A major kickback scandal is threatening to rock Ohio’s Republican gubernatorial primary race.

The scheme, called “pay to profit,” allegedly involves Republican state officials who awarded “no bid” multi-million dollar contracts to winning contractors who artificially inflated the prices they charged the government so they could “kickback” campaign contributions.

The lawsuit that broke the scandal was filed by Democrat Tim Hagan who ran against Republican Robert Taft for governor in 2002 and lost.

Hagan raised about $1.2 million for his 2002 general election campaign. Taft was able to raise more than $12 million, a ratio of 10 to 1.

In court filings obtained by WND, Hagan charged that Taft was able to raise so much more “because of his access to and use of recycled taxpayer dollars from unbid contracts.”

Hagan’s lawsuit also named Ohio’s attorney general, Republican Jim Petro, and the state’s current auditor, Betty Montgomery, as defendants, charging that they too participated in “pay to profit” kickback transactions.

Petro and Montgomery are contending with Ohio Secretary of State Ken Blackwell in the 2006 Republican gubernatorial primary.

Cleveland attorney Kenneth F. Seminatore, who filed the law suit on behalf of plaintiff Hagan, told WND that Blackwell was not named in the lawsuit because Seminatore could find no evidence he had ever participated in the kickback schemes.

Hagan’s lawsuit charges that “pay to profit” schemes were standard operating practice in Ohio Republican Party politics.

“If I could have nailed Blackwell, I would have,” Seminatore told WND. “Believe me, I looked hard, but Blackwell is clean.”

Ohio’s Republican Party still is reeling from the humiliation of Gov. Taft pleading “no contest” to ethics charges.

On Aug. 18, Franklin County Municipal Judge Mark Froehlich fined Taft $4,000, the maximum financial penalty, and found him guilty of four misdemeanors for breaking state ethics laws. Taft had failed to report golf outings, meals, hockey tickets and other gifts from some of Ohio’s most influential business and political leaders. Refusing to resign, Taft became Ohio’s first sitting governor convicted of a crime.

On Dec. 19, Seminatore filed a bombshell revelation in the Hagan case with the Cuyahoga County Court of Common Pleas. Kevin O’Brien, a lawyer in Columbus, Ohio, provided Seminatore with an affidavit claiming that in the summer of 2005 he was having an after-work drink in a trendy Columbus bar when he was approached by Amy Gravenguard, who introduced herself as the fund-raiser for Petro’s gubernatorial campaign.

In O’Brien’s affidavit, a copy of which WND has obtained, O’Brien described the conversation he and his friend had with Ms. Gravenguard:

During the introduction, my friend told Amy that I was a collections attorney; Amy said, “is that right; you should become special counsel” or words to that effect; I told Amy that I was a Democrat and I remember her response because she said that “Jim Petro is the most democratic of the Republican candidates” and I got a good laugh out of that.

In Ohio, “special counsel” who are appointed by the state government to collect past-due obligations can make millions for what is generally a “no bid” appointment. O’Brien’s affidavit then described the quid pro quo Gravenguard proposed:

I spoke with Amy a few minutes and she told me that if I was interested in becoming special counsel that I would need to make a contribution to Mr. Petro’s campaign; I asked her what the going contribution was and she said $25,000.00; in addition to that she said that most contributors agree to host several fund raisers for the candidate and there would be some expense involved in hosting the fund raisers.

In the parlance of Ohio “pay to profit” kickback deals, O’Brien knew what he was being told. The price to him was a $25,000 personal contribution to Jim Petro’s gubernatorial campaign plus the cost of a few fund-raisers, with the assumption that O’Brien would tap his friends to attend and contribute.

In return, O’Brien would find himself appointed a special counsel with a lucrative license to apply his collection skills for substantial personal profit. According to the charges of the Hagan lawsuit, that’s how “pay to profit” worked in Ohio.

O’Brien’s statement was particularly damaging because as a lawyer he could lose his license if he had provided this statement falsely under oath. Asked whether a crime had been committed by Gravenguard, Seminatore told WND: “That’s a good question. Maybe a federal grand jury ought to look into it.”

Then, on Dec. 23, just before Christmas weekend, Hagan instructed Seminatore to drop the case.

“I have no explanation for my client’s instructions,” Seminatore told WND, “but it certainly wasn’t the merits of the case. We had the evidence and I was ready to advance in a case I felt certain we would win.”

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