Ohio sues Noe to get control of coin funds; watchdog seeks records of 4 who worked for Taft

5/25/2005

COLUMBUS The state yesterday sued Maumee coin dealer Tom Noe on behalf of the Ohio Bureau of Workers Compensation and a judge agreed to immediately freeze the assets of the state s rare-coin funds.

On behalf of BWC and in the best interest of protecting the fund, I am asking the court to immediately give BWC complete control of the coin funds, said Attorney General Jim Petro, a Republican.

The state s request for a preliminary injunction was agreed to by Mr. Noe, a prominent GOP fund-raiser and then ordered by Judge David E. Cain of Franklin County Common Pleas Court.

Also yesterday, the state s rare-coin scandal reached into the office of Gov. Bob Taft.

Ohio Inspector General Thomas Charles asked the governor for e-mails, phone records, and personnel files for former Chief of Staff Brian Hicks and three other current and former employees of Mr. Taft s office.

During the course of our investigation, information has come to light that certain members of the governor s staff may have received lodging accommodations and other items by Mr. Noe, Mr. Charles wrote in a letter to the governor s office.

Mr. Hicks resigned as Mr. Taft s chief of staff in 2003 to start his own lobbying and consulting firm.

That firm, Hicks Partners, was hired by the Bush-Cheney campaign and the Republican National Committee to raise money in Ohio for the President s re-election campaign. The fund-raising included an October, 2003, lunch event in Columbus that raised $1.4 million for the campaign.

The U.S. Attorney s office and the FBI are currently investigating whether Mr. Noe has violated federal campaign finance laws and has focused on donations made at that fund-raiser, which Mr. Noe attended.

Yesterday, the attorney general s office sued Thomas Noe Inc., which is the parent company of Vintage Coins & Collectibles. Profits from the two coin funds flow into Thomas Noe Inc.

The lawsuit was filed the same day that the bureau said Mr. Noe s attorneys barred access by fraud investigators to two locations where Mr. Noe s Capital Coin funds maintain inventories: Monclova Township and Broomall, Pa.

The Blade has reported that as many as 121 state-owned coins valued at about $400,000 are missing or stolen.

State Sen. Teresa Fedor (D., Toledo) called Mr. Petro a Johnny-come-lately, taking action 51 days after The Blade first reported that the bureau had invested $50 million in rare-coin funds controlled by Mr. Noe, who has contributed to the campaign funds of Mr. Petro, Governor Taft, state Auditor Betty Montgomery, and many other top Ohio Republicans.

Sen. Marc Dann, a Democrat from suburban Youngstown, said he hoped the attorney general didn t wait too long to file suit to freeze the assets of the coin funds.

They have had almost eight weeks since The Blade first uncovered this to clean up the records, try to find coins, to maybe move coins, or convert them for their personal benefit in the worst case. This could have been avoided if the attorney general had filed suit immeidately, Mr. Dann said.

Judge Cain yesterday signed an order to:

• Stop Thomas Noe Inc. from selling, transferring, disposing, or removing any of the assets of the two coin funds without the bureau s consent.

• Immediately freeze the assets of the coin funds.

• Get an accounting to determine all assets, liabilities, and obligations of the coin funds.

• Allow for the assets of the coin funds to be transferred to locations that the bureau determines.

• Give the bureau complete control of the coin funds.

Bill Wilkinson, Mr. Noe s attorney, said the request for a preliminary injunction and order signed by Judge Cain were with the consent and cooperation of Mr. Noe, who has agreed to step down as general manager of Capital Coin Fund I and II.

If the state wants a new manager, they will get it. If they want no coins traded, there won t be any coins traded, Mr. Wilkinson said.

Mr. Noe urged the state to not immediately freeze the assets of the coin funds, Mr. Wilkinson said.

Mr. Noe counseled against the coin freeze. It will deprive the coin fund of trading income as long as it is in place. The state insisted on the coin freeze, he said.

Mr. Wilkinson said he didn t know how many coins had been traded since the controversy began in early April.

Senator Dann said it wasn t a healthy relationship for Mr. Noe s attorney and the attorney general s office to file a request for a preliminary injunction that both sides supported.

If the attorney general can t maintain a level of independence and objectivity, he ought to withdraw, he said.

At about 11 a.m. yesterday, state fraud investigators had planned to start checking the inventory of all the rare coins owned by the state.

But Mr. Noe s attorneys would not allow bureau fraud investigators to enter the locations in Monclova Township and Broomall, Pa., said Jeremy Jackson, the bureau s press secretary.

He said legal hurdles prevented the investigators from checking inventory at the two sites.

Mr. Wilkinson, Mr. Noe s attorney, said the Broomall, Pa. site, Delaware Valley Rare Coins, is not owned or controlled by Noe and access wasn t granted to Monclova Township because the bureau initially said it wanted to go there tomorrow or Friday but then moved that up by two days.

Mr. Wilkinson said attorneys from his firm had been dispatched to coin offices in Colorado and Florida, and he couldn t get one to Toledo that soon.

