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Published: Sunday, 4/27/2014 - Updated: 4 months ago

COMMENTARY

Noe scandal and its aftermath just won’t go away

Coingate shows what can happen when partisan politics gets mixed up with public money

BY DAVID KUSHMA
BLADE EDITOR
Kushma Kushma
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What have Ohio Republicans learned from the Tom Noe scandal — other than, perhaps, not to get caught? Not much, evidently.

You remember Noe, the former Maumee coin dealer and big-time power player in state GOP politics. Between 1998 and 2005, he persuaded the Ohio Bureau of Workers’ Compensation to let him manage a bizarre investment of $50 million — money raised from employers to pay workers who were hurt on the job — in rare-coin and collectibles funds he created.

Based largely on investigative reporting by The Blade, Noe was convicted in 2006 of stealing $13.7 million from the funds. He is serving an 18-year stretch in a state prison, after doing two years in federal prison for laundering illegal contributions to the 2004 re-election campaign of President George W. Bush. The Coingate scandal ensnared then-Gov. Bob Taft, a Republican, who offered a no-contest plea in 2005 to criminal charges of misdemeanor ethics violations.

You could reasonably conclude that the intent of the Coingate scheme, at least in part, was to use public money as a pump-primer to help strengthen Ohio Republicans’ political fund-raising apparatus. Noe’s crimes — theft, money laundering, forgery — interrupted that agenda.

A new report by the state inspector general’s office concludes blandly that “the Noe scandal resulted in significant reforms at the Ohio Bureau of Workers’ Compensation, both to the organization and in the manner in which the bureau operates.” Good to hear.

But my colleague Jim Provance, The Blade’s Columbus bureau chief, has reported that the bureau is investing $50 million — the most that it could spend — in a Wisconsin health-care real estate fund headed by a major national Republican donor and money-raiser, Jon Hammes.

There’s no hint of illegality in the transaction; the bureau insists it’s a sound business decision. But that doesn’t greatly improve its aroma.

The office of Gov. John Kasich, who has not been implicated in Coingate, says the governor doesn’t know Mr. Hammes and doesn’t involve himself in investment decisions by the Bureau of Workers’ Compensation board. But the bureau’s administrator and nine of the 11 board members are his appointees.

Tom Noe, flanked by Lucas County sheriff’s deputies, leaves a courtroom after sentencing in this 2006 photo. Tom Noe, flanked by Lucas County sheriff’s deputies, leaves a courtroom after sentencing in this 2006 photo.
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Nor has Mr. Hammes given to the campaigns of Mr. Kasich and other Ohio politicians. Maybe it’s just a coincidence, but the other state governments that are big investors in his real estate fund — New Jersey, Texas, and New Mexico — also have Republican governors with national political aspirations in 2016.

Governor Kasich’s all-but-certain Democratic opponent in November, Ed FitzGerald, is predictably trying to make a campaign issue of the $50 million plunge. The workers’ compensation bureau counters that its investments have been so successful, it gave back $1 billion last year to Ohio businesses that pay to insure their employees against workplace injuries.

Either way, the Noe scandal provides a continuing reminder of what can happen when partisan politics gets mixed up with the spending of public money.

Last week, Ohio Inspector General Randall Meyer, the ostensible watchdog of state government and an appointee of Governor Kasich, at last issued his office’s final report on the Noe fiasco — nine years after the investigation began, six years after the last prosecution in the case, and only after The Blade sued Mr. Meyer this year to force the document’s release.

The report goes beyond Noe’s antics to describe other bad business at the Bureau of Workers’ Compensation. But its nearly 100 pages include little that Ohioans haven’t heard before.

The report concludes that several bureau officials sought to cash in on their ability to approve big investments, in the form of bribes. It says another figure in the investigation who was sentenced to prison, an investment specialist named Mark Lay, caused the state to lose $216 million through “one of the largest financial frauds in Ohio history.”

Yet even as it rehashes previous findings, the review omits critical investigative records that are supposed to accompany reports from the inspector general, such as transcripts of witness interviews. It skirts issues related to convictions that have been expunged because the report took so long to arrive.

And the report leaves big questions unresolved: Beyond the Bureau of Workers’ Compensation, how deep and how high up did the scandal go? Who approved the coin scheme? How could Noe have looted so much money for so long? Who knew about it? Other than those who were named in Coingate’s 19 criminal convictions — including several prominent Toledo area Republican politicians — who else was involved?

The investigation didn’t answer these questions because it didn’t ask them. As Mr. Meyer put it: “As the task force investigation was completed prior to the current inspector general assuming this office, there were no resources utilized to reinvestigate an already completed matter.” That nonexpenditure of resources appears to have precluded even an interview with Noe.

And now there is another $50 million investment by the Bureau of Workers’ Compensation with partisan overtones. The bureau insists it is “unquestionably a much more professional and accountable organization than it was in 2005.”

So you might think that the bureau and the Kasich administration would want to avoid even the remotest possibility of a sequel to the Noe disaster, especially in an election year. Apparently not. One thing seems certain: We haven’t heard the last of Coingate, or its aftermath.

David Kushma is editor of The Blade.

Contact him at: dkushma@theblade.com or on Twitter @dkushma1



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