COLUMBUS — Ohio Attorney General Dave Yost has subpoenaed a series of players connected to a controversial investment pitch to the state's $95 billion pension fund for teachers.
The subpoenas focus, in particular, on their communications with current and former board members.
The subjects of those subpoenas, including one to a former board member, are expected to appear at the attorney general's office in Columbus on Sept. 13 and are to come bearing documents, business plans, and communications with STRS board and staff.
Mr. Yost has sued in Franklin County Common Pleas Court to have current Chairman Rudy Fichtenbaum of Clayton and member Wade Steen of Columbus removed from the board. The lawsuit alleges they've violated their fiduciary duties to one of the largest public pension funds in the nation.
The subpoenas went out after the court at least temporarily blocked an attempt by the two defendants to depose Mr. Yost himself.
The attorney general's lawsuit contends the two board members sought to invest as much as 70 percent of STRS assets, about $65 billion, with QED, a “shell company that lacks any indicia of legitimacy and has backdoor ties to Steen and Fichtenbaum themselves.”
According to court records, subpoenas went out to:
● Robert Stein of Strongsville, a former STRS board member and chairman who, the lawsuit contends, first directed STRS staff to connect with QED in 2020.
● James (Seth) Metcalf of Columbus, a former state deputy treasurer and a founder of and registered lobbyist for QED Systemic Solutions.
● Jonathan Tremmel of Dublin, described by the lawsuit as a "former professional colleague and/or acquaintance of Steen" who formed QED Technologies, LLC in 2019.
● QED Systemic Solutions of Columbus.
● QED Management LLC of North Canton.
● QED Technologies LLC of Dublin, in care of Mr. Tremmel.
● OhioAI LLC of North Canton, organized by Mr. Metcalf in 2020.
None of the subpoena subjects are named as defendants in the suit against Mr. Fichtenbaum and Mr. Steen.
In addition to the two sitting members of the board, the subpoenas specifically seek documents and communications pertaining to former board members Mr. Stein, Robert McFee, Yoel Mayerfeld, Scott Roulston, and Rita Walters.
STRS is the second-largest public employee pension fund in Ohio with about $95 billion in assets and about 540,000 active, inactive, and retired members as of June 30.
All of this relates to ongoing turmoil on the STRS board that led to Mr. Steen, Gov. Mike DeWine's investment expert appointee, being removed by the governor last year. The courts later found the move to be illegal and ordered Mr. Steen's return in April.
Mr. Steen is part of a new 6-5 majority that has allied with retired teachers challenging board decisions that eliminated their annual cost-of-living adjustments and paid performance bonuses to the fund's in-house investment staff.
STRS reported a 10.5 percent return on investment in the fiscal year that ended on June 30. The fund has experienced an average annual return of 8.8 percent over the last five years. The fund said that performance ranked it among the top 8 percent in the nation.
The QED investment proposal was pitched as a potential way to boost investment performance and help the fund pay for permanent restoration of the COLA.
STRS staff warned against the investment, arguing that QED had no track record or existing clients, lacked the technology to carry out the investment, and could have opened STRS to regulatory questions.
Mr. Steen and Mr. Fichtenbaum sought to subpoena Mr. Yost personally to question him about the facts underlying the lawsuit's allegations. The suit was filed soon after the 10th District Court of Appeals in Columbus ordered Mr. Steen's reinstatement to the board.
It also came shortly after Mr. DeWine, who lost that case, had forwarded to Mr. Yost a 14-page anonymous memo containing allegations from STRS staff.
That memo raised concerns about the QED proposal and and alleged an attempted "hostile takeover" of the fund by a group of retired teachers coordinating to replace board members and undermine staff.
Both defendants have denied wrongdoing.
In blocking the deposition of Mr. Yost, Franklin Judge Karen Held Phipps determined that questions about facts in the case could be acquired through the normal evidence discovery process.
Mr. Steen will leave the board next month as his term expires, likely shifting the majority again as Mr. DeWine appoints his replacement.
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