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An interesting little story from Ohio:
Quick summary- State of Ohio invested 50 Million in Pension money in Rare Coins thanks to the suggestions of a well connected individual who happens to be a rare coin dealer. NOw, perhaps up to 13 Million is missing, and the dealer is being investigated:
Quick summary- State of Ohio invested 50 Million in Pension money in Rare Coins thanks to the suggestions of a well connected individual who happens to be a rare coin dealer. NOw, perhaps up to 13 Million is missing, and the dealer is being investigated:
Coins Go Missing, and G.O.P. Insider Becomes Outcast
By JAMES DAO
Published: May 28, 2005
COLUMBUS, Ohio, May 27 - For nearly a decade, Thomas Noe has been the Republican Party's man to see in northwest Ohio, a confidant of governors and a prodigious fund-raiser for legislators, judges and just about every Republican statewide elected official.
He also happened to be a dealer in rare coins. And in 1998, the Ohio Workers' Compensation Bureau agreed to invest in a rare-coin fund that he controlled as a way to hedge its holdings in stocks and bonds, an investment that experts have called highly unorthodox.
But this week, Mr. Noe's lawyers said that as much as $13 million of the state's $50 million investment in his two funds could not be accounted for. Mr. Noe, meanwhile, has become the focus of at least six investigations or audits involving either his handling of the coin investments or his campaign fund-raising. Federal investigators are also looking into his contributions to President Bush's 2004 campaign as a "Pioneer," raising more than $100,000.
And suddenly, Republicans who once stood staunchly at Mr. Noe's side, and at his fund-raising parties, cannot seem to run from him fast enough.
"I am outraged, angered, saddened, and I'm sickened by what we learned yesterday from Mr. Noe's attorney," Gov. Bob Taft said on Friday about the revelation of the missing millions. "If he is guilty of criminal conduct, he should receive the most severe punishment possible."
Mr. Taft, a friend of Mr. Noe, said he was unaware of the coin investments until The Toledo Blade broke the news in April. He made his comments at a news conference at the statehouse, where he announced the resignation of James Conrad as the administrator of the Workers' Compensation Bureau, and announced his support for legislation to prohibit such investments.
William C. Wilkinson, a lawyer for Mr. Noe, said his client was cooperating fully with the criminal investigations. "It's premature to talk about criminal conduct until those investigations are complete," he said.
Democrats have tried to turn the missing coins into a morality tale about the dangers of one-party government. Indeed, in Ohio it is hard to find anyone responsible for government problems who is not a Republican, since Republicans control not only the governor's office, but also the Legislature, the attorney general's office, the Supreme Court and the state auditor's office.
"One-party rule has made the Republicans much more sloppy in their corruption," said State Senator Marc Dann, a Democrat.
But the scandal has also jolted the Republican Party simply because Mr. Noe, thanks to his energy, charm and sheer fund-raising prowess, has helped or befriended just about every prominent Republican in the state. Mr. Taft, who cannot run for re-election because of term limits, received about $20,000 in donations from Mr. Noe and his wife over the past decade.
The three Republicans trying to replace Mr. Taft in next year's election - Auditor Betty Montgomery, Attorney General Jim Petro and Secretary of State J. Kenneth Blackwell - have all received thousands of dollars from Mr. Noe and his wife, Bernadette, in recent years, according to state campaign records. All three have opened audits or investigations into Mr. Noe's coin funds or campaign contributions.
And on Friday, Mr. Blackwell called for the federal Justice Department to take control of the investigations, suggesting that his rivals, Mr. Petro and Ms. Montgomery, are too close to Mr. Noe to investigate him.
"This growing and disgraceful scandal reaches into the highest levels of our government," Mr. Blackwell, who has received more than $3,500 from the Noes since 1995, said in a statement. Spokesmen for Ms. Montgomery and Mr. Petro said they have pursued their investigations as aggressively as possible and said that any contributions from Mr. Noe would not cloud their objectivity.
Even the state's highest court has been touched by the case. When a series of lawsuits seeking an inventory of Mr. Noe's coin investments was brought before the Ohio Supreme Court recently, five of seven justices recused themselves. All had received campaign contributions from Mr. Noe.
As a result, the lone Democrat on the court will preside over the cases and has selected five other judges to stand in for her Republican colleagues.
"Of course this damages the party," Robert Bennett, the chairman of the Ohio Republican Party, said in an interview. "But we're going to be judged by how we respond to it. The people in Ohio understand that if you try to cover up, try to do the Watergate cover-up, it never will work in this day and age."
In the 1990's, Mr. Noe, 50, was chairman of the Republican Party in Lucas County, which includes Toledo. His wife held the same position until last year. He was a friend of Gov. George V. Voinovich, now a senator, whose administration first approved a $25 million investment in Mr. Noe's rare-coin funds in 1998.
But Mr. Noe was also an early supporter of Mr. Taft when he ran for secretary of state in the 1990's. And after Mr. Taft was elected governor in 1998, the Workers' Compensation Bureau approved a second $25 million investment in rare coins through Mr. Noe in 2001.
