COLUMBUS, Ohio – A chaos-filled Friday at the retired teachers’ pension board has left two people without jobs and plenty more concerns about violation of ethics laws.
It was the expected final day for the State Teachers Retirement System (STRS) board member Wade Steen, but the unexpected dismissal of Executive Director Bill Neville. The day also included an attempt to silence and condemn STRS staff, which failed. As if that wasn’t enough – a document I obtained has led to renewed calls for a state investigation into possible ethical violations.
A (somewhat long) recap
The State Teachers Retirement System (STRS) is in chaos. In summary, there has been constant fighting, two board resignations and allegations of both a public corruption scheme and mishandling of funds.
In May, Yost filed a lawsuit to remove two members of STRS, stating they are participating in a contract steering “scheme” that could directly benefit them. Yost started the investigation after documents prepared by STRS employees alleged that Wade Steen and Chair Rudy Fichtenbaum have been doing the bidding of investment firm QED.
We have been covering this controversy from the beginning, including a dozen recent stories dealing with the latest problems around the alleged corruption plot. To get a larger overview of the situation, we did a Q&A with viewers and readers.
QED was started by former Deputy Treasurer Seth Metcalf and consultant Jonathan (JD) Tremmel. In 2020, they set their eyes on STRS, according to the main 14-page memo.
The documents claim that they – despite having no clients and no track record – tried to convince STRS members to partner with them.
They couldn’t impress the board members, mainly because of their lack of experience and also because QED was not registered as a broker-dealer or investment adviser. The men also didn’t own the technology to “facilitate the strategy,” the documents say.
Steen and Fichtenbaum had allegedly been bidding continuously, pitching QED’s direct documents to board members and proclaiming the company’s talking points to other staff.
The pair should be removed because they broke their fiduciary duties of care, loyalty and trust when “colluding” with QED, according to Yost’s case.
Click here to learn more about the lawsuit.
This fight began from a debate on how STRS should invest money – through the current system of actively managed funds versus an index fund. Active funds try to outperform the stock market, have more advisors and typically cost more. Index funds perform with the stock market, are seen as more passive, and typically cost less.
In short, “reformers” want to switch to index funding, while “status quo” individuals want to keep actively managing the funds. Recent elections have allowed the “reform-minded” members to have a majority of the board.
Reformers want a cost-of-living adjustment, or COLA. The COLAs were suspended for more than 150,000 retired Ohio teachers for five years starting in 2017. They were reinstated, but there has been a suspension of increases, significant for retirees who need this money and are dealing with inflation.
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The faction also believes that this is a “sham” investigation meant to prevent democratically elected individuals from choosing what they want to do with their pension money.
Steen and Fichtenbaum have repeatedly brought up how quick the turnaround time was between Yost receiving the memo and filing the civil suit. It is unclear the total timeline, but the documents were received by government officials in early May. Yost said he was investigating on May 9, and by May 14, a lawsuit had been filed in Franklin County Court of Common Pleas.
In late Aug., Yost filed a slew of subpoenas against QED and others allegedly involved in this scheme.
The same month, QED spoke out to us for the first time and so did the AG.
Following that interview, Fichtenbaum did an interview to defend himself. In this one-on-one interview, Rudy Fichtenbaum explained his side – and why he is still considering a deal with the investment firm at the center of the scandal.
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A door closed
It is the end of an era for STRS.
“It’s bittersweet – I’m not going to be able to be their voice anymore, so I’m going to miss that,” Steen said.
During the full-day long meeting, retirees celebrated Steen – bringing him two separate cakes, balloons, cards and picture frames of him.
This was a disappointing day for retired teachers like Robin Rayfield.
“The best friend any teacher ever had is Wade Steen,” Rayfield told me.
Steen was Gov. Mike DeWine’s appointment to the board, but now his chaotic term is finished.
The controversial figurehead had become the leader of the reformers.
After growing wary of Steen’s relationship with QED, the governor removed Steen from the board in 2023. Steen sued and a judge reinstated his position in April of 2024.
Then came the whistleblower documents and Yost’s lawsuit.
“Anytime there’s an allegation that a public contract is being steered in a particular direction, that’s concerning,” Yost told me. “It’s not only illegal, but it points to a larger corruption.”
But on Friday, the reformers tried to stand up for their departing member.
Board member Julie Sellers proposed a vote of no confidence for the “direction” that the STRS staff members were going, arguing that they lied to try to get Steen in trouble because they were corrupt.
A debate ensued, with non-reform member Carol Correthers fighting back against her – saying that this is absolutely not what the board should be doing. She argued that this would prevent actual good changes from taking place.
Other members weighed in, with member Pat Davidson trying to take a “middle-ground” approach.
The proposal ended up failing since it had only five votes for it when it needed a supermajority. Reformer Davidson voted against it and newly appointed member Michael Harkness abstained – to groans in the audience.
Although it didn’t pass, Rayfield said it shows how the new board will continue Steen’s mission – while his organization handles the legal battle.
Rayfield runs the Ohio Retirement for Teachers Association (ORTA) and he said he and Steen put a fund together in 2023 to pay his legal fees to fight the governor.
“I communicated with Wade,” Rayfield said in an interview with me in May. “I said, ‘Well, do you wanna fight this?’ And he goes, ‘Let me think about it because fighting the governor is a tough thing to do…’ But nonetheless, we stood with Wade and I said, 'Well, ORTA could potentially help you fight this.”
They ended up raising more than $80,000 for Steen.
Case Western Reserve business law professor Eric Chaffee explained that this raises red flags.
“If you have certain benefits being paid to an individual, who’s supposed to represent a complete group of people, from a segment of that group of people, it creates concerns that there are going to be policies that favor them,” Chaffee said.
It just got worse, the expert said.
I obtained thank you cards that Steen wrote to pensioners for donating to his legal fund, adding that the “generous financial contribution” will allow him to “deliver” for teachers.
“The fact that there are thank you notes that have been issued, that can be viewed as an admission on the part of this individual that, in fact, these gifts, this provision of legal services, did in fact occur and this individual was actually aware of it,” the expert said.
I asked Steen about this, and he said he didn’t do anything illegal.
“I’m not worried about them saying that because I know that I haven’t, as I stated, I’ve never taken anything,” the former board member said.
But the money didn’t stop at Steen’s first lawsuit.
“We’re doing the same for Rudy because he’s under the same attack,” Rayfield said.
This means both Steen and Fichtenbaum, the chair, are using donations from a section of members to pay their legal fees.
“I think that was their sign to me that what I was doing was right,” Steen said, defending the donations he received and continues to receive.
Concerns from STRS staff about the legal fund have been reported to the state ethics commission.
“They’re going to say this is a conflict of interest,” Steen laughed as he grabbed a plate of his celebration cake.
Rayfield has argued that the real ethical problem is with the former executive director. Neville had been on paid leave for nearly a year while a law firm appointed by Yost investigated allegations of violent outbursts and sexually explicit language.
Last February, the law firm found that many of the claims were unsubstantiated; however, he did have a record of raising his voice, according to the firm.
However, in a near-unanimous vote, the board chose to move forward with an end-of-employment agreement. Steen abstained from voting.
I requested the agreement, but STRS said it hadn’t been signed yet, so their legal team did not have it.
What’s next?
Now that Steen’s term is over, DeWine must appoint a new member.
However, it is likely the reformer isn’t gone for good.
Previously just whispers, a pensioner put it out into the open Friday that she and the other reformers wish Steen would be the next executive director of STRS.
If that were to happen, that would likely lead to even more infighting. Reformers say that some chaos isn’t such a bad thing.
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