COLUMBUS, Ohio — A new interim head of the controversial Ohio retired teachers’ pension fund has been named. Aaron Hood, a financial expert at the United States Military Academy at West Point, will be taking charge of the chaotic system.
During a Thursday evening board meeting, the State Teachers Retirement System (STRS) board voted for Hood to be the acting executive director as a search firm looks for their full-time choice.
Hood begins Nov. 18, taking over from current acting head Lynn Hoover.
RELATED: Both acting head and CIO of Ohio retired teachers’ pension fund resign amid controversy
He has a big task and will face an uphill battle.
In summary, there has been constant fighting, two board resignations and allegations of both a public corruption scheme and mishandling of funds. As of this week, there has been a dismissal and multiple senior staff resignations.
Who is Hood?
Hood has worked as a Finance Senior Fellow at West Point in the Department of Social Sciences, according to his profile on the academy website. He has been there for five years, according to his LinkedIn.
He is seemingly instructing a course on financial statement analysis and another on banking, his profile lists.
Prior to that, he worked as executive VP and CFO of Summit Carbon Solutions, an Iowa-based company that develops "the world’s largest carbon capture project," according to their website.
He was also a partner and lead asset management at Perella Weinberg Partners, a global financial services firm. He also helped found it and was formerly the CFO, his profile says.
He had other jobs in finance and asset management at Morgan Stanley, according to his LinkedIn.
Hood is a veteran who served as a captain and lieutenant in the Army Corps of Engineers for five years. According to his West Point profile, he held leadership roles in the U.S., Germany, and Bosnia.
He received his MBA from Harvard Business School and is a current board member of Superior Silica Sands, the profile says.
We reached out to him for an interview and are waiting to hear back.
Here's a recap
STRS is in chaos. In summary, there has been constant fighting, two board resignations and allegations of both a public corruption scheme and mishandling of funds. As of this week, there has been a dismissal and two senior staff resignations.
We broke the news in September that Hoover and CIO Matt Worley resigned after months of controversy.
RELATED: Both acting head and CIO of Ohio retired teachers’ pension fund resign amid controversy
In May, Attorney General Dave Yost filed a lawsuit to remove two members of STRS, stating they are participating in a contract steering "scheme" that could directly benefit them. Yost started the investigation after documents prepared by STRS employees alleged that Wade Steen and Chair Rudy Fichtenbaum have been doing the bidding of investment firm QED.
QED was started by former Deputy Treasurer Seth Metcalf and consultant Jonathan (JD) Tremmel. In 2020, they set their eyes on STRS, according to the 14-page memo Yost received.
The documents claim that they — despite having no clients and no track record — tried to convince STRS members to partner with them.
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.
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.
The pair should be removed because they broke their fiduciary duties of care, loyalty and trust when "colluding" with QED, according to Yost's case.
Click here to learn more about the lawsuit.
We have covered this controversy from the beginning, including over a dozen recent stories dealing with the latest problems around the alleged corruption plot. Watch and read the story below for a more in-depth recap.
RELATED: Chaos-filled day at Ohio teachers’ pension board leading to even more ethical concerns
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.
Reformers want a cost-of-living adjustment, or COLA. The COLAs were suspended for more than 150,000 retired Ohio teachers for five years starting in 2017. They were reinstated, but there has been a suspension of increases, significant for retirees who need this money and are dealing with inflation.
STRS staff have explained that they know the COLA is essential and are working to get it back. They added that the system is functioning well — better than any of the other pension systems in the state. A report by the Ohio Retirement Study Council found that STRS has a higher return than any of the four other state pension systems.
The reformers also believe that this is a "sham" investigation meant to prevent democratically elected individuals from choosing what they want to do with their pension money.
Steen and Fichtenbaum have repeatedly brought up how quick the turnaround time was between Yost receiving the memo and filing the civil suit. The timeline is unclear, but government officials received the documents in early May. Yost said he was investigating on May 9, and by May 14, a lawsuit had been filed in Franklin County Court of Common Pleas.
In late August, Yost filed a slew of subpoenas against QED and others allegedly involved in this scheme.
The same month, QED spoke out to us for the first time, and so did the AG.
Following that interview, Fichtenbaum did an interview to defend himself. In this one-on-one interview, Rudy Fichtenbaum explained his side — and why he is still considering a deal with the investment firm at the center of the scandal.
As of now, Steen has termed off his board seat and got a tearful goodbye from pensioners in September.
DeWine has appointed attorney Jon Allison to the board, a former top aide for Former Gov. Bob Taft.
In late September, our investigation revealed that STRS was, once again, moving to hire a firm that allegedly had a lack of experience and personal ties to the board leaders, according to senior staff.
I revealed in October that Scott Hunt, the appointee of The Department of Education and Workforce, is now no longer on the board. Carolyn Everidge-Frey has replaced him.
Then, I reported that the board chose not to move forward with the controversial consulting firm that has been the subject of my investigations.
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