A spokesman for the bureau, Jeremy Jackson, said the rare coins had appeared to be a good investment that helped balance the steep decline in stock prices in the late 1990's. Since 1998, he said, the coin funds earned $15 million for the fund. And Mr. Noe also profited handsomely, collecting more than $3 million in fees.
Mr. Jackson said the investment in coins represented only a tiny proportion of the state's $16 billion workers' compensation fund. "We felt that small allocation would potentially reduce the risk of that portfolio," he said.
But in the past two months a series of embarrassing details about Mr. Noe and his coin funds have come to light. First, The Blade disclosed that two coins worth $300,000 had been lost in 2003. Then state officials acknowledged that another 119 coins worth $93,000 were missing. Earlier this week, Mr. Noe's lawyers told state officials that he had also used state funds to invest in artwork and collectibles, such as autographs and cards. And on Thursday Mr. Noe's lawyers said that as much as $13 million in assets are missing.
Mr. Jackson said it was not clear whether Mr. Noe had the legal authority to invest the state's money on collectibles or whether the state was even the rightful owner of those items. State officials also say they do not know which coins have disappeared from the two funds, which are being liquidated.
Mr. Noe had previously told The Blade that coins were lost in the mail or that they were stolen by a Colorado dealer. His lawyer, Mr. Wilkinson, said Friday, "We don't have information as to where the assets are, so we are not commenting on it." He added that Mr. Noe, who stepped down as the fund manager, was on vacation with his family.
Experts in state workers' compensation programs said they knew of no other states that invested in rare coins, largely because they are considered volatile commodities that are difficult to price, difficult to sell and easy to lose or steal.
"I just can't imagine collectible rare coins being used as an investment," said Gregory Krohm , executive director of a trade association for government agencies that administer workers' compensation programs. "It's hard to make a market for them."
On Friday, a judge in Franklin County signed an order freezing certain assets belonging to Mr. Noe worth over $15,000. And on Tuesday, prosecutors in Lucas and Franklin Counties are scheduled to meet with United States attorneys and the state inspector general to discuss coordinating their investigations.
All the activity has provided Democrats with a rare opportunity to grab the spotlight. Minutes after Mr. Taft's news conference in the statehouse on Friday, Democratic legislators and Mayor Michael Coleman of Columbus, who is running for the Democratic gubernatorial nomination, held their own event in the corridor outside, attacking the Republicans for a "pay to steal" culture.
"Just about every person I meet wants to talk about this issue," Representative Ted Strickland, a Democrat who is also running for governor, said in an interview. "I've tried to talk for some time about the arrogance of single-party rule, but this scandal has struck like a bolt of lightning."
By JAMES DAO
Published: May 28, 2005
COLUMBUS, Ohio, May 27 - For nearly a decade, Thomas Noe has been the Republican Party's man to see in northwest Ohio, a confidant of governors and a prodigious fund-raiser for legislators, judges and just about every Republican statewide elected official.
He also happened to be a dealer in rare coins. And in 1998, the Ohio Workers' Compensation Bureau agreed to invest in a rare-coin fund that he controlled as a way to hedge its holdings in stocks and bonds, an investment that experts have called highly unorthodox.
But this week, Mr. Noe's lawyers said that as much as $13 million of the state's $50 million investment in his two funds could not be accounted for. Mr. Noe, meanwhile, has become the focus of at least six investigations or audits involving either his handling of the coin investments or his campaign fund-raising. Federal investigators are also looking into his contributions to President Bush's 2004 campaign as a "Pioneer," raising more than $100,000.
And suddenly, Republicans who once stood staunchly at Mr. Noe's side, and at his fund-raising parties, cannot seem to run from him fast enough.
"I am outraged, angered, saddened, and I'm sickened by what we learned yesterday from Mr. Noe's attorney," Gov. Bob Taft said on Friday about the revelation of the missing millions. "If he is guilty of criminal conduct, he should receive the most severe punishment possible."
Mr. Taft, a friend of Mr. Noe, said he was unaware of the coin investments until The Toledo Blade broke the news in April. He made his comments at a news conference at the statehouse, where he announced the resignation of James Conrad as the administrator of the Workers' Compensation Bureau, and announced his support for legislation to prohibit such investments.
William C. Wilkinson, a lawyer for Mr. Noe, said his client was cooperating fully with the criminal investigations. "It's premature to talk about criminal conduct until those investigations are complete," he said.
Democrats have tried to turn the missing coins into a morality tale about the dangers of one-party government. Indeed, in Ohio it is hard to find anyone responsible for government problems who is not a Republican, since Republicans control not only the governor's office, but also the Legislature, the attorney general's office, the Supreme Court and the state auditor's office.
"One-party rule has made the Republicans much more sloppy in their corruption," said State Senator Marc Dann, a Democrat.
