Mike Peppel, Republican congressman Michael Rulli’s new communications director, ran what Ohio Attorney General Dave Yost called a “sham charity” in 2023 for falsely claiming it was raising money for those impacted by the East Palestine trail derailment disaster.

A lawsuit was settled Aug. 10, 2023, in Columbiana County Common Pleas Court with Peppel agreeing to dissolve the organization, Ohio Clean Water Fund.

OCWF paid about $139,000 to the Second Harvest Food Bank of the Mahoning Valley. OCWF had claimed it was collecting money on the food bank’s behalf to assist East Palestine derailment victims, but Second Harvest had no knowledge of the group or had any partnership agreement with it.

As part of the settlement, Peppel was ordered to pay a $25,000 civil penalty and was banned permanently from incorporating, operating or soliciting for any charity in Ohio.

When the lawsuit was settled, Yost, a Republican like Rulli, said: “This settlement means the cost incurred by the state to investigate and prosecute does not come out of the food bank’s pockets. That’s precisely the outcome we were looking for.”

Peppel was hired Monday as Rulli’s communications director.

In a prepared statement, Rulli, R-Salem, said: “In light of the dismissal of any and all civil complaints against Mr. Peppel, we are ready to move forward and focus on serving our constituents with a proven leader joining our team.”

Rulli added: “We are happy to have Mike Peppel join our team as our communications director after spending nearly a decade in public service. Mike’s extraordinary work ethic, loyalty and dedication to the people of our region assisted me in nearly every aspect of what I was able to accomplish during my time in the Ohio Senate.”

Peppel said: “I concur with the congressman’s statement, and I look forward to working with him to serve the people of our district.”

Rulli’s 6th Congressional District office had been without a communications director since Kaela Thompson, who held the job for four months, resigned in October. Since January, she’s been the legislative director for the Texas House of Representatives.

When Rulli was in the state Senate, Peppel was his senior legislative aide from January 2019 to March 2023. Peppel left Rulli’s office for a Republican consulting firm in April 2023 that ended up not hiring him as a result of the allegations. The lawsuit against the Ohio Clean Water Fund and Peppel, its founder, was filed April 10, 2023, by Yost’s office.

Before working for Rulli, Peppel worked for Republican Bill Johnson, who represented the 6th Congressional District for 13 years before resigning in January 2024 to become Youngstown State University president. Peppel was political director for Johnson’s campaign from January 2017 to January 2019 while also serving as his office’s community outreach representative from January 2017 to May 2018.

Rulli was elected to fill Johnson’s unexpired congressional term in a special June 11 election and then was elected to a full two-year term Nov. 5.

The 6th Congressional District includes all of Mahoning, Columbiana, Carroll, Jefferson, Belmont, Harrison, Monroe, Noble and Washington counties and portions of Stark and Tuscarawas counties. Mahoning is the district’s most-populous county.

LAWSUIT

Peppel faced a seven-count civil lawsuit from the attorney general’s office accusing him of setting up a “phony charity that falsely claimed” it was collecting donations for the Second Harvest Food Bank to help East Palestine residents impacted by the Feb. 3, 2023, train derailment in the village.

Yost said when he filed the lawsuit: “Peppel is profiting illegally from this well-publicized tragedy with his unlawful charity, Ohio Clean Water, and rampant deceptive and fraudulent practices.”

The food bank didn’t give permission to the group to raise funds on its behalf.

At the time of the lawsuit, it was disclosed that OCWF raised $141,183 from more than 3,200 donors for emergency aid and bottled water it contended it was going to give the food bank — it later turned out to be about $149,000 — with $91,769 going to administrative fees. Only $10,000 initially went to the food bank, and that came after Michael Iberis, the food bank’s executive director, complained about the fund.

OCWF formed in February 2023, right after the East Palestine train derailment.

In a May 3, 2023, statement, when a preliminary injunction was issued against Peppel and the organization, Yost said: “I’m still fuming about it, and we’re going to hold (Peppel) accountable.”

In a July 10, 2023, response to the lawsuit, Peppel’s attorney, David H. Thomas of Columbus, wrote that “the funds raised on behalf of Ohio Clean Water were received from donors by third-party entities that generally engage in fundraising on behalf of political action committees. Subsequently, those third-party entities distributed the remainder of the fundraised sums to Ohio Clean Water’s bank account after charging their customary fees. Mr. Peppel has no control over these third-party entities, who acted at the direction of individuals who are not parties to the attorney general’s complaint, nor did he have access to or control over Ohio Clean Water’s bank account. Consequently, Mr. Peppel had no oversight or control over how Ohio Clean Water’s funds were spent.”

In the settlement agreement, Peppel disputed the allegations in the lawsuit “but agreed nevertheless to resolve all of the attorney general’s claims against Mr. Peppel in this case. The attorney general and Mr. Peppel represent that such a resolution will avoid the long and costly litigation process while also honoring the intentions of the citizens who donated to help the East Palestine community.”