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COLUMBUS -- Federal and state authorities are pursuing criminal and civil charges against Tom Noe for allegedly misappropriating $10 million to $12 million from the state's rare-coin investment.
Franklin County Prosecutor Ron O Brien said yesterday that he has reason to believe Mr. Noe, a prominent Toledo-area Republican fund-raiser and rare-coin dealer, has misappropriated more than $10 million in state assets.
"I have reason to believe it is more than just missing assets or lost assets or otherwise," said Mr. O Brien, a Republican. "I have reason to believe there is actual misappropriation of state funds involved ... I'm talking about conversion for personal use."
"When I say I have reason to believe there was misappropriation, I'm talking about conversion for personal use," he added.
It is unclear whether Mr. Noe used some of the state's money to make contributions to Republican candidates, including President Bush's re-election campaign, Mr. O Brien said.
The Bush-Cheney campaign lists Mr. Noe as a Pioneer, for raising from $100,000 to $250,000 for the President's re-election campaign.
The U.S. attorney's office and the FBI are investigating whether Mr. Noe violated campaign-finance laws. That probe has focused on an October, 2003, fund-raiser in Columbus that generated $1.4 million for the Bush campaign.
Gov. Bob Taft has scheduled a Statehouse news conference today to respond to the unfolding GOP scandal.
Mr. O Brien said he didn't have details of the alleged misappropriation, but he confirmed it involved money provided by the Ohio Bureau of Workers Compensation to Mr. Noe's Capital Coin funds.
The Blade reported April 3 that since 1998 the bureau had invested $50 million in rare-coin funds controlled by Mr. Noe, despite concerns raised by a bureau auditor about possible conflicts of interest and whether the state's millions were adequately protected.
The bureau is the state agency charged with paying medical bills and providing monthly checks to Ohio workers injured on the job.
Since 1990, campaign finance records show, Mr. Noe has contributed more than $110,000 to candidates for state offices and to various state Republican Party committees.
Asked where the state's money went, Mr. O Brien replied: I don'tknow the answers to that question. The search warrant might partly answer that.
He referred to the search warrant executed yesterday afternoon at Mr. Noe's Vintage Coins & Collectibles, his Monclova Township headquarters.
As many as 10 fraud investigators pored over evidence at Mr. Noe's office as Ohio Highway Patrol troopers stood guard outside.
A technician photographed all the evidence inside the headquarters before it was brought outside and put into a state van backed up to the office warehouse. Late into the night, state inspectors loaded numerous boxes and at least eight desktop computers and a laptop into the van.
Inspectors confiscated more than coins in their sweep yesterday. One investigator said they found that Mr. Noe had purchased other collectibles with the state's money, including a Christmas card signed by former First Lady Jacqueline Onassis and a document signed by Thomas Jefferson.
Mr. Noe has said through his lawyers that he will cooperate in the investigation. Mr. O Brien said he expects Mr. Noe to make a full statement to authorities on his alleged misconduct in Lucas and Franklin counties.
Mr. Noe's business is located in Lucas County and the Bureau of Workers Compensation made its rare-coin investment from its headquarters in Columbus, the seat of Franklin County and the state government.
The Ohio attorney general's office is expected today to file a lawsuit in Franklin County Common Pleas Court to freeze all of Mr. Noe's personal and business assets, along with those of his wife, Bernadette, said agency spokesman Kim Norris.
The Noes are both former chairmen of the Lucas County Republican Party.
Mr. Noe, who resigned earlier this month as a member of the Ohio Board of Regents and the Ohio Turnpike Commission, also has agreed to surrender his passport today at the Franklin County prosecutor's office, Mr. O Brien said.
State attorneys obtained a court order yesterday morning so bureau fraud investigators, state auditors, and the inspector general's office could get access to the state's rare-coin inventory housed at the headquarters.
For three days, bureau fraud investigators were barred access to the site.
After the hearing yesterday morning, three attorneys representing Mr. Noe provided information to Mr. O Brien and the chief of his white-collar crime unit about the misappropriation of state assets.
Mr. O Brien said he then contacted Lucas County Prosecutor Julia Bates, a Democrat; U.S. Attorneys Greg White of the Northern District of Ohio and Gregory Lockhart of the Southern District; attorneys for the governor, the Bureau of Workers Compensation, Attorney General Jim Petro, and state Auditor Betty Montgomery.