But the scandal has also jolted the Republican Party simply because Mr. Noe, thanks to his energy, charm and sheer fund-raising prowess, has helped or befriended just about every prominent Republican in the state. Mr. Taft, who cannot run for re-election because of term limits, received about $20,000 in donations from Mr. Noe and his wife over the past decade.
The three Republicans trying to replace Mr. Taft in next year's election - Auditor Betty Montgomery, Attorney General Jim Petro and Secretary of State J. Kenneth Blackwell - have all received thousands of dollars from Mr. Noe and his wife, Bernadette, in recent years, according to state campaign records. All three have opened audits or investigations into Mr. Noe's coin funds or campaign contributions.
And on Friday, Mr. Blackwell called for the federal Justice Department to take control of the investigations, suggesting that his rivals, Mr. Petro and Ms. Montgomery, are too close to Mr. Noe to investigate him.
"This growing and disgraceful scandal reaches into the highest levels of our government," Mr. Blackwell, who has received more than $3,500 from the Noes since 1995, said in a statement. Spokesmen for Ms. Montgomery and Mr. Petro said they have pursued their investigations as aggressively as possible and said that any contributions from Mr. Noe would not cloud their objectivity.
Even the state's highest court has been touched by the case. When a series of lawsuits seeking an inventory of Mr. Noe's coin investments was brought before the Ohio Supreme Court recently, five of seven justices recused themselves. All had received campaign contributions from Mr. Noe.
As a result, the lone Democrat on the court will preside over the cases and has selected five other judges to stand in for her Republican colleagues.
"Of course this damages the party," Robert Bennett, the chairman of the Ohio Republican Party, said in an interview. "But we're going to be judged by how we respond to it. The people in Ohio understand that if you try to cover up, try to do the Watergate cover-up, it never will work in this day and age."
In the 1990's, Mr. Noe, 50, was chairman of the Republican Party in Lucas County, which includes Toledo. His wife held the same position until last year. He was a friend of Gov. George V. Voinovich, now a senator, whose administration first approved a $25 million investment in Mr. Noe's rare-coin funds in 1998.
But Mr. Noe was also an early supporter of Mr. Taft when he ran for secretary of state in the 1990's. And after Mr. Taft was elected governor in 1998, the Workers' Compensation Bureau approved a second $25 million investment in rare coins through Mr. Noe in 2001.
A spokesman for the bureau, Jeremy Jackson, said the rare coins had appeared to be a good investment that helped balance the steep decline in stock prices in the late 1990's. Since 1998, he said, the coin funds earned $15 million for the fund. And Mr. Noe also profited handsomely, collecting more than $3 million in fees.
Mr. Jackson said the investment in coins represented only a tiny proportion of the state's $16 billion workers' compensation fund. "We felt that small allocation would potentially reduce the risk of that portfolio," he said.
But in the past two months a series of embarrassing details about Mr. Noe and his coin funds have come to light. First, The Blade disclosed that two coins worth $300,000 had been lost in 2003. Then state officials acknowledged that another 119 coins worth $93,000 were missing. Earlier this week, Mr. Noe's lawyers told state officials that he had also used state funds to invest in artwork and collectibles, such as autographs and cards. And on Thursday Mr. Noe's lawyers said that as much as $13 million in assets are missing.
Mr. Jackson said it was not clear whether Mr. Noe had the legal authority to invest the state's money on collectibles or whether the state was even the rightful owner of those items. State officials also say they do not know which coins have disappeared from the two funds, which are being liquidated.
Mr. Noe had previously told The Blade that coins were lost in the mail or that they were stolen by a Colorado dealer. His lawyer, Mr. Wilkinson, said Friday, "We don't have information as to where the assets are, so we are not commenting on it." He added that Mr. Noe, who stepped down as the fund manager, was on vacation with his family.
Experts in state workers' compensation programs said they knew of no other states that invested in rare coins, largely because they are considered volatile commodities that are difficult to price, difficult to sell and easy to lose or steal.
"I just can't imagine collectible rare coins being used as an investment," said Gregory Krohm , executive director of a trade association for government agencies that administer workers' compensation programs. "It's hard to make a market for them."
On Friday, a judge in Franklin County signed an order freezing certain assets belonging to Mr. Noe worth over $15,000. And on Tuesday, prosecutors in Lucas and Franklin Counties are scheduled to meet with United States attorneys and the state inspector general to discuss coordinating their investigations.
All the activity has provided Democrats with a rare opportunity to grab the spotlight. Minutes after Mr. Taft's news conference in the statehouse on Friday, Democratic legislators and Mayor Michael Coleman of Columbus, who is running for the Democratic gubernatorial nomination, held their own event in the corridor outside, attacking the Republicans for a "pay to steal" culture.
"Just about every person I meet wants to talk about this issue," Representative Ted Strickland, a Democrat who is also running for governor, said in an interview. "I've tried to talk for some time about the arrogance of single-party rule, but this scandal has struck like a bolt of lightning."
