State Street Corp agreed to pay $12 million to settle fraud allegations relating to a pay-to-play scheme to win Ohio pension fund contracts. The company’s former head of public funds group Vincent DeBaggis, who was also charged as part of the scheme, settled for $274,000.
The Securities and Exchange Commission said that the group struck a deal to make payments and contributions to Ohio’s then deputy-treasurer Amer Ahmed in exchange for being awarded three contracts. Ahmed was convicted of misconduct.
Robert Crowe, the company’s outside lobbyist who was also charged, is contesting the charges.
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DeBaggis allegedly signed a lobbying agreement with immigration lawyer Mohamed Noure Alo, who had no lobbying experience, understanding he would share part of his $160,000 fee with Ahmad.
The SEC said DeBaggis also worked with Crowe to contribute to Ahmad’s election campaign and alleged that Crowe made $16,000 worth of campaign contributions from his own bank account, alongside reimbursing others for donations to the candidate.
“The SEC’s allegations regarding Mr. Crowe are patently untrue,” Crowe’s attorney, Arthur McMahon, said in a statement provided to Reuters. “Moreover, nothing the SEC has alleged would constitute securities fraud, a breach of the SEC’s pay-to-play rules or a violation of any other rule the SEC has authority to enforce.”
A spokeswoman for State Street on Thursday acknowledged that the activity described in the SEC settlement “violated State Street’s standard of conduct” and said its management was not aware of the scheme at the time.
The bank added that it fired the employee and in 2012 eliminated its practice of hiring consultants to help solicit asset servicing agreements for state retirement plans.
Ohio’s main retirement system, called OPERS, is the 11th largest public pension in the country with $91.2 billion in assets at the end of 2014.
Photo by David Grant via Flickr CC License
