COLUMBUS -- Ruling in a lawsuit filed by The Blade, the Ohio Supreme Court yesterday ordered the Bureau of Workers Compensation to release all transaction records from the $50 million rare-coin investment that Tom Noe controlled.
In a 5-2 decision, the high court rejected the state's argument that the records which show the sellers, dates, and purchase prices of coins in the state's inventory are trade secrets exempt from the Ohio Public Records Act.
The documents should be released immediately for public inspection, wrote Democratic Justice Alice Robie Resnick of Ottawa Hills for the majority.
Justice Paul Pfeifer, a Republican, added in a concurring opinion: "From the outset, the Bureau of Workers Compensation's trade secret argument seemed more a delaying tactic than a legitimate legal issue.'
The Blade had the final lawsuit pending before the Supreme Court against the insurance fund for injured workers. State Sen. Marc Dann, a Democrat from suburban Youngstown who has emerged as the leading critic of the controversial rare-coin investment, and The Columbus Dispatch filed similar suits but dismissed them on June 22 and June 23, respectively.
Fritz Byers, general counsel for Block Communications Inc., the parent company of The Blade, said yesterday's ruling "vindicates the public's crucial interest in scrutinizing governmental affairs. The transaction records to which the public will now have access are a vital part of this story of grotesque abuses of public trust," Mr. Byers said.
John Robinson Block, publisher and editor-in-chief of The Blade, cheered the Supreme Court decision, but said Gov.Bob Taft needs to release weekly reports he has received from the bureau, dating to 1999.
Mr. Taft has claimed he does not need to release the information, citing executive privilege.
"We're pleased with the court's decision and hope Governor Taft will convince his underlings to release records and stop violating Ohio Public Records law," Mr. Block said.
"We are confident of our legal position."
The Blade on May 11 asked the Supreme Court to order the bureau to provide access to uncensored audit reports of the coin inventories and records documenting transactions of the two funds that Mr. Noe formed Capital Coin I and II.
On May 26, state officials announced they were pursuing civil and criminal measures against Mr. Noe after his attorney informed authorities that up to $13 million is missing from the rare-coin investment.
Mr. Dann yesterday said the transaction records could answer two major questions about Mr. Noe's Capital Coin.
"Who was he transacting with? And how many of those related-party transactions were artificial in their valuations?" Mr. Dann said.
He referred to Mr. Noe's 1997 statement that he and coin fund managers could buy and sell coins among themselves from the state's inventory.
Mark Anthony, a spokesman for state Attorney General Jim Petro a Republican who is seeking his party's nomination for governor next year said the state will not ask the Supreme Court to reconsider its decision.
Mr. Anthony referred other questions to the bureau, saying: We're their lawyer, not their spokesman.
No timetable for release
Jeremy Jackson, the bureau's press secretary, said the agency will comply fully with the Supreme Court's decision.
He said there is no immediate timetable for releasing the documents.
"We want to get it out as quickly as we possibly can," he said.
Attorney William Bodoh, who was appointed by Mr. Petro to oversee divestiture of the coin funds, said the court's decision would hinder his ability to recoup as much money as possible for the state.
"If the world knows what Tom has invested in discrete holdings, then that essentially sets the top end of what somebody is going to pay for it, and then they are going to try to beat it," said Mr. Bodoh, a retired federal bankruptcy court judge who had not yet reviewed the court's decision.
It makes it very difficult for us to come up with an exit strategy for marketing the coins, Mr. Bodoh said.
Mr. Bodoh said he planned to review the decision and then devise a strategy for selling off the coins that considers that the public will have knowledge of how much Mr. Noe and employees paid for the valuables.
"If any other coin dealer was going to offer a coin for sale, he or she would not say, Keeping in mind that I paid $500 for this [coin], what do you offer for this?," he said. "Someone is going to say, I ll pay you $500."
