Report: State contracts laundered through shell company

By Randy Ludlow - The Columbus Dispatch

COLUMBUS, Ohio — More than $12 million from state contracts was laundered through a shell company to improperly enrich a pair or related companies, according to an investigation released Tuesday by Ohio Inspector General Randall J. Meyer.

The investigation found that while certified as a minority-owned business enterprise, TSG Partners used its status to land set-aside state contract opportunities totaling nearly $15.8 million between Jan. 1, 2015 and Aug. 31, 2017.

TSG Partners’ owners, father and son Kyle and Mark Schriml, however, had no employees and transferred $12.3 million in its state payments to Advocate Solutions and Advocate Consulting Group within a few days of receiving the money, according to the report.

The Columbus-based Advocate companies are 50 percent owned by Mark Schriml, according to the inspector general’s report.

The investigation found that the Department of Administrative Services, which awarded contracts to TSG Partners, failed to adequately review the company’s qualifications in wrongly granting it minority-business enterprise designation that allowed it to receive numerous state contracts during the tenure of former Gov. John Kasich.

Owners of qualified minority companies must have have day-to-day control of their companies under state law. TSG relinquished its MBE status in October 2017.

Meyer referred his report to Franklin County Prosecutor Ron O’Brien for consideration of potential criminal charges. A person who intentionally misrepresents himself as owning or controlling a minority business enterprise to obtain contracts can be charged under state law with theft by deception.

A review of bank records suggested that TSG Partners “has a limited, if any, commercial useful function,” with Kyle Schriml unable to answer basic questions about its state contracts, the report said. He admitted the company used the Advocate companies as its contractors.

The inspector general’s report recommended that DAS determine if the Advocate companies, TSG Partners and the Schrimls should be barred from receiving further state contracts. Comment was being sought from the state agency.

Online records show that Advocate Solutions received $3.5 million in state payments in 2018 and $599,287 in 2019 while Advocate Consulting received $3 million in 2018.

A message seeking comment from the Schrimls or Advocate representatives was left at the company’s office on Tuesday morning.

The Dispatch uncovered in 2017 that the Advocate companies had received in excess of $17 million in improper no-bid contracts since mid-2011. The company employed several former Department of Administrative Services information technology executives.

The revelations prompted inspector general reports confirming The Dispatch’s reporting and reforms in state bidding requirements.

By Randy Ludlow

The Columbus Dispatch

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