Since April, the Ohio Bureau of Workers' Compensation has been caught in the eye of a storm of controversy--it's also been caught short of cash, to the tune of about $13 million, and then some.
The Toledo Blade dubbed the scandal "Coingate," referring to the $55 million in bureau funds that have been invested in rare and valuable coins since 1998. At least 121 of those coins have mysteriously gone missing. Two of the coins--valued at $300,000--were known to be missing in 2003, allegedly "lost in the mail." But a 2004 audit revealed that the whereabouts of an additional 119 coins were not known, bringing the total value of the loss to about $400,000.
Public revelations about the loss triggered an investigation and a physical inventory of the coin holdings this past May, revealing further misappropriated coin investments totaling between $12 million and $13 million.
All of the missing coins were purchased with state money controlled by Tom Noe. In 1998, Noe pitched officials who managed the bureau's investment portfolio with the idea of buying and selling coins. He was given $50 million to invest on the bureau's behalf.
Noe, a wealthy local coin dealer and well-known Republican fund-raiser, earned the coveted status of a Bush "pioneer" because of the contributions he raised for President Bush in last year's elections--more than $100,000.
However, his work raising cash for the president's re-election campaign has also made him the target of U.S. Justice Department and FBI investigations into whether Noe violated federal campaign financing laws by giving money to people who then donated it to Bush's re-election.
In May, the Ohio Inspector General announced it would also pursue charges against Noe for "alleged wrongful acts associated with the investment practices" of the bureau.
Compounding matters, allegations have been made that Noe used some of that misappropriated state money to make contributions to GOP candidates, including President Bush.
Amid the investigations, Noe was forced to resign from his position as manager of the coin fund. Noe also resigned from his positions on the Ohio Board of Regents and the Ohio Turnpike Commission.
Soon after, a flurry of Republicans--including President Bush and Ohio Gov. Bob Taft?moved to distance themselves from the scandal by returning campaign contributions made by Tom Noe and his wife, Bernadette.
The fallout from Coingate has been troublesome for Ohio's beleaguered Bureau of Workers' Compensation. Only days after Noe's resignation, the scandal also forced the resignation of James Conrad, the head of the agency.
State officials expect that the case will result in multiple prosecutions. Meanwhile, the scandal deepened even further following Conrad's resignation when it was revealed that an additional $215 million of the state's insurance fund had been lost in a hedge fund unrelated to Noe or the coin funds.
The bureau's chief investment officer was forced to resign, and Gov. Taft has promised to appoint a Governor's Special Liaison to the agency, who will essentially act as a watchdog, keep the governor informed of day-to-day issues relating to the bureau and oversee a management review team.
August 1, 2005
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