not an uncommon assertion made against the pension fund. Reformers state there needs to be a change because the current board keeps hurting the pensioners.
Lawsuit
Wednesday morning, Yost filed a lawsuit to remove Steen and Rudy Fichtenbaum, saying they have failed their role in protecting the pension fund.
The AG states that the pair should be removed because they broke their fiduciary duties of care, loyalty and trust when “colluding” with QED.
“While this scheme may benefit Steen and Fichtenbaum, it may spell disaster for Ohio teachers who have retired or hope to retire someday,” the lawsuit states.
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