Trial investigating alleged misconduct on Ohio's teacher pension board begins
COLUMBUS, Ohio (WCMH) -- Monday kicks off a trial investigating state allegations of misconduct among the pension board that covers 500,000 active and retired Ohio teachers.
The lawsuit was filed in May 2024 after Ohio Attorney General Dave Yost released concerns from an anonymous 14-page letter accusing two State Teachers Retirement System board members of acting without the best interests of educators in mind. Board President Rudy Fichtenbaum and former board member Wade Steen are accused of attempting a hostile takeover of the pension's funds.
The anonymous letter alleged Fichtenbaum and Steen had improperly schemed to steer money from the $90 billion pension fund to an investment firm known as QED. Steen's lawyer, Norman Abood, said his clients never denied discussions with QED investment leaders, but do not agree that there was any misconduct.
"We're looking forward to the trial, because that's when the rubber meets the road," Abood said. "It's no longer going to be a question of innuendo or rumor."
Abood said Steen, an investment expert appointed to the STRS board by Gov. Mike DeWine, was trying to enhance the pension's economic performance by meeting with QED. He said Steen and Fichtenbaum spoke with QED leaders about possible investment opportunities to address a shortfall in earnings.
Abood said the state has subpoenaed thousands of pages of records, but has not taken anyone's formal statements. He is grateful the trial will offer straightforward, on-the-record details.
"There has been written discovery, but there hasn't been actual question and answer to see what the perspectives of the various people involved were," Amood said.
The lawsuit was filed amid years of chaos and a retired teachers watchdog group that was fighting for STRS reforms. At the time Fichtenbaum and Steen spoke with QED leaders, the pension fund lost $5 billion in just one year. It has also since come to light that the chief legal counsel for STRS was partially behind the anonymous letter.
The board ultimately declined any investments from QED in 2021, but Yost's civil claims were filed regardless. Although the state initially sought monetary penalties, Yost's office dropped that demand. The state now wants a judge to bar Fichtenbaum and Steen from ever serving on a public pension board again. Steen has already left the board.
"I mean to be, to be accused of the things that they've been accused of, and to have the kind of remedies that the state is seeking, would be a permanent stain on their records," Abood said. "We're very concerned about that."
The fund has consistently underperformed. Teacher retirees told NBC4's Colleen Marshall that they believe the fund's poor performance led to the end of promised annual cost-of-living increases.