Rare coins viewed
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Bureau fraud investigators began to view the rare coins inside Mr. Noe's vault at about 11 a.m. yesterday, said Jeremy Jackson, the bureau's press secretary.
At 1:30 p.m., Mr. Noe was required to provide a complete inventory list so the inspection and audit of the rare coins could start, according to the order signed by a Franklin County Common Pleas Court judge.
But Mr. Jackson said the audit never began because Mr. Noe's attorney, Bill Wilkinson, contacted the state to say that $10 million to $12 million of assets are unaccounted for.
Any review ceased and the appropriate authorities were called in, Mr. Jackson said.
Inspector General Tom Charles, the state's anti-corruption watchdog, asked for help from the Lucas County prosecutor's office on Wednesday. He wanted the local office to assist the highway patrol in getting the search warrant.
In asking for the search warrant, the prosecutors said there was evidence of theft, obstruction of justice, and tampering with evidence, Ms. Bates said.
"We were asked quite frankly to get in there and help them get these coins," Ms. Bates said last night.
The search warrant did not indicate who may have committed the crimes, nor did it say where they occurred, she said. The warrant allowed the highway patrol and the inspector general'soffice to scour Vintage Coins and take everything from coins to computers.
Lucas County Common Pleas Court Judge Jack Zouhary signed the search warrant yesterday afternoon and it was executed shortly afterward.
Mr. O Brien said he would meet next week with Ms. Bates and U.S. Attorneys White and Lockhart to coordinate the investigation into the alleged misappropriation of state assets by Mr. Noe.
The search warrant was executed to "make sure the assets that currently exist are seized along with any other evidence and move forward in a joint investigation with everybody involved," Mr. O Brien said.
Jon Richardson, who is representing Mr. Noe regarding the federal investigation, said he has not been contacted regarding the criminal allegations made by Mr. O Brien. He expects he will represent Mr. Noe in the matter.
A federal grand jury is expected to begin hearing from witnesses Wednesday. The U.S. attorney'soffice has acknowledged that it is investigating Mr. Noe and law enforcement sources have said it centers on contributions made to a Bush-Cheney fund-raiser in October, 2003, at which Mr. Noe sponsored a table.
A number of local Republicans attended the $2,000-a-plate event. President Bush flew in for the luncheon, which raised $1.4 million for the campaign.
Sam Thurber, husband of Lucas County Commissioner Maggie Thurber, said last night that he has been called to testify before the grand jury. He spoke briefly outside a fund-raiser for Betty Shultz, an at-large Toledo city council member.
Mr. Thurber, Ms. Thurber, and Ms. Shultz donated to the Bush-Cheney campaign at the time, although the Thurbers each contributed $1,950, records show.
Ms. Shultz acknowledged that she, too, has been summoned to appear before the grand jury. She declined further comment.
At the time of the fund-raiser, Mr. Noe had already given the maximum $2,000 to the campaign for the primary. It is illegal to give someone else money to donate on your behalf.
Colorado joins probe
Jacki Tallman, a spokesman for the Jefferson County, Colo., Sheriff'sDepartment, said detectives from her staff have joined Ohio authorities in investigating the Colorado ties to the state'srare-coin investment.
In October, 2003, the sheriff'soffice investigated the apparent mail theft of two gold coins worth about $300,000 from the venture'sColorado office. A former employee, Michael Storeim, reported the theft to authorities, but Mr. Noe never contacted civil investigators about the missing state-owned coins.
"We are onboard with the current, reopened investigation," said Ms. Tallman. "We are working with the state of Ohio."
Ms. Tallman said two Jefferson County investigators have been assigned to the case.
Mr. Storeim'sattorney, Brian Jeffrey, said he had "no idea" these developments were forthcoming. Mr. Storeim has been blamed by Mr. Noe and colleagues for the misappropriation of 121 coins from the fund'ssuburban Denver office.
"It does certainly appear the problem with the fund is not Mr. Storeim," Mr. Jeffrey said. "This all came as a surprise to us. We had no idea there would be anything like this discovered."
Earlier this month, Mr. Storeim filed suit against Mr. Noe, claiming the Maumee businessman instructed at least two of his employees to seize $500,000 worth of his valuables from the Denver office.
Calls for Conrad's ouster
Democrats yesterday called for Governor Taft to oust or suspend James Conrad, the bureau'sadministrator-CEO.
