Controversy Erupts over Claims by Ohio RNC Committeeman Jim Dicke That Document He Circulated to ORP Is ‘Full Audit Report’ Which Explains What Lawsuit Says Is $3 Million in ‘Missing Funds in Financial Statements’

A controversy over the financial records of the Ohio Republican Party (ORP) erupted in the days leading up to Friday’s meeting of the ORP State Central Committee (ORPSCC), the party’s 66 member governing body, at Lewis Center’s Nationwide Conference Center.The committee is widely expected to endorse Gov. Mike DeWine (R-OH) at that meeting in his bid for re-election in the contested May GOP primary.

Fork truck billionaire James F. Dicke II (pictured above), one of Ohio’s two National Committeemen on the Republican National Committee, ignited the controversy last month when he sent a message to all 66 members of the ORPSCC. Critics on the ORPCC, led by retired Ernst & Young partner Mark  A. Bainbridge , say Dicke’s message materially misrepresents the nature of the financial report, known as an Agreed Upon Procedures report, produced for the ORP by Compass Pointe, a small Indiana accounting firm.

“You already know five State Central Committee members are falsely claiming that money is missing from ORP,” Dicke began his memo to the 66 members of the ORP.

“This report, from an outside and independent accounting firm, proves that all the state party funds have been properly accounted for and no accounts receivable were written off,” he continued:

What you might not know is that this past week, we caught these ORP critics red-handed colluding with a so-called investigative reporter. This same reporter verbally abused our communications director and has since apologized for his behavior.

The ORP critics sought out a liberal news reporter and made their false allegations. They eagerly gave the reporter a full interview and gleefully helped the reporter smear our Republican Party. All of this was done with the sensational exaggeration of a ratings week hit job.

When state party leaders caught the critics in the act, we acted – by providing the reporter with the full audit report that disproved the allegations. You won’t be surprised to learn the reporter ignored the report and didn’t tell viewers about it.

Chairman Paduchik also gave the reporter a video statement, which referred directly to the audit report. Perhaps at the urging of the ORP critics, the reporter refused to air the clip. The ORP side of the story was never even aired – this is exactly the type of activist journalism that has been used to undermine Republican leaders for decades. (emphasis added)

Read the report, dated January 11, 2022, and titled Agreed-Upon Procedure Engagement (2017/2018 Accounts Receivable and Invoice Reconciliation), here:

 

This report, which Dicke called a “full audit report,” was in fact, not a full audit report, but was instead an “accounting procedures report.” These two types of accounting reports, prepared by certified public accountants for their clients, are significantly different, as this graphic from Accountinguide indicates:

Indeed, the failure of the ORP to conduct a full audit of the group’s financial statements, which have not been subjected to an annual audit for more than a dozen years, lies at the center of the lawsuit filed in November against the ORP by five members of the ORPSCC.

As The Ohio Star reported:

The Canton, Ohio-based firm hired in April to audit the financial statements of the Ohio Republican Party (ORP) has resigned, highlighting ongoing concerns of the accounting practices of an organization that has not had an audit for 16 to 20 years.

Ohio Republican Chairman Bob Paduchik dropped that bombshell during his chairman’s report to the fall meeting of the Ohio GOP’s State Central Committee more than a week after receiving the letter from the Clifton Larson Allen (CLA) LLP certified public accounting firm.

The brief September 1 email from CLA principal of assurance Gregory Blasiman to ORP Executive Director Justin Bis and Paduchik cited the poor condition of the accounting records for the reason the firm has withdrawn from the contract.

“CLA has determined we will withdraw from the audit engagements covered by that (April) engagement letter … to allow the organization to prioritize its efforts on current accounting and reporting matters,” the email states. “As such, we have terminated the … engagements effective immediately.”

On November 29, 2021, five members of the ORPSCC, including Bainbridge, filed a lawsuit demanding, among other things, an ORP audit to account for what they allege is “$3 million in missing funds from financial statements” covering the period 2017 to 2021. (see page 6 of the lawsuit)

The lawsuit identifies those missing funds as $1.7 million in equity that was removed the 2017 ORP financial statement, $437,000 in equity that was removed from the 2019 ORP financial statement, $638,000 in accounts receivable (the “Rep. Stivers receivables”) that were carried on the ORP’s books from 2017 to 2020 but were written off in May 2021 after Bainbridge began questioning it, and another $271,000 that was removed from the ORP books in 2021.

