toledoblade.com -- Calls for coin-fund answers grow

COLUMBUS — For the first time, Republicans joined Democrats yesterday in asking tough questions about the state’s $50 million investment in rare coins.

A day after The Blade reported that one of the people hired by local coin dealer Tom Noe to manage a state-funded coin venture was convicted of a felony for faking a rare-coin transaction to cover up drug money, three GOP senators said they want answers to several questions.

The Blade reported yesterday that Mark Chrans, now 41, was convicted of fraud and perjury in federal court for his role in laundering cocaine profits in 1981. Chrans is the same manager who caused Mr. Noe’s Capital Coin to write off $850,000 over the last three years because of bad coin deals, an unpaid loan, and salary advances.

“That is disconcerting,” said Sen. Kirk Schuring (R., Canton).

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The revelations could prompt a review into what the state requires regarding background checks into those hired to manage state money, said Sen. Randy Gardner, a Bowling Green Republican who is the No. 3-ranking senator. “Should we consider doing more in this area? And the answer is probably yes,” said Mr. Gardner.

Sen. Jeff Jacobson, a Dayton area Republican who is the No. 2-ranking senator, said he is examining a proposal to require a third party to analyze all alternative investments using state funds and submit a report to lawmakers.

The Ohio Bureau of Workers’ Compensation has invested $50 million with two Capital Coin funds set up and managed by Mr. Noe — a prominent Republican fund-raiser — getting $25 million in 1998 and another $25 million in 2001.

The bureau says during that period, the coin funds have returned more than $13 million in profits to the state and have been one of the bureau’s better investments.

Until yesterday, Republicans had rushed to defend Mr. Noe, a former Lucas County GOP chairman who was appointed by Republican governors to the state Board of Regents and the Ohio Turnpike Commission.

In an April 7 interview with The Blade, Gov. Bob Taft said Mr. Noe is “making money for the state. What’s the problem?”

“These people, these firms, they are hired to do a job. They are hired to get a return for the state on its investment,” said Mr. Taft, who has received campaign cash from Mr. Noe.

Mr. Gardner, whose campaign fund received $6,950 from Mr. Noe over the last decade, had earlier said that Mr. Noe is a target for Democrat attacks.

Questions raised

Yesterday, Mr. Gardner said the news about Chrans raises many questions about state policies on the backgrounds of those who handle state money, from the bureau to the state Treasurer’s office, to the state pension systems.

Is it proper to check out everyone hired by a money manager? Or just the money manager?

“I think it’s a fair question to ask. This is a fine time to look into these things,” he said.

Jim Conrad, the bureau’s administrator who has refused to comment on the growing controversy, declined again yesterday a request for an interview about how a convicted felon ended up with hundreds of thousands of dollars of the bureau’s money.

Mr. Conrad won’t do any interviews until the state’s inspector general, the state’s anti-corruption watchdog, completes his investigation into “alleged wrongful acts associated with the investment practices” of the bureau, said press secretary Jeremy Jackson.

A Democratic state senator called on the state to end its $50 million investment in Mr. Noe’s Capital Coin funds.

The news about Chrans “makes it more clear this was a mistake for the state” to invest in rare-coin funds controlled by Mr. Noe, said Sen. Eric Fingerhut (D., Cleveland).

“This is why other states would not invest in this kind of risky venture,” added Sen. Teresa Fedor (D., Toledo).

Reacting to the news of Chrans’ felony conviction, Sen. Marc Dann, a Democrat from suburban Youngstown, who has asked for and been denied by the bureau detailed records about rare-coin transactions with state money, said: “As you unpeel more and more of the onion, you find more onion.”

The Blade could find no other instance of a state government investing in a rare-coin fund. Neither the state nor Mr. Noe could provide one.

Skeptics

Both Ms. Fedor and Mr. Fingerhut were skeptical about Mr. Noe’s statement to The Blade on Thursday that he was unaware of Chrans’ felony conviction in 1986 in U.S. District Court in Springfield, Ill.

“This is a small circle of people in this business,” Ms. Fedor said.

“If it is true, as Noe claims, that he was unaware of that, that gives me the gravest concern of all the pieces of this story,” said Mr. Fingerhut. “I have no problem giving felons a second chance, but clearly Mr. Noe picked someone with a criminal record in the general field of the business. It’s not like he got into a riot on Halloween night.”

Mr. Fingerhut said he is looking at possible changes in state law to bar candidates from receiving campaign contributions from individuals who have a big stake in a company that invests state money.

Chrans was hired by Mr. Noe to run Visionary Rare Coins, a joint venture funded with state money that was part of the bureau’s investment portfolio.

With his conviction, however, it may have been difficult for Chrans to get a license to be a stock broker, a financial planner, or an investment adviser in Ohio.

The securities division of the Department of Commerce runs a background check on applicants to determine if they meet the legal standard of being of “good business repute.”

Included in that is a criminal background check. If a person has engaged in “any act or practice declared to be a fraud” or if they have been found guilty of a felony — both apply to Chrans — it would have to be disclosed to the securities division.

According to the division, applicants who have “egregious or excessive disciplinary sanctions or legal incidents are denied licensure.”

Dennis Ginty, a spokesman for the commerce department, said the division can consider other factors relating to the offenses, such as the circumstances surrounding it, how long ago it happened, and whether there has been any wrongdoing since.

Denny White, chairman of the Ohio Democratic Party, said he was not surprised by the news about Chrans.

Although the inspector general is probing the bureau’s rare coin investments, Mr. White renewed his request that a county prosecutor investigate the entire rare-coin investment by the bureau for possible criminal wrongdoing.

“Someone is getting a paycheck somewhere — whether it be federal, state, or county — to investigate or look into public officials that are doing questionable ethical things, and someone has not earned their paycheck this month,” Mr. White said.

Lucas County Prosecutor Julia Bates, a Democrat, did not return messages yesterday.

Reached for comment yesterday, Franklin County Prosecutor Ron O’Brien, a Republican, said if the inspector general’s office finds any potential violations of state law, the matter would be referred to his office.

Contact James Drew at:jdrew@theblade.comor 614-221-0496.

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