Documents recovered in a public records search indicate that the former director of Ohio's Environmental Protection Agency [OPEA], Scott Nally, who Gov. John Kasich appointed in 2011 and who resigned suddenly in early January of 2014, benefited from the largesse of long-time Kasich venture capitalist friend, campaign contributor and mastermind partner behind JobsOhio, Mark Kvamme.
Kvamme has been a close confidant and political benefactor to Kasich for about 18 years, from the time they met in the mid-1990s through Kasich's shapeshifting from nine-term Ohio congressman to Wall Street banker and Fox Channel political talkshow host following his flop as GOP presidential hopeful in 2000, to the Buckeye State's so-called "comeback" governor running for a second and final term.
Kvamme appears to have opened his house in Sunbury free of charge to Nally, who on occasion also rode along gratis on the former Silicon Valley venture capital guru's private jet to a retreat in Montana.
In a surprise announcement just one week into the new year, Gov. Kasich announced Nally was out as OPEA director and Craig Butler would replace him. No reason was given for Nally's resignation at the time other than he was leaving "to pursue other opportunities." Gov. Kasich, running for a second term this year, wished the Hoosier well in his next endeavor. "Today, Ohio has some of the strongest environmental regulations in the nation, but they are also grounded in common sense," Kasich said in a brief statement. He added, "I value his counsel and will continue to rely on it."
Kvamme's name appears on Ohio Ethics Commission Financial Disclosure Statements Nally was required by law to fill out. Listed as a "source of income" on the form filed March 19th of this year, Mark Kvamme's specific contribution is not detailed since that level of disclosure is not required by law. But reliable sources indicate Nally bunked down at the Sunbury home for an undisclosed amount of time until around March 5th, months have he resigned his OEPA post, when county auditor information shows he acquired a $550,000 Parkview condo at Goodale Park in Columbus.
Gov. Kasich has declared Ohio's environmental regulations good, but critics allege that when Kvamme was directing JobsOhio, the private development group pressured OEPA to give oil and gas players what they wanted, effectively relinquishing regulation writing to the burgeoning oil and shale gas industries, which have contributed significantly to jobs created on Kasich's watch. Some government watchers suspect that Kvamme's largesse to Nally were merely attempts to co-opt him, even at the expense of clean air and water for Ohioans
And while Kvamme used his private jet to whisk state agency leaders like Nally off to Montana, it appears he also took Geoffrey S. Chatas, who at the time was appointed senior vice president for Business and Finance and chief financial officer of The Ohio State University [OSU], on a recreation sojourn down to Nashville that played into a pitch to him and former OSU president Gordon Gee to invest $50 million with Drive Capital, the two-person venture capital firm run by Kvamme and his partner Chris Olsen, who last October touted the opportunity Drive Capital represented to OSU.
In his email to Jonathan Hook at OSU, Olsen said the Midwest as a region may be out of favor with some, but he and Kvamme see it as a place with the "raw ingredients to build massive companies that will generate returns commensurate with the top venture funds in other successful regions." Olsen goes on to say that OSU "would be an ideal limited partner for us, and we would love to work with you guys to achieve this vision in the coming years and decades."
Chatas, who came to OSU from JP Morgan Asset Management where he was a managing director after his post as chief financial officer post at Progress Energy and American Electric Power before that, also benefited with a seat on Kvamme's private jet.
Chatas, who moved into his current position of Senior Vice President for Optimization and Integration and Medical Center Chief Transformation Officer on March 1, earned an impressive $683,153 salary in 2013 as CFO, according to published reports, and was paid an additional bonus of $97,647, representing a payment of a bonus earned in 2012. OSU's campus newspaper, The Lantern, reported that Chatas earned nearly 15 percent of his base pay with an additional $100,464 bonus. But in Chatas' annual performance review from last September, interim OSU president at the time, Joseph Alutto, reminded that Chatas needed to be aware of his "leadership shadow."
"You have taken on an increased level of responsibility that requires great attention to detail and thoughtful leadership," Alutto wrote, as reported by The Lantern. He went on to say that Chatas needs to "remove barriers and create a culture where people want to work for you." Alutto, who was finally replaced at the end of January by OSU's new president Dr. Michael Drake, advised Chatas to not put pressure on his team "without taking the time to understand their situations and the impact on the university." For Chatas to do so, Alutto said in his review, could "cripple the university" in the long term.
Last November CGE reported on Drive Capital inking a $50 million deal with OSU that could net the firm millions in fees and operating expenses and a handsome share of future profits. Gov. Kasich's first order of business was to create JobsOhio, a privatized, nonprofit economic development entity he said was critical because it would act at the "speed of business" so business could create jobs in Ohio. Kvamme 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 hundreds of millions, 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 a board member with other board members including Dr. Gee and then as JobsOhio's president and chief investment officer until last year, when he departed and joined Olsen to create drive Capital.
