Liberal watchdog files complaint tied to teachers’ pension fund
Artist Andrew Scott's stainless steel, 30-foot-long gavel was installed in 2008 outside the the Thomas J. Moyer Ohio Judicial Center, home of the Ohio Supreme Court in Columbus, Ohio, designed by architect Harry Hake. (Highsmith, Carol M., 1946- Carol M. Highsmith Archive via the Library of Congress)
A liberal watchdog wants the Supreme Court of Ohio’s Office of Disciplinary Counsel to investigate the attorney behind what it dubbed a multi-year effort to steer teacher pension assets to startup QED Technologies.
The Campaign for Accountability claims the conduct of James Seth Metcalf, an attorney who was the deputy treasurer and executive counsel to then-Ohio Treasurer Josh Mandel, appears to have violated the Ohio Rules of Professional Conduct.
The filing comes as a new examination estimated that reported investment returns resulted in roughly $9.3 billion in cumulative overstatement over the past two decades, a conclusion that the Ohio Retirement Study Council was unable to independently verify.
It also follows a ruling from Franklin County Court of Common Pleas Judge Karen Held Phipps that removed Rudy Fichtenbaum from the STRS board, a pension fund for Ohio’s more than 500,000 active and retired public educators. The ruling also barred Fichtenbaum and former STRS Board member Wade Steen from serving again.
“Half a million Ohio teachers and retirees trusted the STRS board to safely manage their retirement savings, but an Ohio court found that two of its members were taking direction from the very people angling to get their hands on those assets,” Campaign for Accountability Executive Director Michelle Kuppersmith said in a statement.
“Mr. Metcalf ghostwrote their memos, scripted their questions, fed them motions to make from the dais, and moved the conversation onto an auto-deleting messaging app,” Kuppersmith added. “His actions seem at odds with bar rules prohibiting conduct involving dishonesty, fraud, deceit, or misrepresentation.”
The Campaign for Accountability isn’t necessarily treading new ground.
Former Republican Attorney General Dave Yost filed a lawsuit in May 2024 in the Ohio Court of Common Pleas in Columbus to remove Steen and Fichtenbaum from the STRS board. Yost alleged the board members participated in a “scheme” to steer contracts that could benefit them.
Ohio public employees can participate in different pension programs. The programs include the STRS for public school system teachers in the Buckeye State, the School Employees Retirement System for public school employees who aren’t teachers, and the Public Employees Retirement System for public employees paid in any part by the state.
Concerns about the STRS emerged after an anonymous whistleblower sent Republican Gov. Mike DeWine a 14-page memo in May 2024. According to reports, the document alleged that a scandal was emerging within the teacher retirement system.
The concern centers on their relationship with QED, an investment firm co-founded by Metcalf and J.D. Tremmel.
Meanwhile, a recent article, “Retirement at Risk: The Political Economy of Public Pension Governance,” published in the Journal of New Finance, revealed “a systematic overreporting of investment returns relative to audited returns, with performance bonuses based on these reported returns.”
“…Although annual discrepancies appear modest in percentage terms, their cumulative effect is substantial,” the article revealed. “When translated into dollar values, the overstatement of STRS’s reported returns between 2003 and 2022 totals approximately $9.3 billion.”
The article noted that the state’s other public sector pension system, the Public Employees Retirement System, “ties management bonuses to audited returns and exhibited a pattern of deviation of reported returns versus audited returns consistent with random error.”
State Rep. Adam Bird, R-New Richmond, questioned the article’s conclusion and said that state officials planned to meet with the article’s authors to learn more.
“At this time, the Ohio Retirement Study Council staff was unable to verify the conclusions presented in ‘Retirement at Risk: The Political Economy of Public Pension Governance’ and was unable to confirm or reproduce the same results,” Bird said in a statement.
“We will be attempting to coordinate a meeting between our ORSC staff and the authors of the article,” Bird added. “It is important to verify the accuracy of the data in the report before making any further comment or taking action.”
