Last fall, Pennsylvania’s largest pension fund made a hush-hush investment. It secretly sunk $100 million into a business backed by Pittsburgh tycoon Thomas Tull, a co-owner of the Steelers who made a fortune producing a string of superhero movies.

Two days later, campaign records show, Tull showered money on politicians — making nearly $1.5 million in donations spread among national Democrats and Republican alike.

A piece — $10,000 — was passed down to the Democratic Party in Pennsylvania. When The Inquirer recently asked whether the money ran afoul of pay-to-play rules for contributions at that level, Tull and national Democrats took steps to undo the contribution. He and the Democrats called it a mistake.

Still, Tull said that the investment from the PSERS investment fund and his campaign donations were unrelated.

”There is no connection,” Tull said.

For 25 years, reformers have been trying to stamp out pay to-play in pension-fund investments, the bond business, and elsewhere in government spending. But critics say the problem has only grown worse following a spate of court decisions striking down campaign-finance controls, especially by stripping away limits on how much national political funds can raise.

Moreover, many pensions funds have been putting more money into private-equity investments, many of them owned or financed by wealthy campaign donors.

The $64 billion PSERS fund, which declined comment for this story, provides pensions for Pennsylvania’s retired public-school employees. It has been buffeted by a series of troubling disclosure of late. Among them: news that the FBI is looking into fund decisions, reports of extravagant travel expenses by fund investment staff, and the board’s admission it adopted a wrongly inflated figure for the plan’s financial performance.

The board two weeks ago reversed course and hiked the amount that 100,000 teachers must pay into the fund. The board said it had no choice due to the poor dollar returns in a plan that critics say is far too heavily invested in exotic private investments.

Behind closed doors

Last Sept. 14, the 15-member PSERS board met in a session barred to reporters and the public.

By law, the board includes several educators, but also four legislators — two from each party, and three appointees of Gov. Tom Wolf. Glen Grell, the executive director of PSERS — the Pennsylvania School Employees’ Retirement System — is a Republican who previously served in the state House for 11 years.

On this day, the venture under discussion was so confidential that it even had a code name: Project Newton.

While the fund still will say little about the meeting, The Inquirer soon reported what was up. Despite the tradecraft on fund paperwork, the matter was pretty prosaic. The board, sources disclosed, had voted to invest $100 million in a Los Angeles e-commerce company called Figs. It sells high-end hospital scrubs and is named after a favorite food of a founder.

Figs’ lead investor was Tull. At 50, he is a guitar-collecting billionaire from upstate New York who began his financial climb by opening a chain of laundromats and later became a producer of such Hollywood blockbusters as Dark Knight, Jurassic Park, and the superhero series Watchmen.

In 2016 he sold his studio for $3.5 billion and, a few years later, his Los Angeles estate for $35 million. He bought another big house in the Pittsburgh suburbs and announced he was looking for promising companies to back.

Like many other professional money managers, Tull is a big campaign donor. He has given $6 million to politicians over the last 15 years, one-third in the last year.

And like many such contributors, he hedges his bets, donating to both parties. In Tull’s case of late, he has balanced donations to Democratic presidential nominees with money to Republicans in Congress.

So it was on Sept. 16 — two days after the PSERS vote — that he gave $711,000 to a campaign fund backing Joe Biden and $750,000 to a super PAC for U.S. Senate Republicans.

Two shots of $100 million

As it happens, the pension fund vote last year was the second time PSERS had pumped $100 million into a Tull enterprise.

In 2018, the fund invested that amount in Tulco LLC, a firm he had started the year before. In a public pitch to the board recommending the investment, the pension fund’s professional staff admiringly summarized Tulco as a technology-savvy outfit targeting businesses “ripe for disruption.”

The staff wrote that Tull had been introduced to PSERS by Tom Lamb, whom it identified as with the Greater Pittsburgh Chamber of Commerce. While Lamb, father of U.S. Rep. Conor Lamb (D., Pa.) is on the chamber’s board, his day job is as a top lobbyist for PNC bank, one of the largest corporations in Pennsylvania and a recipient of fees from PSERS.

In any event, Tull’s spokesperson said the staff report was “false.” The Tull aide said someone else had introduced him to PSERS. She would not say whom. Through PNC, Lamb declined to comment.

In the 2018 vote, only one PSERS board member opposed the investment. Since then, Tulco has said the fund’s $100 million investment has shot up to be worth $148 million. However, PSERS has yet to record cashing out any money from the investment.

Two year later, the board decided to do it again by investing another $100 million in a Tull-backed enterprise — Figs. This time, five board members voted against the move.

Beyond providing a vote count, the pension fund has yet to provide any information about the investment or even confirm it was in the Tull-financed scrubs firm.

After the Figs vote, a pension spokeswoman justified the secrecy by saying the board had been given ”sensitive investment information ... under strict contractual confidentiality requirements.”

People familiar with the fund said its worry at the time was that another investor would hear of the Figs opportunity and scoot in ahead of PSERS.

