Ohio coin dealers feeling scandal's sting

2/14/2006

Beth Deisher tells people she is editor of Coin World magazine in Ohio and some raise an eyebrow or pause disapprovingly, she said.

It wasn't always that way in her Buckeye State. But a $50 million rare-coin scandal this year involving one-time GOP fund-raiser and coin-dealer Tom Noe has stigmatized the industry, she said.

And a 53-count indictment announced yesterday against the former Monclova Township businessman, who sought audiences with the President and golfed with the governor, might only make it worse.

"They give you this funny look that by implication, anything or anyone having to do with coins is a crook. In this state it certainly has become a handicap if you're involved with coin collecting, rare coins, and bullion," she said.

"I don't think that same stigma is there anywhere else, but it is very, very strong in this state."

The legislature's reaction to the Noe scandal also has hurt the dealers and collectors in Ohio by raising prices, she said. State lawmakers in the GOP-controlled legislature removed the sales tax exemption on gold bullion and collectible coins, forcing some coin dealers out of business, Ms. Deisher said. The exemption approved in 1989 and once unofficially known as the Noe Amendment became a political liability for the GOP, she said.

"They have put upward of 100 coin dealers out of business or have severely affected their businesses. These are honest, law-abiding people that got crushed in all the hysteria over the situation," she said. "At least 25 states exempt bullion coins for sales tax. The knee-jerk reaction of the legislature has really put a chill on the coin business."

Ed Fritz, who lobbied with Mr. Noe for the exemption back in the late 1980s, had plans this year to expand his business, Centerville Coins and Jewelry Connection. But since the sales tax exemption was lifted, he has lost 80 percent of his in-store business, he said. He has gained back 30 percent by "redoubling our efforts on the Internet."

That's lost money for the state, he said.

"People who used to come in and buy bullion, they just stopped coming in," he said. "I've talked to a lot of legislators and had a meeting with [Speaker of the House Jon] Husted. They've all said, 'We'll look at this thing, but you have to get rid of [Gov. Bob] Taft because he's going to be ducking this thing because it's connected to Noe.'●"

"I've known Noe for 30 years. I knew his father. I'm flabbergasted," Mr. Fritz said of the indictment. "I've never known Tom to do anything illegal."

Ms. Deisher said the number of counts in the indictment was particularly shocking to her and others, who thought it might involve a few counts and was more of a political than criminal issue.

Scott Travers, a consumer advocate and author who this week released the fifth edition of his Coin Collector's Survival Guide, said that the liquidation of Mr. Noe's holdings for the state has been quietly and skillfully executed by hired consultant, John Albanese. Mr. Travers said coin prices have not been affectd by a potential flood on the market, in part because demand has been so strong and because Mr. Albanese has experience unloading large amounts of coins.

"When you deal with reputable dealers, people who deal with upholding high standards [you don't have problems.] There are a lots of bad apples, fly-by-night organizations, and boiler-room operations," Mr. Travers said. "[Mr. Noe] was a dealer who had a spotless reputation, and that's why it's so shocking. It's fascinating that it has had no impact on the marketplace."

Donn Pearlman, who owns a public-relations firm and is a spokesman for Professional Numismatists Guild, agreed that the scandal has not affected the larger coin-trading industry. But he stressed the indictment and the scandal have been a shock because Mr. Noe was well-respected in the industry.

"It's not just rare coins; wherever money can be made there are problems. You have problems in the stock market, real estate, oil," he said. "I think that if there was ever any reaction, it lasted for 37.8 seconds. The market roared forward in 2005. Major numismatic auctions in 2005 were $500 million, compared to $320 million in 2004."

David Harper, the editor of the rare coin weekly Numismatic News, agrees. "The hobby," as he refers to it, has survived, even flourished, despite the pall and taint of "Coingate," he said.

The market has been buoyed by the rising price of gold and silver and pushed higher by the intense interest in U.S. rare coins, he said. Though the Noe affair provides cautionary tales for dealers and investors, the story is more about corruption in government and how not to invest public dollars, he said.

"Very lax bookkeeping," he said. "It looks like the government of the state of Ohio was run out of the back end of a Buick."

Contact Christopher D. Kirkpatrick

at: ckirkpatrick@theblade.com

or 419-724-6077.