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SEC Accuses Lobbyist of Ohio Pay-to-Play Scheme

COLUMBUS, Ohio (CN) - A lobbyist for State Street Bank and Trust Co. engaged in a pay-to-play scheme with Ohio's deputy treasurer, securities regulators say in a federal complaint.

Though the complaint filed Thursday takes aim only at the lobbyist, Robert Crowe, the Securities and Exchange Commission says Amer Ahmad dreamed up the scheme of extracting kickbacks in exchange for lucrative state brokerage business shortly after his appointment to state deputy treasurer in 2009.

"Ahmad wanted to keep his position in state government because of the opportunities it afforded him to engage in these 'pay-to-play' schemes," the complaint states, but keeping this lucrative position required the current Ohio treasurer to win the 2010 election.

With his eye on a contract to have State Street Bank and Trust service Ohio pension funds, Crowe in turn repeatedly made secret campaign contributions to the Ohio treasurer in 2010, according to the complaint.

"Crowe made the contributions by filtering $16,000 from a third party through Crowe's personal bank account, and by reimbursing other individuals for contributions made in their own names," the complaint states.

The SEC says Ahmad then awarded State Street three of the four lucrative contracts, which named the bank as the global subcustodian for the international funds and investment assets of Ohio's public pension funds.

With Ahmad threatening to rescind State Street's so-called global custody contracts, "Crowe continued to funnel campaign contributions to the Ohio Treasurer through at least September 2010," the complaint states.

The SEC notes that the Ohio treasurer nevertheless lost to his challenger in the 2010 election, and Ahmad left the office by Jan. 3, 2011.

"The new treasurer subsequently asked the Ohio attorney general to investigate State Street and on March 3, 2012, announced that State Street no longer would be employed for the global custody contracts or by any other Ohio entity," the complaint states.

A formal SEC investigation has been ongoing since 2013, but Crowe invoked the Fifth Amendment when subpoenaed to testify, according to the complaint.

Seeking civil penalties and an injunction, the SEC alleges various violations of the Securities and Exchange Act. SEC attorney Alyssa Qualls filed the 18-page complaint.

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