COLUMBUS, Ohio — Two of the top Ohio retired teachers' pension fund leaders had their first day on trial, defending themselves as the state accuses them of participating in a $65 billion corruption scheme.
Franklin County Court of Common Pleas will be the home of a week-long bench trial, with Judge Karen Held Phipps deciding whether or not to remove State Teachers Retirement System (STRS) board chair Rudy Fichtenbaum from his position and ban both him and former board member Wade Steen from ever returning to public pensions.
Attorney General Dave Yost's civil lawsuit was filed a year and a half ago — all leading to Monday.
Assistant AG Chad Kohler, Steen's attorney Norman Abood and Fichtenbaum's attorney Richard Kerger made their opening arguments in court.
"The defendants breached their fiduciary duties," Kohler said. "They did that by choosing secrecy over transparency, by deceiving their fellow board members, by embracing favoritism, by acting with extreme bias, by engaging in unprecedented conduct that raised serious questions."
For the past year and a half, we have dug into — and exposed — the controversy swirling inside the more than $100 billion pension fund for more than 500,000 active and retired public educators in Ohio.
In summary, there has been constant fighting, two board resignations, and allegations of both a public corruption scheme and the mishandling of funds. There has been a senior staff dismissal and at least two senior staff resignations.
The scandal centers on Steen and Fichtenbaum and their relationship with startup investment firm QED Technologies, run by former Ohio Deputy Treasurer Seth Metcalf and Jonathan (JD) Tremmel.
How we got here
In May of 2024, the governor received a 14-page anonymous whistleblower memo alleging a massive public corruption scheme brewing and moving quickly within STRS. In 2020, Metcalf and Tremmel set their eyes on STRS, according to the document.
The documents claim that they — despite having no clients and no track record — tried to convince STRS members to partner with them and provide them with $65 billion.
They couldn’t impress the board members, mainly because of their lack of experience and also because QED was not registered as a broker-dealer or investment adviser. The men also didn't own the technology to "facilitate the strategy," the documents say.
So what exactly are Steen and Fichtenbaum trying to change, and what would QED allegedly attempt to do? Revise the investment structure. The men are seen as the leaders of the "reform movement." This fight began from a debate on how STRS should invest money, through the current system of actively managed funds versus an index fund. Active funds try to outperform the stock market, have more advisors, and typically cost more. Index funds perform with the stock market, are seen as more passive, and typically cost less.
In short, "reformers" want to switch to index funding, while "status quo" individuals want to keep actively managing the funds. Recent elections have allowed the "reform-minded" members to have a majority of the board.
Despite Steen no longer being on the board, he still remains the face of the "reform" movement and is still seen as the leader in the eyes of many retirees.
The STRS memo claims QED and ORTA, the Ohio Retirement for Teachers Association, had worked together, specifically when it comes to elections, to get a more sympathetic — or willing — board.
Steen and Fichtenbaum had allegedly been bidding continuously, pitching QED's direct documents to board members and proclaiming the company's talking points to other staff.
Soon after, Yost filed a lawsuit to remove Steen and Fichtenbaum from the board, stating they were participating in a contract steering "scheme" that could benefit them. Yost started the investigation after the memo, now known as being prepared by STRS employees, alleged that Steen and Fichtenbaum had been bidding on QED.
The AG states that the pair should be removed because they broke their fiduciary duties of care, loyalty and trust when "colluding" with QED.
As we have continued the dozens of reports on the topic, our investigation in September 2024 revealed that STRS was, once again, moving to hire a firm that allegedly lacked experience and personal ties to the board leaders, according to senior staff.
After our report, the board chose not to move forward with the firm that has been the subject of my investigations.
Communications obtained via a records request of a court filing reveal that QED associates consistently told then-board member Steen what questions to ask, gave him documents to propose, and pushed him to follow its plan.
Texts between Steen, Metcalf and Tremmel show that the pair consistently worked together. There are hundreds of text messages.
To read what the texts said, CLICK HERE.
Our reporting stunned the governor, he said, so after more than a year of requesting an interview with him, he agreed to one in April 2025.
RELATED: Ohio Gov. Mike DeWine stunned by teachers' pension fund behavior with firm accused of corruption
Trial
"You will see numerous instances where defendants passed off materials that they claim to have written themselves that were actually ghostwritten by Tremmal and Metcalf," Kohler said. "Tremmel and Metcalf were spoon-feeding the defendants and telling them exactly what to say during board meetings."
Fichtenbaum and Steen say they didn't do anything wrong. Abood argued that evaluations of new proposals would help with financial struggles and provide more money to retirees.
"This whole case is about this claim that there was some secret deal to promote an investment solution proposed by QED," Abood said during opening statements. "It's not supported by the facts.
The texts tell a vastly different story, according to attorney Martin Cordero, who cross-examined Steen immediately after the opening statements.
Through hours of back-and-forth, Cordero showed all the legal and ethical documents Steen had signed, went through training slides on how to be a good fiduciary — ones Steen said he did not recall sitting through — and pressed him on his communication and alleged favoritism toward Metcalf and Tremmel.
Dozens of texts and emails were shown, including ones that showed QED wrote documents for Steen and gave him direct questions to ask. Steen did.
As Steen told us after our DeWine interview in April, the defense said getting advice isn't a crime.
"We were at that point in a conversation about benchmarks, I was not getting satisfactory answers from the staff, I couldn't get clarification," Steen said, so that is why he reached out for help on what to ask and how to gain insight.
Cordero pressed Steen on why he provided documents marked as confidential to Metcalf.
"You asked me, 'Were they marked confidential?' They were. But they were not confidential documents," Steen responded.
Cordero pointed out the discrepancy with this, then brought up the fact that Steen asked Metcalf to discard the non-confidential-confidential documents after reviewing.
"I was asking him to craft questions I could look at; I was crafting questions, also, to try to understand the information in the documents," Steen said, with his team adding that he never told anyone else that Metcalf and Tremmel wrote questions because there was "animosity" toward QED.
Steen said his goal was and has always been a better retirement for teachers.
"What I was trying to do was to provide benefits that were promised to planned beneficiaries — that were taken from them, like the cost of living adjustment — and reduce expenses when we had excessive investment costs," Steen testified.
Along with Steen, Fichtenbaum, Metcalf and Tremmel are expected to take the stand during the trial.
During a 15-minute break during cross, Kohler spoke with us about how the state is just getting started.
"This case is straightforward," the assistant AG said, adding that the state is trying to protect teachers' money. "You're going to see a lot of evidence; you're going to see a lot of egregious conduct."
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