CLEVELAND — Ohio Attorney General Dave Yost is looking into allegations that current and former members of the State Teachers Retirement System (STRS) are involved with an attempted "hostile takeover" of the board by a private equity firm, his office announced Thursday.
The news comes after Gov. Mike DeWine announced Wednesday that a consulting firm had severed its contract with the retirement board, calling the news "a huge red flag, calling into question how STRS is operating and providing oversight."
Yost's office on Thursday released a document that DeWine referenced in his Wednesday statement, including assertions that STRS board members Wade Steen and Rudy Fichtenbaum, along with former member Robert Stein, have been involved in a years-long effort to convince the STRS to do business with a private investment company. The firm, QED, led by Seth Metcalf and Jonathan Tremmel had previously had proposals dating as far back as 2020 rejected by the board.
“Pension board members are required by law to act in the best interest of the teachers whose money they invest,” Yost said. “I will take whatever action is necessary to protect teachers against private interests attempting to hijack their retirement accounts.”
On Friday, Ohio Secretary of State Frank LaRose issued a statement saying he has directed his office's public integrity division to "expand our ongoing investigation into potential STRS-related campaign finance violations, which were brought to our attention several weeks ago by a tip from a concerned citizen."
"I believe the Governor’s referral is in part specific to that investigation, but if we find additional allegations or evidence of wrongdoing, we’ll pursue it and take any appropriate action under the law,” LaRose said.
The "Summary of Concerns" shared by Yost's office, which does have a listed author, alleges that QED presented the STRS an investment proposal requesting billions of board funds to be allocated to the firm to partner on AI trading technology that the firm purported would fix STRS' "problems."
Members of the STRS' investment committee, after engaging with industry experts, rejected a QED proposal in 2021 after the consulting firm Cliffwater cited QED's lack of prior investment experience or clients. Additionally, STRS members claimed QED's proposal relied on incorrect representations of STRS' finances.
The document further alleges that in the years since the board initially rejected QED's proposals, the board has been targeted with attacks by individuals associated with QED and the Ohio Retired Teachers Association.
“This isn't monopoly money; it’s hard-earned income that belongs to teachers,” Yost said. “There is a responsibility to act in their best interests.”
The document speculates the board members could have had "other incentives" to promote the investment firm, claiming "QED would secure a lucrative arrangement with STRS, which would make millions for those connected to it, and ORTA members would receive [cost of living adjustments], regardless of their impact on the system."
"To be clear, board candidates are free to campaign and adopt positions as they see fit," the document states. "The concern is whether QED and ORTA are working in concert to support candidates and board members who will further their agenda, and the conflicts such actions create as QED continues to pitch its services behind the scenes to select board members."
Steen was dismissed from the STRS by DeWine last year, with the governor at the time citing Steen's lack of attendance at meetings. The document released by Yost's office also states that DeWine was also "aware of Steen's role in actively promoting QED." Steen was reinstated in 2024 after the Ohio 10th District Court of Appeals determined his firing was unlawful. The document states that ORTA raised $40,000 to help cover Steen's legal fees in the case.
You can read the full anonymous memo in the document reader below:
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