On January 17, 2022, ORPCC members Laura Rosenberger and Mark Bainbridge, two of the five plaintiffs in the lawsuit against ORP, attended a zoom meeting with the three Compass Pointe partners who prepared the January 11, 2022 Agreed-Upon Procedure Engagement (2017/2018 Accounts Receivable and Invoice Reconciliation) report sent to the ORP. Compass Pointe Managing Partner Patrick Sherman participated in the meeting, in addition to Compass Pointe Partner Joseph Paulson and Compass Point Partner Matthew Caras.

“Mark Bainbridge and I were not given a copy of the Compass Pointe report before the zoom meeting so we did not have a chance to ask specific questions on the Agreed-Upon Procedures Report. Managing Partner, Patrick Sherman, did confirm at the meeting that their report was not an audit and agreed that the 2017 and 2018 ORP financial statements were ‘materially misstated’. Sherman also volunteered that the Compass Pointe CPA firm does not perform audits,” Rosenberger said in a statement sent to The Star.

A follow-up zoom meeting was scheduled for January 19, 2022, but it was cancelled by ORP leadership. It was at about this time that RNC National Committeeman Dike sent his email to the 66 members of the ORPSCC.

The Compass Pointe report deals only with the $655,000 in accounts receivable first placed on the ORP books in 2017 and written off in 2021, but  does not address the missing money that has disappeared without explanation from the ORP’s equity,  including $1.7 million in 2017 and $436,000 in 2019. (emphasis added)

The Compass Pointe report includes this statement:

“It is worthy to note our work did not give rise to analyzing physical checks nor copies of checks which were deposited, as the check images in the iStream Deposit online account were not available for 2017 and 2018.”

There is no physical evidence yet presented that the Stivers campaign paid the Stivers campaign debt.

Multiple Ohio Republican Party current and former staff members, including Paduchik, told The Ohio Star that complaints about so-called missing funds revolved around handling the so-called Stivers receivables.

It is the practice of the ORP, like other state parties, to front funds to its endorsed candidates to enable them to pay for advertising, payroll, and other administrative expenses in a regular fashion that is difficult when campaigns often rely on irregular revenue from fundraiser events.

One candidate told The Ohio Star he took advantage of this for his campaign’s mailings, and then he reimbursed the party.

In the case of Stivers, the party miscoded roughly $655,000 in funds loaned to the Stivers campaign and then repaid to the party.

This $655,000 does not have anything to do with the $1.7 million written off the party’s books, nor other discrepancies that Ohio Republican State Central Committeeman Bainbridge said are accounted for in the financial records.

On the Feb. 10 episode of The Ohio Star Podcast, Bainbridge said he repeatedly asked for records relating to the ORP books, specifically at a March meeting with ORP staffers and at the May meeting of the party’s Financial Review Committee meeting.

At the March meeting, the retired Ernst & Young partner said that he asked about $655,000 on the books as a receivable. The staffer in charge of the financials told him, “You know, I don’t know. Nobody asked me that question.”

When he asked again about the receivables at the May meeting of the Fiscal Review Committee meeting, Bainbridge said he was rebuked by both Paduchik and party treasurer David W. Johnson for asking such detailed questions.

He said that the Fiscal Review Committee did not meet again until December after Paduchik removed him from the committee.

Among the problems not addressed by the Compass Pointe report is the unexplained reductions in the party’s equity.

Bainbridge told the podcast that he was given some balance sheets to survey when he was still working with the ORP staff in anticipation of an audit that was canceled after the firm resigned from the account.

“For 2017 and 2019, there was a reduction on the 2017 balance sheet of the net worth of the equity of the Ohio Republican Party of $1.7 million,” he said.

“It’s just called on the financial statements on the balance sheet a reduction of retained earnings or something, and there is no explanation for it,” he said.

The CPA, now in private practice, said there was a similar entry for 2019.

“2019? The same thing,” he said.

“A $437,000 reduction in equity and again, no explanation,” he said.

“The Compass Pointe report verifies that the financial statements of the Ohio Republican Party cannot be relied on or trusted and the report documents the lack of integrity of the financial statements. Given the magnitude of these errors, coupled with the previous report by Rightside Compliance for the fiscal year 2016, why should the members of the Ohio Republican Party State Central Committee have any comfort that the ORP financial statements for any year have any degree of accuracy?” Bainbridge told The Star.

