Nineteen convictions, two acquittals and a bevy of changes in how business is done in the Ohio state capital: Those are the results of a three-year investigation into an investment scandal at the Ohio Bureau of Workers’ Compensation.
The sentencing of investment advisor Mark Lay to 12 years in prison Tuesday marked the close of the last criminal case related to the investigation.
Lay was responsible for the bulk of $300 million in investment losses at the workers’ comp bureau, costing the state $216 million in a high-risk hedge fund he set up in Bermuda.
U.S. District Judge David D. Dowd Jr., who sentenced Lay after the second day of a lengthy sentencing hearing, ordered him to be taken into custody immediately.
Dowd also ordered Lay, chief executive and founder of the now-defunct MDL Capital Management of Pittsburgh, to pay nearly $213 million in restitution and a $590,000 forfeiture. The forfeiture is the amount of money the jury determined that Lay earned from his work on the hedge fund.
Lay, 45, was convicted in October of repeatedly failing to tell workers’ comp bureau officials when questioned beginning in 2004 about the extent of the risk he was taking.
Lay’s attorneys argued that he was a scapegoat for a legitimate investment loss that wasn’t a crime.
“I made mistakes -- no question about it,” Lay told Dowd before sentencing.
The scandal known as “Coingate” began with the revelation in 2005 that the workers’ comp bureau was investing $50 million in rare coins through Republican donor Tom Noe, who is serving 18 years in prison for theft and other crimes on charges that he stole from that investment.
Prosecutors said Lay hid the extent of the risk he took with the fund and went way beyond the limit that state officials set. The state invested $225 million and lost all but $9 million. Lay heavily borrowed against the fund, which caused almost $213 million of the $216-million loss.
He was convicted of investment advisory fraud, two counts of mail fraud and conspiracy to commit mail and wire fraud.