Common sense speculation leads to the conclusion that Kvamme got help from the Wolfe family, big backers of Gov. Kasich who own The Columbus Dispatch newspaper among other media properties, and Columbus retail billionaire Les Wexner, founder of The Limited and an OSU board member who has showered the mega university with mega donations. Gee and Wexner are two power brokers whose support or opposition can open or close doors in a blink. When Kasich spokesman Rob Nichols was asked if Kvamme's relationship with the governor helped him with the $50 million OSU deal, he said declared that assertion "absolutely absurd." The Columbus Dispatch has steered away from any serious reporting on Drive Capital and any investigative reporting on whether Kvamme used his insider relationship to Gov. Kasich and with his close friends and campaign backers to open doors that would to others without these connections be closed. It remains to be learned whether the Wolfe Family, through whatever guises, is an investor in Drive Capital.
Through a spokesman, OSU responded cryptically to requests to confirm whether Drive Capital's pitch was similar to one it made to the Ohio Public Employees Retirement Systems, which became public in a document that surfaced that appears to be in an investment presentation. "It is not appropriate for us to comment on OPERS decisions," OSU said. "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." According to analysis of Drive Capital's pitch to OPERS, it stands to make $9 million from it's $50 million deal with OSU, which was made possible by the authority OSU's board of trustees vested in President Gordon Gee at the time to unilaterally make such a decision. Gee has since left OSU as president and moved onto president of West Virginia University.
Questions remain about whether Nally's residency at Kvamme's Sunbury home constitutes taxable income, and why he left once he was no longer leading OPEA? In addition to Nally and Chatas, who else has winged it to some far off place on Kvamme's jet? When John Kasich was sworn-in as governor, he got the greatest gift of all, a friendly majority Republican legislature that aside from tinkering with many of his proposals on the edges, has delivered to him most of his policies—most especially his private economic jet JobsOhio—on a silver plate. Mark Kvamme entered the public stage as an economic advisor and then as a JobsOhio board member. When Kvamme left the public arena for the private sector, he had all the connections he needed to tap friendly benefactors like Gee at OSU, Wexner at The Limited and the Wolfe Family for large amounts of investment dollars.
Kvamme recognized a kindred bluntness in Kasich when they first met in 1996, CNNMoney observed in a report that fleshed out their early relationship. When an advertising firm Kvamme was a partner in went public in 1995, his stake was valued at $47.7 million after the offering. CNNMoney writer Tory Newmyer said Kvamme recalls the first words Kasich, then chair of the House Budget Committee, said to him on a balcony of the U.S. Capitol: "You're from Silicon Valley. Are you rich?" Kvamme raised money and made introductions for Kasich during following his flop on the GOP presidential stage three years later.
Kasich and Kvamme are of the same mindset when it comes to what government can do to help business. As Newmyer wrote, Kvamme found a willing leader who would buy into his view of what venture capitalists could achieve working with an unfettered government that privatized what was previously a public agency. Working at the speed of business, not the speed of bureauocracy, as Kvamme says is the case when working for old-style government where the public has rights to look in, ask questions and demand accountability through elected representatives.
The good governor, who said he would headup JobsOhio when he proposed it but who had to back down when the Ohio Constitution prohibited it, said his attitude is that he, Kvamme and a select ring of insiders will "do what we as a group decide and what the governor thinks is in the best interest of the people of the state." For someone who studied French history in college, Kvamme sides with top-down rule compared bottom-up. "We're not a democracy, we're a republic," he said in Newmyer's piece. He believes elected leaders should have a wide berth to set the course. "Mob rule doesn't work," he said. "Just look at the government by referendum in California." Meanwhile, California has a Democratic governor and legislature, and Californians voted to raise their income taxes to pay for the state's previous budget excesses. Kasich claims he balanced Ohio's budget without raising income taxes, but he did so by raising use taxes and withholding billions in state aide to local governments and schools.
Come fly me may have been what Kvamme's invitation invited Nally and Chatas and others to do, but whether his private jet winged them to Nashville or Montana or elsewhere, the real destination was always to cash-cow a fat bank account. Or maybe in the case of Nally, as some suggest happened, the real purpose to was give coal companies special treatment. Which Nally may not have done so robotically enough, which may be why he got unceremoniously dumped so he could pursue other opportunities.
Gov. Kasich enjoys a comfortable lead over his Democratic challenger Ed FitzGerald now, and is expected to win a second term in November, barring a miracle where the powerful but slumbeirng SB5 coalition of 2011 awakens and votes.
Gov. Kasich's Press Secretary, Rob Nichols, responded to this report with one of his now patented humor-tipped barbs. "This is the dumbest blog post I've ever read in my entire life," he volunteered via pubic email. Nichols obviously got a laugh out of it. But when he had a chance to flesh out what hides in an Ohio Ethic Commission document, setting the record straight by offering a true explanation for what Kvamme gifted to Nally, and why whatever it was that was a gift wasn't taxable income, he remained silent.