Bainbridge also addressed the failed effort to conduct an audit of the ORP’s books for 2020:

Since the CLA accounting firm resigned on September 1, 2021, Bob Paduchik has fought all efforts to hire a competent independent CPA firm to perform an audit of the ORP financial statements beginning in 2017. This Compass Pointe report is just one more of his efforts to cover-up the significant accounting issues that have been identified. I suspect Paduchik, who was a lobbyist for Governor DeWine before he became ORP Chairman, is delaying an audit until after the spring Republican primary or the November general election to protect Governor DeWine in his efforts to get reelected and former ORP Chairman, Jane Timken, in her bid for the US Senate.

Bainbridge also criticized the conduct of former ORP Chairman Jane Timken, now a candidate for the GOP nomination for the U.S. Senate in Ohio.

“In 2017, then ORP Chairman Jane Timken spent approximately $50,000 to hire the Rightside Compliance consulting firm that issued a devastating report about the ORP’s financial operations,” Bainbridge told The Star.

“If Timken had asked a competent CPA to spend 30 minutes looking at the ORP financial statements, he or she could have provided Timken with all the recommendations provided in the Rightside Compliance report — recommendations Timken did not implement and the ORP still has not been implemented. That $50,000 could have been used to hire CPAs to both audit the 2017 ORP financial statements and implement all the significant recommendations that were never implemented,” Bainbridge continued.

“The irony is that the Ohio Republican Party is now paying two very expensive law firms hundreds of thousands of dollars to fight a lawsuit from the ORP’s own board members who are demanding an audit of the ORP financial statements for 2017 and subsequent years. What an incredible misuse of funds,” he concluded.

Ohio Republican Party Chairman Robert A. Paduchik has enlisted a full array of professional capabilities to undertake damage control for the controversy caused by the questioning of the ORP’s financial statements.

“There is an independent accounting firm report that disproves the false allegation that money is missing from ORP,” wrote Mark R. Weaver – whom NBC News in Charlotte, North Carolina, called one of the nation’s foremost experts in crisis communications – in a Jan. 11 warning letter to conservative activist Dan Regenold, who runs the online education site empoweruohio.org.

“With the receipt of this email, you now have knowledge that the ‘money is missing’ allegation is false,” said Weaver, who worked as a staffer on political campaigns of Gov. R. Michael DeWine.

Weaver then warned Regenold that publishing a falsehood with the knowledge it is false is proof of malice under the Supreme Court’s standard, which set its Sullivan decision and then exposed him to a lawsuit. “Liability for defamation may attach to both the speaker of the false claim as well as the person or entity publishing or broadcasting the false claim.”

Despite the warning letter, Regenold went ahead with his interview.

The Ohio Star reached out to Weaver with questions about the report and the party’s handling of the report and he replied: “I am the attorney, not the spokesman, for the Ohio Republican Party.”

The Ohio Star made several calls to Tricia McLaughlin, the ORP communications director, along with three emails to the address listed on her profile at the ORP website, but there was no reply. The Star then learned Tuesday that she no longer handles communications for the state party and has been replaced by Daniel J. Lusheck, a former spokesman for President Donald J. Trump’s campaign in Ohio and a Marine Reserve infantry officer. The Ohio Star was copied on an email with Lusheck and replied to Lusheck, asking for a conversation about the Compass Pointe report, the Dicke email to all members of the Ohio Republican Party State Central Committee, and Weaver’s use of the Compass Pointe report as part of his threat to sue an online educator who interviewed members of the central committee about irregularities in the ORP books.

Despite this Lusheck’s promise to provide comment to The Ohio Star, none was forthcoming, and instead, Lusheck told The Ohio Star that upon the orders of Paduchik, The Star would not be issued media credentials to the party’s Feb. 18 central committee meeting.

The Ohio Star reached out to Compass Pointe and a partner at the firm told The Star that a possible statement was being worked on with their legal representatives, but it would not be forthcoming before publication.

A further complication regarding the Compass Pointe report is that the report itself was provided to the Ohio Republican Party for its internal use only. The report specifically said that a condition of the report is that it will not be distributed to third parties.

The Ohio Star also reached out to Dicke’s public relations representative Saturday and Tuesday and asked why he described the accounting firm’s report as an audit, and other questions. His public relations staff acknowledged the questions and said they would try to get a reply to The Star. There was no reply by publication.

– – –

Neil W. McCabe is the national political editor of The Star News Network. Send him news tips: [email protected] Follow him on Twitter: @neilwmccabe2.

Michael Patrick Leahy, Editor in Chief of The Star News Network, contributed to this report.

 

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