House Minority Leader Chris Redfern called for the suspension of Mr. Conrad until a full investigation of the rare-coin scandal is complete.
"Here'sa guy who defended this investment and now $10 million to $12 million are missing," Mr. Redfern said.
"He should have no role in this investigation. There is one person who decided to invest these dollars and that is Jim Conrad."
Mr. Taft, who initially defended the state'sinvestment in rare coins, wouldn'ttalk to The Blade last night.
He released a statement that said: "Today'snews makes it clear that Tom Noe has irresponsibly mismanaged the monies of the state of Ohio. Such criminal action is outrageous and will not be tolerated."
Mark Rickel, the governor'spress secretary, declined comment about whether Mr. Taft would remove Mr. Conrad or force his resignation.
Sen. Teresa Fedor (D., Toledo) said she and others who questioned the state'srare-coin investment since The Blade broke the story were "met with resistance every step of the way."
Ms. Montgomery, a former Wood County prosecutor who has received $4,350 in campaign contributions from Mr. Noe, said she did not call for a special audit until May 16 because she wanted to make sure she wouldn'tinterfere with federal investigations.
Ms. Montgomery said she would not discuss the results of the search warrant. She said she won'tplace an estimate on the rare-coin inventory until Sotheby'scompletes its evaluation.
She said she expects the results of the special audit to be used in the criminal investigation of Mr. Noe.
In addition to the search warrant, authorities have subpoenaed records to pinpoint transactions within the Capital Coin funds, Ms. Montgomery said.
"We will look at the inventory that has been purchased by BWC dollars and see where it is now. Is it still in the asset base? Does the inventory we have been given match the coins that we see or the investment collectibles that we are reported to have purchased," she said.
The inventory inspection also involves an investigation of whether Mr. Noe'sCapital Coin invested part of $55 million in state funds to buy autographs, paintings, sports cards, and other collectibles, or whether those items were used as collateral.
A law enforcement source with knowledge of the investigation said that besides the Christmas card signed by Jacqueline Onassis and the document signed by Thomas Jefferson, other collectibles bought with state funds include a rare photograph of Abraham Lincoln without a beard, a Norman Rockwell painting, and baseball cards and autographed baseballs.
There are thousands of items in the store, and include items related to almost every president.
"He'sclaiming these were all investments," the source said.
Mr. Noe was present during part of the day but was not in the store during the evening search. None of his representatives was there, the source said.
"We have no concrete proof that these collectibles and memorabilia are part of the Capital Coin fund," said Mr. Jackson, the bureau'spress secretary. "We have no financial records to show how they were bought by the Capital Coin fund if that in fact was the case."
John Annarino, the bureau'schief legal counsel, said: "It's an ongoing process to decide what belongs to us and what does not belong to us."
Mr. Jackson said "to the best of my knowledge, no other collectibles and memorabilia" were found at the other four sites where Capital Coin stores inventory: Sarasota, Fla., Wilmington, Del., Broomall, Pa., and Evergreen, Colo.
When fraud investigators on Wednesday pressed to check the coins, Mr. Noe'sattorney, Bill Wilkinson, instead showed them several collectible items that he said the state owned through Mr. Noe'sCapital Coin.
"It was the first time anyone at the bureau knew there were such things that were there," said Mr. Conrad, who said bureau officials then contacted the attorney general'soffice.
Scott A. Travers, a rare-coin expert and author of several coin collecting books that stress consumer protection, said he found it hard to believe that $12 million in coins could be stolen. The number is just too large, he said.
Mr. Travers said he suspects other investments might be the reason for the losses, or that some technical reason related to how the money was invested outside of coins could be the problem.
"I find it difficult to believe. I think Noe is too savvy. I just can'tsee the guy taking the coins. I can'timagine it. I just can'timagine how someone can lose $12 million in coins. It'sa lot of money. It'sbeyond comprehension; I don'tbelieve that it happened," Mr. Travers said.
As chairman of the U.S. Mint'sCitizens Coinage Advisory Committee, which advises the Treasury secretary on coinage, Mr. Noe has achieved acclaim and respect within the industry, Mr. Travers said.
Blade staff writers Steve Eder and Christopher Kirkpatrick contributed to this report. Contact James Drew at:firstname.lastname@example.org 614-221-0496.