Saturday, May 28, 2005

The Ohio GOP's "Third-Rate Burglary"

When the kingmaker commits a crime against the State, can the King be trusted to deliver justice? That's the morality tale currently playing out here in one-party rule Ohio in the ethical debacle of a coin collector named Thomas Noe. Of course, Mr. Noe was no ordinary coin collector, it was his profession in the Toledo area, and he made quite a name for himself collecting and trading rare coins and other collectibles. Living the Golden Rule, Mr. Noe amassed a political fortune along with his economic fortune. For decades, he and his wife have served as the chair of the Lucas County Republican party and been trusted associates of both Governors Voinovich and Taft.

As a means to diversify investments, Mr. Noe approached the Ohio Bureau of Workers' Compensation to offer to invest a portion of the state's money in the rare coin market, something that, so far, no other state has been known to do. So, in 1998, the OBWC agreed to let Mr. Noe invest $25 million in rare coins on behalf of the State. When Gov. Taft was elected, Mr. Noe again approached the OBWC who agreed to allow him to invest another $25 million in rare coin funds. (The head of OBWC is appointed by the Governor.)

Despite the fact the Mr. Noe was a county party chairman who had contributed thousands of dollars to Taft when he ran both for Secretary of State and Governor, some Republican state legislators still insist that there is no evidence that there was any evidence of GOP favoritism in choosing Mr. Noe to manage this investment. But, Noe was only one of four private managers of BWC funds to receive as much as $25 million to invest in 1998. When OBWC gave another $25 million for Noe to invest, he become one of only three private managers to hold the maximum amount of capital to invest under the program. And, ironically, when the Executive Director of the Ohio Turnpike Commission resigned in 2002 after an Inspector General's report found he and other high-level employees had improperly accepted gifts, free meals, golf outings, and sports tickets with contracts doing business with the agency, Gov. Taft nominated, that's right, Noe to serve as the new Executive Director. Therefore, it's not surprising that given the value of the contract (under Noe's contract, his firm was able to keep 20% of the profits), that by sheer coincidence all of the private managers became significant contributors to the state GOP. Indeed, Mr. Noe's own political contributions to the GOP increased nearly tenfold after being awarded the coin investment contract.

Until recently, the State has been able to defend this practice given the significant and consistent positive returns on Noe's investments. Indeed, over the years, the information Noe supplied the state showed quite a hefty return (as much as 11% some years). But, then someone in the OBWC must have seen "Jerry McGuire" cause it all went to hell the second someone there asked "show me the money."

First, it was revealed that two coins worth a total of $300,000 were "lost in the mail" in 2003. Then, the Toledo Blade, which has done a thorough and determined investigation to bring this matter to light, revealed that as early as 1999, a BWC auditor questioned some of the practices of Noe such as: writing off $850k in a failed business relationship, the inadequacy of real estate collateral for loans Noe made with state money to other businesses to develop property, the practice of Noe and his partner to personally buy and sell coins to and from the funds while managing the funds, and the payment of advances to Noe and his partner of profits of coin deals that had yet to occur.

Now it appears that over 120 of the coins are "missing." Personally, I would look under Noe's couch cushions or his car seats, I find a fortune every time, and I bet they've been there all along. This week, Noe's own attorney disclosed that as much as one quarter of the $50 million investment cannot be accounted. The head of the BWC has resigned in disgrace. The Ohio Inspector General has opened an investigation of Governor Taft's office as to whether high-level aides (including Taft's former chief-of-staff) improperly received gifts such as free or highly discounted stays at Noe's Florida vacation home. AND THE U.S. ATTORNEY'S OFFICE IS INVESTIGATING A BUSH/CHENEY FUNDRAISER IN COLUMBUS TO SEE IF MR. NOE CIRCUMVENTED FEDERAL CAMPAIGN CONTRIBUTIONS BY USING "PROXY" DONORS. After all, Noe was also one of Bush's "Pioneers," responsible for "raising" over $100,000 to the President's re-election efforts.

Investigators have already found unusual transactions where Noe would pay $100k for a coin and then resell it for $1. Because federal campaign finance laws do not require reporting of individual campaign fundraising efforts, just donations, the federal government is likely going to be interviewing several key players in the Ohio BC '04 effort to see if there is evidence that Noe: 1) obtained his "Pioneer" status by giving the money to other to donate on his behalf; and 2) whether any of the presumed misappropriated state money was used in making such donations.
It's about to get REALLY interesting in Ohio!

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