COLUMBUS - A former chief of staff and fund-raiser for Ohio Treasurer Joe Deters pleaded guilty yesterday to charges in a "pay-to-play " scandal that could imperil Mr. Deters' political career.

Matt Borges, who was Mr. Deters' chief of staff from 1999 to 2001 and a key campaign staff member, pleaded guilty to one count of improper use of a public office.

Mr. Borges was fined $1,000 by Judge Eileen Gallagher of Cuyahoga County Common Pleas Court, but he could have faced six months in jail along with the fine.

Mr. Borges was charged with giving 10 brokers who had contributed to Mr. Deters' campaign fund an advantage in getting contracts with the treasurer's office. The treasurer is the state's chief investment officer.

Eric Sagun, who raised money for Mr. Deters and the Hamilton County Republican Party, pleaded guilty to one count of an election law violation.

Judge Gallagher fined Mr. Sagun $5,000. The maximum fine was $10,000.

Mr. Sagun was charged with soliciting a $50,000 contribution to the Hamilton County GOP's operating fund from convicted Cleveland-area broker Frank Gruttadauria in December, 2001, with the knowledge that the money would end up in Mr. Deters' campaign fund.

Mr. Deters was chairman of the Hamilton County Republican Party from December, 1999 to March, 2001.

The charges were filed in Cuyahoga County Common Pleas Court by Special Prosecutor Thomas Sammon.

A few hours after the misdemeanor charges were filed in Cuyahoga County, Mr. Borges, 32, and the 35-year-old Mr. Sagun pleaded guilty in deals with Mr. Sammon that enabled them to avoid jail time.

"We felt based on our analysis of all the evidence presented and what we would be facing during trial, it was in the best interest of the state of Ohio to reach these plea agreements," Mr. Sammon said.

Mr. Sammon said prosecutors could not find any evidence that Mr. Deters was aware of the crimes.

"We examined that carefully. The evidence was insufficient," he said.

Mr. Deters, a Cincinnati Republican and a former Hamilton County Prosecutor, could not be reached for comment yesterday.

He released a one-sentence statement: "I feel badly for Matt and Eric, but I understand why they wanted to bring this matter to an end. "

Attorneys for Mr. Borges said in a statement: "The notion that our client ever engaged in bribery or pay-to-play is absurd.''

Gruttadauria is serving a seven-year federal prison term in West Virgina for stealing $125 million from his clients over 15 years, a crime which received national press coverage.

Last March, he pleaded guilty to bribing or offering money to someone connected with Mr. Deters' office from March, 1999, to January, 2002, to get business from the treasurer's office.

Prosecutors have not identified that "public servant or party official."

Mr. Sammon yesterday said Mr. Deters' campaign officials deposited contributions, but didn't use them for their own personal use.

"A person can commit bribery without necessarily handing the money off in a brown paper bag. When we alleged that count, we alleged [Gruttadauria] made donations to [Mr. Deters' campaign fund] and the Hamilton County Republican Party believing those donations were to garner him favoritism with the state treasurer's office. In terms of a specific individual, there is none," he said.

Gruttadauria also admitted that he illegally used $7,000 to reimburse other donors. Gruttadauria agreed to cooperate with the grand jury investigation.

Mr. Gruttadauria's former employers - SG Cowen and Lehman Brothers - did a combined $5.9 billion in investment trades with the Treasurer's office from 1999 through January, 2002.

Last week, Mr. Sammon said Mr. Deters would not face criminal charges from a grand jury investigation launched last January that focused on whether Gruttadauria had bribed an employee of the state treasurer's office or Mr. Deters' campaign.

Contact James Drew at:

jdrew@theblade.com or

614-221-0496.

First Published July 28, 2004, 10:09 a.m.