Campaign dollars, government work

By law and regulation, reformers have long been devising intricate steps to disconnect political contributions from government-spending on pension fund investments, legal work, contracts, bonds, and the like. Still, problems have surfaced repeatedly.

In Pennsylvania, a Wayne investment firm, TL Ventures, in 2014 had to return more than $250,000 in fees from PSERS and from Philadelphia’s pension plan, after federal regulators found that it had violated pay-to-play limits. The politicians who received its donations had to give up their money, too. The civil case was the first under a 2010 national reform.

That same year, according to a former investment officer at SERS, the smaller pension fund for retired state employees, that plan’s chairman pressured him to hire a financial firm and told him it was “powerful in Philadelphia,” a court filing said. An outside legal review concluded that the chairman, Glenn Becker, had engaged in “questionable” conduct, but broke no rules.

In a brief interview Tuesday, Becker said, “I don’t remember saying anything like that,” and the complaint against him had “no substance.” Becker now chairs SERS’s investment committee. The fund in 2018 limited the ability of board members to lobby for such hirings.

In 2015, former state treasurer Rob McCord pleaded guilty to federal charges of shaking down a Philadelphia law firm for campaign contributions in return for legal work that McCord controlled.

In 2017 a McCord predecessor as treasurer, Barbara Hafer, pleaded guilty to a corruption charge related to a businessman who marketed investment firms to state officials. Hafer, like all treasurers, sat on the board of both PSERS and SERS.

Still, most such interactions between the private sector and officials are perfectly legal.

Nor is Tull the only heavy contributor to do business with Pennsylvania government.

Another among many is Abington native Stephen Schwarzman, whose Blackstone funds manage billions for PSERS. He gave more than $30 million to political campaigns in 2020 alone, including more than $3 million to funds backing former President Donald Trump.

In sum, “There is a long history of politicians connected to public pensions,” says Chris Tobe, a pension consultant and former Kentucky state pension trustee whose book, Kentucky Fried Pensions, says Wall Street saddled pension plans in that state with high-fee, high-risk investments.

A big donation day

Thomas Tull has made hundreds of campaign donations over the years, Federal Election Commission records show. But never so much as on Sept. 16 of last year. That day, his checks included:

  • $750,000 to the Republican Party’s Senate Leadership Fund, a super PAC devoted to the GOP holding on to control of the upper chamber. Contributions to such PACS were once capped at $5,000, but any ceiling was removed by court decisions that began with the U.S. Supreme Court’s 2010 Citizens United opinion.

  • $2,800 to the Biden for President campaign committee. In a part of campaign-finance law that has remained undisturbed, that was the most individuals could then give directly to a presidential candidate’s main campaign committee.

  • $711,000 to the Democratic Party’s’ Biden Victory Fund. This PAC, in turn, handed out $10,000 donations to Democratic organizations in 44 states, among other Democratic groups. A 2014 U.S Supreme Court decision removed the limits on giving to groups like the Victory Fund.

Of the Tull donation, Biden Victory, in turn, gave $10,000 to the Pennsylvania Democratic Party, passing on the legal maximum it could to a state party organization.

Since 2010, a pay-to-play rule laid down by the U.S. Securities and Exchange Commission stipulates that a money manager may not be hired by pension funds if they have given campaign donations to politicians who could influence their hiring. The donations under scrutiny may be before or after their hiring.

At the time of the $10,000 transfer, the PSERS board included three elected Democrats, and two appointees of Democratic Gov. Tom Wolf, all of whom were backed by the state party that got Tull’s money.

Last week, The Inquirer asked Tull whether the gift to Democrats in Pennsylvania could keep him from collecting from PSERS, given the SEC rules.

After the paper’s questions, Tull’s staff protested to Democratic Party attorneys that he had instructed them not to give any of the money to Pennsylvania. They said the donation was a mistake and should be reversed.

However, Brendan Welch, a spokesman for the state party, said last week, “That money was spent.”

Graham M. Wilson, a lawyer for the Biden Victory Committee, agreed that the committee made an “administrative error.”

When “Mr. Tull contributed to the Biden Victory Fund, he designated his contribution not to be allocated to the Pennsylvania Democratic Party,” Wilson said.

He added that “this issue will be corrected” by sending the Pennsylvania Democrats $10,000 less in the future and amending FEC reports “to show that none of Tull’s funds are actually going to Pennsylvania.”

While Tull was taking pains to reverse the Pennsylvania contribution, people close to the businessman said they were doing it out of an “abundance of caution.” They said the 2010 rule banning fees to money managers who donate to state campaigns wouldn’t apply here because Tull wasn’t hired as a money manager.

Although PSERS in an annual report lists Tulco as a “private equity manager,” Tull’s associates say the pension fund had actually invested directly in his companies.

In a statement, Tull’s spokesperson noted that he gives money to politicians “nearly every election cycle.”

His people says he thinks of himself as a Republican, but not a Trump supporter, and as someone who sees divided government as a useful check on governance.

But lawyer Paul Ryan, vice president of policy and litigation at Common Cause in Washington, D.C., was skeptical about that. He sees a simpler motivation for big donors who give to both parties. “Access and influence is what they are buying,” he said.