Ohio – Compliance Building

Corporate Compliance Fraud in Ohio

The Cleveland Plain Dealer is reporting a fraud that uses the cover of corporate compliance: ‘Corporate Compliance’ form not from any government agency. According to columnist Sheryl Harris, businesses are receiving official-looking mailings with a form requesting a $150 fee to comply with the annual meetings under state law.

As the story points out, not all companies need to have an annual meeting and even if they did, filling out a form is not a sufficient replacement for an annual meeting.

The Ohio Secretary of State has posted an alert on her website: Alert: Annual Minutes Disclosure Solicitation. She has also published an example of the fraudulent mailing (.pdf).

As with the fraudulent SEC Examiners stories we are hearing about, it is sad to see fraudsters using compliance to dupe their marks.

Thanks to Corporate Compliance Insights for pointing out this story:Attention: Beware of Corporate Compliance Form Hoax Circulating in Ohio.

Ohio’s Pay-To-Play Law

On January 2, 2007, then Ohio Governor Taft signed into law Substitute House Bill 694, enacting changes to Ohio’s pay-to-play laws. The new law places restrictions on many political contributors who currently hold, or are competing for, a contract with the state or local government. The new law also extends these prohibitions to many local political subdivisions that were not covered under previous versions of the law, including county commissioners, city council members, township trustees, school board members, and other local boards, commissions, task/ forces, and other authorities.

The law is currently subject to litigation.

Ohio’s pay-to-play laws are primarily in R.C. 3517.13, are triggered when

a partner or owner of an LLC, LLP or partnership, or an individual who owns 20% or more of the shares of a corporation contributes over $1,000; or
if those business owners, their spouses, children, and the company’s affiliated political action committee (“PAC”) cumulatively contribute over $2,000 over the course of two years.

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Ohio Retirement System Lobbyist

map_ohio Ohio requires registration and annual filings if you are a Retirement System Lobbyist. See Ohio Revised Code §101.90. According to the law, it seems that any replacement agent hired by an investment fund is subject to registration if that agent discussed an investment offering with the Ohio retirement system.

Retirement system lobbyist means any person engaged to influence retirement system decisions or to conduct retirement system lobbying activity as one of the person’s main purposes on a regular and substantial basis. Retirement system lobbyist does not include an elected or appointed officer or employee of a federal or state agency, or political subdivision who attempts to influence or affect retirement system decisions in a fiduciary capacity as a representative of the officer’s or employee’s agency or political subdivision.

Engaged means to make any arrangement whereby an individual is employed or retained for compensation to act for or on behalf of an employer to actively advocate.

Compensation means a salary, gift, payment, benefit, subscription, loan, advance, reimbursement, or deposit of money or anything of value; or a contract, promise, or agreement, whether or not legally enforceable, to make compensation.

Employer means any person who, directly or indirectly, engages a retirement system lobbyist.

Retirement System Decisions means a decision of a retirement system regarding the investment of retirement system funds. Retirement system decision also includes the decision by a board of a retirement system to award a contract to an agent or an investment manager Retirement system lobbying activity means contacts made to promote, oppose, reward, or otherwise influence the outcome of a retirement system decision by direct communication with a member of a board of a state retirement system, a state retirement system investment official, or an employee of a state retirement system whose position involves substantial and material exercise of discretion in the investment of retirement system funds.

You are required to submit a report three times a year (due May 31, September 30 and January 31) using Form 1010.93 AGT (.pdf) The Office of the Legislative Inspector General launched the Ohio Lobbying Activity Center (OLAC). The OLAC is an online filing system that allows registered Agents/Lobbyists and their Employers to electronically register their lobbying engagements and file their tri-annual Activity and Expenditure Reports.

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