DAYTON DAILY NEWS                   Copyright (c) 1996, Dayton Newspapers Inc.DATE: Friday, February 2, 1996               TAG: 9602020101EDITION: CITY           SECTION: NEWS        PAGE: 1A TYPE: MAIN SOURCE: By Debra Jasper and Misti Crane        Columbus Bureau                            ARANOFF, RIFFE INDICTED    Two of Ohio's most powerful politicians - Senate President Stanley Aronoff and former House Speaker Vern Riffe  - were  indicted Thursday on charges stemming from their financial relationships with lobbyists.   Aronoff and Riffe, who together ruled the Statehouse for a decade, were charged with breaking state laws by failing to report that they each took morethan $500 for giving speeches or making appearances before lobbyists and corporations.   Sen. Eugene Watts, R-Galloway, and three lobbying groups also were indicted. The grand jury indicted Aronoff, R-Cincinnati, and Riffe, D-Wheelersburg, on two counts of filing a false statement. Each violation is afirst-degree misdemeanor, punishable by six months in jail and up to a $1,000 fine.   Aronoff, who asked to be arraigned today, appeared before the media Thursday to read a brief statement. He refused to answer questions.   "If the (ethics) disclosure statements in question are inaccurate in any way, I accept full responsibility," he said. "But I emphatically deny that I intentionally or knowingly falsified any disclosure statement."   Riffe said Thursday he will show that his financial disclosure statements were proper. He said he would not try to plea bargain.   "Contrary to published reports, I could not, and would not, plead to something I did not do...." he said . "In fairness, judgment should be withheld until all the facts are known.''   At the heart of the investigation is a law that until 1994 allowed legislators to take money  for speeches not directly related to legislative matters - with one catch. Officials had to disclose any payments over $500 if the money came from a single source.   That stipulation led to a practice known as "pancaking," where legislators sometimes accepted multiple $500 checks for appearing at a single event. The checks, while written by different individuals, sometimes came from people or companies closely associated.   The giant retailer, The Limited, for example, pleaded no contest in Januaryto a misdemeanor charge and was fined $10,000 for failing to make public in 1990 and 1993 the payment of $4,500 in honoraria to both Aronoff and Riffe.   The Limited bypassed the reporting requirement by having nine of its 16 subsidiaries each write $500 checks to Aronoff and Riffe. But once LegislativeInspector General Tom Charles confirmed that The Limited was the company behind all nine, he issued a report saying the company should have disclosed the payments.   Aronoff, Riffe, other lawmakers and lobbyists adamantly deny any connectionbetween campaign contributions, honoraria and legislative action. But Charles'report noted that at a 1993  Limited breakfast where Aronoff and Riffe received checks, employees of the Ohio Department of Transportation and two top executives of the Limited's lobbying firm were present.   At the time, the state was about to proceed with a $60 million highway project that would speed traffic flow to The Limited's business complex and New Albany, where billionaire board chairman Les Wexner lives.   Watts said Thursday he would not contest the grand jury's indictment, although he said he had not knowingly violated any law. Watts, who is expectedto be arraigned today, was charged with failure to file a statement, a fourth-degree misdemeanor, punishable by up to $250 and 30 days in jail.   Watts was paid $500 for attending a reception in downtown Columbus sponsored by the Cleveland-based McDonald and Co. Securities Inc., a bond underwriting firm that does substantial business with the state. At least 18 lawmakers were paid from $500 to $1,500 for attending the event, but unlike the other lawmakers, Watts cashed the check but never went to the reception.   McDonald delivered a $500 honorarium to Watts' Statehouse office by accident, he said, and he made a "careless mistake" by accepting it and not reporting it on his Ohio Senate ethics disclosure statement.   Watts said he believed the money was for a different event and later returned it. He said he was busy with an overwhelming number of receptions andinvitations and; his canadidacy for the GOP nomination for the U.S. Senate.   The grand jury also charged Government Consultants Group Inc., of Columbus,with failure to file, a fourth-degree misdemeanor, and the law firm Climaco, Climaco, Seminatore, Lefkowitz & Garofoli of Cleveland, and Strussion Consulting Services of Columbus, with falsification, a first-degree misdemeanor.   Some of multiple checks given to lawmakers for the McDonald reception came from Tom Strussion, who was an independent lobbyist working for McDonald.   Some of the grand jury's investigation centered on five dinner parities at the Columbus home of Paul Tipps, former chairman of the Ohio Democratic Party and the Montgomery County Democratic Party. Tipps, now a Columbus lobbyist, and his partner Neal S. Clark issued a statement saying, "For two years and during the course of three separate investigations, we have said that we did nothing wrong. The grand jury ... reached the same conclusion."   The nine-member grand jury has been meeting since October, reviewing evidence regarding multiple payments from lobbyists to 12 past and present legislators. Franklin County Prosecutor Michael Miller said an investigation is still pending against McDonald & Co. Securities.   Miller would not comment on the seriousness of the charges. "I can assure you that the grand jury is not going to indict on puffs of smoke," Miller said.LENGTH: Long  :  109 LINESSUBJ: GRAND JURY      INDICTMENTS      POLITICIANS      OHIO LEGISLATURENA: STANLEY ARANOFF    VERN RIFFE    GENE WATTS GEOG: COLUMBUS, OHIO AT: FAILURE TO REPORT    FAILURE TO FILE    LOBBYISTS    HONORARIA ENHANCER: REF8