Bill Brandt, the president and CEO of Development Specialists Inc., the firm hired to replace Mr. Noe as the fund's manager, said he had mixed emotions about the court's decision.
He said "sunlight is the best disinfectant," a reference to using transparency as a way to restore the confidence of Ohioans in light of what has transpired with the coin funds.
But he added: "My goal is to get money back for the people of Ohio, and I'm afraid the knowledge of cost and price information would impair that."
Yesterday's ruling came from Justices Resnick and Pfeifer and five appeals court judges whom Justice Resnick appointed after Chief Justice Thomas Moyer and four other justices removed themselves from the cases involving Mr. Noe.
The five justices, all Republicans including Judith Lanzinger, received a combined $23,511 in campaign contributions from Mr. Noe and his wife, Bernadette. Mr. Noe was chairman of Justice Lanzinger's campaign last year.
Of the five appeals court judges picked by Justice Resnick, who had that power because she was the senior justice sitting on the cases, three are Democrats and two are Republicans.
Republican Thomas Bryant of Findlay and Democrat Tom Grady of Springfield dissented from yesterday's decision.
Documents and transactions
On April 26, The Blade asked the bureau for access to records documenting purchases and sale transactions from the two rare-coin funds that Mr. Noe controlled.
Two days later, the bureau provided The Blade with audit reports of the rare-coin inventory, but details about those coins were blacked out.
The Blade later received uncensored copies of the rare-coin inventory.
The Blade filed its lawsuit on May 11 against the bureau, seeking a court order to get access to the transaction records.
The state said records on the purchase of coins which are part of the transaction documents are "trade secrets and may affect the ability of the Funds to recoup their investments."
Attorneys for the bureau also said the documents are exempt from inspection under the state Public Records Act because they "are not records kept by a public office."
The court majority said the documents meet the definition of public records under state law because they document the bureau's investments.
Referring to Mr. Noe's Capital Coin I and II, Justice Resnick wrote: "These companies are public offices for purposes of the Public Records Act because they are entities established by the laws of this state for the exercise of any function of government."
"Moreover, the coin companies were capitalized almost entirely by, and indeed owe their very existence to, money furnished by the bureau through the State Insurance Fund," Justice Resnick added.
The documents about the purchase of coins are not trade secrets, even if their disclosure would affect the ability of the state to recoup its investment, Justice Resnick wrote.
For the information to be exempt from the Open Records Act as a trade secret, it must appear to have been the "subject of efforts that are reasonable under the circumstances to maintain its secrecy," she wrote.
The state did not allege it "had made any effort toward maintaining the secrecy of this information," Justice Resnick wrote.
In addition to reviewing the transaction records, The Blade is entitled to have the state pay its attorney fees, Justice Resnick wrote.
That amount was not available last night.
Judge Grady, in his dissenting opinion, said he would not have issued an immediate court order but would have granted one that would have triggered more review.
He compared the bureau's claim that release of the transaction documents would damage the state's ability to recoup its investment to a "dead mackerel in the moonlight," but he said the question should be considered in the "same manner as in civil actions."
But in his opinion concurring with the majority decision, Justice Pfeifer wrote: How much the bureau paid for coins is irrelevant to how much they can be sold for. The market is the market. That is especially true where, as here, the items sold are rare and unique.
Justice Pfeifer noted that the state has hired Sotheby s, the international auction house, to place a value on the coin inventory.
"The state will be an informed seller, and buyers will therefore know that the eventual sell off will not be akin to a garage sale where someone sells a Rembrandt for five dollars."
"The state will know what it is selling and what it is worth. And with bureau assets of over $21 billion, according to its 2004 annual report, the state can afford to wait if it does immediately get the price it seeks," Justice Pfeifer wrote.
Justice Pfeifer ended the opinion with "Caveat emptor," the Latin phrase which means "let the buyer beware."
Contact James Drew at:firstname.lastname@example.org or 614-221-0496.