In the wake of reports that Ohio Governor John R. Kasich's long-time friend and campaign contributor Mark Kvamme succeeded in inking a $50 million deal with The Ohio State University that could net him millions in fees and operating expenses and a handsome share of future profits, some inquiring minds at Capital Square in Columbus are asking if two powerful hometown Titans helped the deal happen because they are investors in Drive Capital, LLC, Kvamme's company whose focus is to find and invest in Midwest-based IT, financial services, consumer and health-care services companies.
Kasich promised reform if elected, especially when it came to creating jobs since the state had lost so many of them during the Great Recession of 2008-08. His first order of business was to create JobsOhio, a privatized, nonprofit economic development entity he said was needed to act at the "speed of business" so business could create jobs in Ohio. Mark Kvamme, who has known Kasich for years and who has shown his fidelity over the years by showering his political pal with campaign contributions, became Kasich's Silicon Valley spokesman in Ohio.
In the course of just three years, from appearing beside Gov. Kasich in early 2011 to push JobsOhio quickly through a friendly GOP-controlled legislature to today when S.E.C. documents show he and his Drive Capital co-founder Christopher Olsen have raised 60 percent or $181 million of their goal of $300 million goal, Mark Kvamme has transitioned from first being Kasich's jobs czar, where he worked out of the Governor's office, to relocating to JobsOhio, where he served as board member and then president and chief investment officer until last year, when he departed from JobsOhio and joined partner and former Sequoia Capital partner Christopher Olsen to create the venture-capital firm.
Documents released Monday showing what may have been the terms and conditions of a sweetheart deal OSU's former President E. Gordon Gee, a friend of Kasich and Kvamme and a JobsOhio board member, handed to Kvamme have some Capital Square insiders wondering if Kvamme got help from the Wolfe family, owners of The Columbus Dispatch newspaper among other media properties, and Columbus billionaire Les Wexner, founder of The Limited and former OSU board member and mega donor to the university, two power brokers whose support or opposition can open or close doors in a blink?
The Columbus-based group behind the release of documents acquired through a public record request to Ohio Public Employees Retirement System believes then President Gee was the key to the university investing $50 million with Kvamme's venture capital firm. If the deal OSU entered into is similar to a deal from Kvamme OPERS turned down, Kvamme and Olsen stand to earn $9 million in fees, $500,000 in expenses and 20 percent of future profits from Ohio State’s investment.
Influence peddling is nothing new in Ohio. From the President Warren G. Harding's now famous "Ohio Gang" of the 1920s that ransacked Washington and got itself embroiled in the famous Teapot Dome affair to the Ohio Bureau of Workers' Compensation in 2005, under Republican Gov. Robert Taft, which doled out millions to a big GOP donor whose business centered on selling rare coins, access to public officials in order to influence their decision making is as necessary to making deals like Kvamme's happen as oil and gas are to making an automobile run.
When a spokesman for Gov. Kasich was asked if Kvamme's relationship with the governor helped him with the deal, Rob Nichols said that is "absolutely absurd."
At the request of Gov. Kasich, the Ohio legislature insulated JobsOhio from public scrutiny by exempting it from public records laws. But as some but not all media wake up to the great fortune Kvamme's had with OSU, some Capital Squire insiders say that great fortune was facilitated to some degree by Wexner and the Wolfes, who are suspected of being investors in Drive Capital.
Speculators point to the fact that the Columbus Dispatch, which endorsed Kasich in 2010 and provided him and his administration constant positive coverage ever since, has editorialized for the secrecy provisions of JobsOhio, which others, notably Kasich's Democratic challenger next year, have been criticized as unnecessary and fraught with potential conflicts of interest.
It was noticed that at the media conference Monday, Channel 10, the Columbus TV station owned by the Wolfe family, publishers of the hometown Dispatch, did not show up while Columbus' other two TV stations did.
In its reporting on the story, The Columbus Dispatch did not disclose whether its owner is invested in Drive Capital. The Dispatch acted similarly evasive when, as an investor in the Arena District where Columbus' Hollywood Casino was originally to be built, it begrudgingly acknowledged in its reports opposing locating the casino there that it had an interest in the outcome. Not only did the legacy newspaper, which has since downsized its product, argue against the original location of the Penn National casino, but its former president chaired a community committee that opposed the gambling facility being built in downtown Columbus. The casino eventually capitulated and relocated to west Columbus.
OSU's response to queries for comment on the deal was short and brisk. "It is not appropriate for us to comment on OPERS decisions," a spokes said, adding, "We do affirm our decision that Ohio State has a legal obligation under the Ohio Uniform Trade Secrets Act (R.C. 1333.61, et .) not to disclose trade secrets."
WKSU, which covered the story Monday, quoted the leader of ProgressOhio saying all he knew is "that the way the revolving door works, he [Kvamme] has certainly cashed in to the tune of $9 million, it appears, that those relationships definitely paid off for Mark Kvamme and his partner Chris Olsen."
Reports say that the public records requested from Ohio State were so heavily redacted that it is difficult to learn the specifics of the Kvamme deal, although the Drive Capital document OPERS provided offers a glimpse into what Kvamme's deal to OSU, which has chosen to keep matters in the dark to date.
On hand for the Monday media event was Catherine Turcer of Common Cause Ohio, an established Capital Square advocate for good and open government. Turner has seen this alleged influence-peddling movie before.
"We all know we have this history of taxpayer money being misused," she told the Toledo Blade, the newspaper whose series on corruption at BWC led to the imprisonment of rare coin dealer Tom Noe and contributed to Ohio voters electing Democrats in 2006 to four of the state's five statewide offices.
"We don’t have to go back very far to think about Coingate. 2005 is not a distant memory for most of us. If we had not had good open-records [law], we would not have been able to figure out what was going on and that, in fact, our public dollars were being misused," Turner observed.
Meanwhile, the black box that is JobsOhio has Ohio 44th in the nation in job creation. Kasich and Kvamme promised to move the jobs needle, which they have, but it's going higher not lower.
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