Bank One, one of Ohio’s largest commercial banks, has been implicated in the “pay to profit” scandal currently rocking Ohio Republican Party politics.

In a civil lawsuit filed by Timothy Hagan, the Democratic Party challenger who lost to Gov. Robert Taft in the 2002 gubernatorial race, Bank One was named as the recipient of lucrative “no bid” contracts.

The lawsuit alleged Bank One engaged in a “kickback” scheme to funnel back to Republican Party campaigns some of the ample profit earned in the inflated dollar “no bid” deals. Hagan’s lawsuit claimed the “pay to profit” scheme was a major reason Taft was able to raise some $12 million in the 2002 gubernatorial race, compared to approximately $1 million Hagan raised.

Hagan’s civil lawsuit, filed by Cleveland attorney Kenneth F. Seminatore, charged Bank One won lucrative “no-bid” contracts “at nearly twice the price of comparable contracts in other states,” identified as “a misuse of taxpayer dollars,” while in return Bank One “is among the largest source of political contributions” for individual Republican Party candidates in Ohio, as well as to the Republican Party in Ohio.

The lawsuit pointed to Bank One’s involvement in a welfare reform contract. Under federal mandates for welfare reform, the Ohio Department of Job and Family Services, or DJFS, was required to create an automated Centralized Collection and Disbursement Unit, or CC&D, for child support, before the April 1, 2000, deadline mandated by federal welfare reform laws.

Bank One was the subcontractor in a bid submitted by Lockheed Martin that totaled over $218 million over five years, approximately $70 million more than DJFS had budget for the project.

The Lockheed Martin bid failed, yet Republican state officials ultimately decided to give the contract to Bank One on the grounds that the bank already was familiar with the project, even though the experience claimed for Bank One came as subcontractor in a failed bid.

According to Hagan’s lawsuit, Bank One was awarded the contract in the amount of $14.7 million for fiscal year 2000 and $28.7 million for fiscal year 2001.

The allegation is that these amounts represented “massive” overpayment to Bank One when compared to comparable contracts with other vendors in other jurisdictions.

The lawsuit alleges a pattern of behavior taken by Ohio Republican officials in state government positions to create “emergencies” and other conditions such that Ohio’s laws requiring competitive open biding could be circumvented. In return, the lawsuit alleged, Bank One made substantial campaign contributions to the Republican Party politicians involved, both directly and indirectly, through contributions to the Republican Party itself.

WND has obtained the filings in the case as submitted by attorney Seminatore to the Cuyahoga County Court of Common Pleas. The filings argued:

This lawsuit is designed to expose, redress and end these corrupt practices once and for all in the State of Ohio. The participants have violated the competitive bid laws of this State, the prevailing wage laws of this State, the campaign finance laws of this State, and the various criminal statutes underpinning the State’s racketeering laws.

Since none of the “reforms” being contemplated by the Ohio Legislature address the no-bid “pay to profit” scheme, the lawsuit asked the court to order injunctions against several prominent Ohio Republicans, threatening that an injunction was needed, otherwise the “passage of presently contemplated ‘reforms’ will lead Defendants to even greater reliance on the practices alleged in this Complaint.”

Among the defendants named in the lawsuit were Gov. Taft, Ohio Attorney General Jim Petro and Ohio Auditor Betty Montgomery. Petro and Montgomery are candidates for the 2006 Ohio Republican gubernatorial primary.

The leading candidate in the primary, Ohio Secretary of State Ken Blackwell, was not named in the lawsuit. Attorney Seminatore told WND Blackwell was not named because his four-year investigation of the “pay to profit” scheme had not uncovered any wrongdoing by him.

“If Blackwell had been involved,” Seminatore told WND, “we would have gone after him too. We looked, but we couldn’t find anything on Blackwell.”

The lawsuit laid out the damages the “pay to profit” scheme caused Ohio taxpayers:

This lawsuit focuses upon the ultimate and most egregious corruption of the political and democratic processes in the State of Ohio. It is not about “pay to play” politics, which cynical observers might suggest is “the American way” in a political system where the cost of campaigns leads politicians to trade “access” for campaign contributions. Rather, it is about forthright “pay to profit,” the trading of campaign contributions for un-bid public contracts, a portion of the proceeds from which are “kicked-back” to assure the continued dominance of the controlling parties by giving them and them alone access to taxpayer dollars to fund their election, re-election and related political campaigns.

And again:

When multi-million dollar contracts are legally or illegally awarded on a no bid basis to major contributors, the winning contractors can and do artificially inflate the prices they charge to government to cover the costs both of the contributions they are expected to “kick-back” to or for the benefit of the soliciting public official and the taxes that they will pay on the “kick-back” overage.

WND has learned that the Ohio State Inspector General’s Office, the State Ethics Committee and the Ohio State Highway Patrol are looking into the “pay to profit” scandal.

WND also has learned that the U.S. Justice Department’s Public Integrity Section has been looking into the “pay to profit” allegations made in the Hagan lawsuit.

WND asked Seminatore if some of the allegations involved possible criminal violations.

“That’s a good question,” Seminatore answered, “maybe a federal grand jury will get convened to find out.”

Previous stories:

Feds looking into GOP scandal

Scandal rocks Ohio governor’s race

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