Federal authorities are trying to build a public corruption case against former Ohio House speaker Cliff Rosenberger and three payday lending industry representatives, according to a search warrant and subpoena obtained exclusively by this newspaper.
The search and seizure warrant sent to the Ohio House on May 22 lists three boxes and a thumb drive, which federal prosecutors believed contain evidence of extortion, conspiracy to commit extortion, attempt to commit extortion and bribery, according to the documents.
Ohio House Chief Legal Counsel Mike Lenzo turned over the boxes and thumb drive to federal investigators May 23 — the same day FBI agents raided Rosenberger’s home and storage unit in Clinton County.
The seven-page warrant lists as targets of investigation: Rosenberger, payday lending lobbyists Stephen D. Dimon, Jr. and Leslie R. Gaines, and Advance America executive Carol Stewart, and unnamed others.
It asks for records of communications between Rosenberger, Stewart, Dimon, Gaines and others concerning: “payday lending legislation; evidence of payments, kickbacks, bribes or other benefits such as payment of travel-related expenses…”
“The documents released today, which pertain to Cliff Rosenberger, are in response to the various records requests issued by members of the news media. We believe they provide further insight and answer questions regarding the federal investigation on this matter,” House Speaker Ryan Smith, R-Bidwell, said in a statement today.
Federal authorities also seized a personal computer left by Rosenberger at the Ohio House Republican Organizational Committee – the campaign arm of the House GOP. The committee received a search warrant May 22.
Rosenberger’s attorney David Axelrod says “Rosenberger has nothing to hide.”
“We’ve learned nothing today that we haven’t known for months. Search warrants may be interesting to read, but aren’t necessarily good indicators of what evidence actually exists,” Axelrod said. “They are one-sided documents that are often little more than wish lists of evidence for investigators and prosecutors, and the threshold for inclusion in a search warrant is very low. We caution against reading too much into the mere existence of this search warrant.“
While Rosenberger was speaker, a payday lending reform bill — House Bill 123 — was opposed by the industry and stalled in the Ohio House.
The warrant also asks for any records relating to official action taken by Rosenberger connected to those who helped pay for or sponsor Rosenberger’s travel.
The warrant seeks material that may document violations of the federal Travel Act, which has been on the books since 1961. The Travel Act makes it illegal to travel state to state or internationally with the intent of promoting or facilitating unlawful activity, including extortion or bribery.
The documents show that a federal grand jury is impaneled in Cincinnati to hear evidence on the case. U.S. Magistrate Judge Karen L. Litkovitz, appointed to the bench in 2010, signed the search warrant. No charges have been filed against anyone.
Rosenberger, a Republican, has said that all his actions as speaker were lawful and ethical.
Dimon is a Columbus-based independent lobbyist who represents several clients including Select Management Resources, an auto title lender based in Georgia. Gaines has been a lobbyist for Select Management Resources in South Carolina. Stewart is a senior vice president for Advance America, another payday lender.
The Dayton Daily News reported in April that Rosenberger made three international trips with Stewart over the course of two years: China, London and Normandy, France. The trips were sponsored by national organizations and funded by corporate interests.
The subpoena for state records issued was to House Chief Administrative Officer Kim Flasher on April 9 — the day before Rosenberger announced his resignation. The subpoena sought Rosenberger’s travel records, including where he went, how it was funded, who his travel companions were and other details.
The Dayton Daily News submitted public records requests for any search warrants or subpoenas received by the Ohio House when news broke that Rosenberger was under federal investigation.
The warrant and subpoena do not seek records of any other lawmakers or legislative staff members.
Rosenberger, 37, of Clarksville in Clinton County, resigned just days after telling the Dayton Daily News that he had hired criminal defense attorney David Axelrod to deal with an FBI inquiry.
Rosenberger, a 2012 Wright State University graduate, started in the Ohio House in January 2011 and quickly rose to power as speaker four years later. Speaker is considered one of the three most powerful political positions in state government.
House Bill 123, the payday lending bill, faced a pitched battle even after Rosenberger stepped down. It was delayed for weeks by an internal fight over who would replace Rosenberger as speaker for the remainder of the two-year legislative session.
In June, after 11 rounds of voting on the House floor, Smith won the speaker’s gavel. The next day, Smith put House Bill 123 up for a floor vote and it passed 69-14. The Senate voted 21-9 in favor on July 10 and Gov. John Kasich signed it into law in August.
State Rep. Kyle Koehler, R-Springfield, chief architect of the payday lending reform bill, said: “I am proud of the leadership demonstrated by Speaker Smith in this new era in the House. The bipartisan reforms achieved by HB 123 will protect thousands of Ohioans from unscrupulous lending practices. I’m confident we will continue to move forward in doing the people’s work .”
U.S. Sen. Sherrod Brown, D-Ohio, the only statewide elected Democrat, said regarding ECOT and payday lenders “I think there are these bookends of corruption the likes of which we haven’t seen in my lifetime.”
While Rosenberger resigned after the FBI story broke, Democratic gubernatorial candidate Richard Cordray worked at the federal Consumer Financial Protection Bureau to rein in payday lenders, Brown said.
On Monday, Smith said “I look forward to putting this situation behind us and moving in a positive direction, as the investigation into this matter revolves around one individual and is not reflective of the good work achieved by the members of this caucus, our staff, or the Ohio House as a whole.”
Axelrod says Rosenberger has fully cooperated with the investigation.
“At the outset, he offered his full cooperation by voluntarily providing documents and electronic media without a search warrant or grand jury subpoena. He also consented to the FBI taking numerous documents and photographs from his home that were not covered by the search warrant, and to a consensual search of his storage unit. He will continue to provide his full cooperation in anticipation of his ultimate vindication,” Axelrod said.
This is a developing story. Check back soon for updates.
STAYING ON THE STORY
Our Columbus Bureau reporter Laura Bischoff has been covering this story from the beginning. Like her on Twitter at @LBischoff to stay updated.