Mr. Jackson said the bureau s fraud investigators yesterday began to check inventories in Evergreen, Colo., and Sarasota, Fla. He said it was unclear how long the inspections would take.

We won t discuss the findings until we re complete, he said.

Mr. Noe s Denver attorney, Dan Levin, said Ohio investigators yesterday reviewed documents at the Numismatic Professionals office in Evergreen. He expected the agents to return to the office today to continue the inspection.

They just reviewed the books and records, said Mr. Levin, who was on hand for the inspection. It was very uneventful. They are just verifying the inventory right now.

Mr. Levin said he couldn t speak for the other Capital Coin subsidiaries, but the Evergreen office was willing to cooperate.

Mr. Charles, the state s inspector general, asked the governor s office for information about four current and former employees as part of his investigation of the state s investment in rare coin funds controlled by Mr. Noe.

In addition to Mr. Hicks, the inspector general asked for records on former Hicks assistant Cherie Carroll, communications director Orest Holubec, and former high-ranking aide Doug Talbott.

We will comply with this, said Mark Rickel, the governor s press secretary. It is part of an ongoing investigation.

Asked if the current and former employees had done anything wrong, Mr. Rickel replied: That will be determined by this investigation.

The Blade reported May 12 that Mr. Hicks, who was Mr. Taft s chief of staff and most trusted aide from 1999 to 2003, twice rented a Florida Keys home owned by Mr. Noe for family vacations.

Mr. Hicks told The Blade that he paid $300 to $500 for five nights in the 3,600-square-foot watefront home in 2001 and stayed there again for a few days a year later.

People familiar with the area said it costs between $2,500 and $3,500 a week to rent homes similar to the Noes property.

In interviews on May 10 and May 11, Mr. Hicks said he did not disclose the vacation stays to the Ohio Ethics Commission because he felt he paid market value for the stay.

Last night, Franklin County Treasurer Richard Cordray, a Democrat, said he found it odd that Mr. Hicks had not reported the vacations as a gift on his financial disclosure statement.

Mr. Cordray, who is seeking the Democratic nomination for state treasurer next year, said there appeared to be a fair amount of distancing going on between Mr. Taft and Mr. Hicks.

When informed of this information, Mr. Hicks told The Blade on May 11 that he stayed in the home s apartment.

Mr. Hicks, Ms. Carroll, and Mr. Talbott didn t return messages seeking comment yesterday. Mr. Holubec declined comment.

The inspector general requested all state phone and cellular records for Mr. Hicks from 1999 to 2003, phone records for Mr. Talbott from 1999 through 2000, and phone records for Mr. Holubec from 1999 to present.

Mr. Talbott, a former aide to Republican Governors George Voinovich and Mr. Taft and now a lobbyist, has said he had some meals with Mr. Noe in Columbus, but he never accepted gratuities from him.

Morton s restaurant confirmed that Mr. Noe has rented the wood-panelled Private Boardroom. By several accounts, Mr. Noe would pick up the tab for occasional events steeped in expensive steaks, flowing drinks, and large tips.

In addition, the inspector general wants personnel files and all e-mails for Mr. Hicks and his aide, Ms. Carroll; and personnel files for Mr. Holubec and Mr. Talbott.

When Mr. Hicks resigned as Mr. Taft s chief of staff in 2003 to start his own lobbying and consulting firm, Ms. Carroll joined him at Hicks Partners.

As the bureau s fraud investigators began to check the state s rare-coin inventory, Democrats continued to hammer away at what they say is a slow reaction by Republican officeholders to what is being referred to as Coingate.

On Monday, Mr. Taft ordered bureau fraud investigators to execute a complete inventory of all rare coins owned by the state.

Mr. Taft initially defended the state s investment and Mr. Noe shortly after The Blade published its first story on April 3.

House Minority Leader Chris Redfern (D., Catawba Island) yesterday said Mr. Taft s failed leadership strikes again.

More than a month after the coin scandal was first uncovered, amid serious allegations of deception and wrongdoing, Governor Taft has now finally reached the same conclusion that Ohioans made five weeks ago this scandal cannot be tolerated and must be fully investigated.

Mr. Redfern said state Auditor Betty Montgomery and Mr. Petro, both Republicans seeking their party s nomination for governor in 2006, also have reacted too slowly.

Ms. Montgomery on May 16 ordered a special audit of the state s rare-coin investment. On Monday, Mr. Taft asked Mr. Petro to secure an expert opinion on whether releasing the Capital Coin inventory will harm the bureau s ability to receive a maximum return on its investment while the state s investment is being liquidated.

The Blade, Mr. Dann, and the Columbus Dispatch have separately asked the Ohio Supreme Court to order the bureau to release an uncensored list of the state s rare-coin inventory and transactions that Capital Coin has made information the bureau says is a trade secret exempt from the state s public records law.

The disappearance of these coins and the larger question of how public monies are invested are central issues for the auditor s office.

And ensuring that records of public investments are released to the public is an issue Petro should have resolved long ago, Mr. Redfern said.

Steve Eder contributed to this report. Contact James Drew at:jdrew@theblade.com or 614-221-0496.