E-mails released in investment scandal

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The bureau lost $50 million investing in rare coins.

COLUMBUS (AP) — The former head of the state insurance fund for injured workers fretted over the wording of a draft memo explaining a $215 million investment loss months before the loss became public knowledge, documents released Thursday show.

The Bureau of Workers' Compensation lost the money in a hedge-fund investment with Pittsburgh-based MDL Capital Management.

"I'm not tied to words but I believe we need to hit them over the head with a sledge hammer up front," Jim Conrad, former BWC director, said in an e-mail to a former aide, Mark Nedved, on Oct. 27, 2004.

The agency released the e-mails Thursday in response to media records' requests.

Conrad's suggestions included a statement in bold that the insurance fund was solvent, that no injured workers would be denied benefits and all medical providers' bills would be paid.

The next day, Conrad questioned changes to a MDL analysis by bureau communications director Jeremy Jackson. "It seems to me they might be self destructing," Conrad wrote to Nedved.

The memo was never released publicly and was meant for internal distribution only, Jackson and bureau spokeswoman Nancy Smeltzer said Thursday.

Nedved has left the bureau. A message was left at a home listing for an M. Nedved in Columbus.

A message was left with Conrad's attorney. Jackson said he simply responded to a request for information by Conrad.

Massive scandal

The MDL loss was part of the state government scandal that started with the revelation of the bureau's unorthodox $50 million investment in rare coins. As the scandal deepened, it led to Conrad's ouster, a reorganization of the workers' comp agency and Gov. Bob Taft's no contest plea to charges that he failed to report golf outings and other gifts.

To date, 14 people have been charged with crimes including theft, bribery and ethics violations.

The e-mails shed further light on the bureau's attempt to deal with the MDL loss.

Earlier this month, The (Toledo) Blade reported that Conrad worried news would spread about the loss.

In an Oct. 27, 2004 e-mail, Conrad said top agency officials should put on a positive face to make the agency's investment staff feel at ease.

The e-mail was to John Annarino, the bureau's chief legal counsel and ethics officer.

In the e-mail, Conrad said that James McLean, the bureau's investment director at the time, "told me this morning that he thought the major chance of us getting involved with the MDL situation is with a leak from OUR employees."

More than a year ago, similar e-mails surfaced showing Conrad wanted information about MDL kept out of weekly reports to Taft.

The bureau is suing MDL to recoup its losses.

Friday, August 18, 2006