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COLUMBUS — State fraud investigators, ordered by Gov. Bob Taft to “execute a complete inventory” of all rare coins owned by the state, were barred yesterday by Maumee coin dealer Tom Noe from beginning the inspections.

Eight to 10 fraud investigators from the Bureau of Workers’ Compensation, representatives of the state auditor’s office, and employees of Sotheby’s auction house had planned to start checking the coin inventory yesterday at five locations where Mr. Noe’s Capital Coin Fund Limited maintains inventories: Monclova Township, Broomall, Pa., Wilmington, Del., Sarasota, Fla., and Evergreen, Colo.

But Mr. Noe’s attorney Bill Wilkinson, informed by state officials yesterday of the planned inspections, advised him not to agree to the inspections until he could have attorneys present at all the locations where the state’s coins are held.

The Blade first reported April 3 that the bureau had invested $50 million with Mr. Noe to purchase rare coins.

Since then, reporters have found that as many as 121 state-owned coins valued at about $400,000 are missing or stolen.

The Ohio inspector general’s office is investigating, state Auditor Betty Montgomery has announced a special audit, and the secretary of state’s office is scrutinizing Mr. Noe’s campaign contributions to GOP statewide and legislative candidates.

Yesterday, a spokesman for Governor Taft said his boss has had enough.

“The governor is fed up. He wants to get to the bottom of this,’’ said Mark Rickel, the governor’s press secretary.

Mr. Noe’s attorney said his client was given no notice of the inventory inspections.

“There were people at remote sites, and we had no idea what they would be asked,” Mr. Wilkinson said.

“Why don’t they just tell the truth?’’ replied state Sen. Marc Dann, a Democrat from suburban Youngstown who has emerged as the leading critic of the state’s investment in rare coins.

Mr. Dann questioned why state officials would tell Mr. Noe’s attorney anything in advance of an inspection.

“It is consistent with what my fears are, which is putting the same people in charge of the Republican money machine in charge of the investigation,’’ said Mr. Dann. “If they gave notice to Mr. Noe’s lawyers, that is criminal. If those lawyers are nervous today, what stops them from tossing the investigators out?”

Managers of Capital Coin subsidiaries reached yesterday declined to provide information about any investigations involving their offices.
The examination of the state’s inventory will proceed today, and it’s unclear how long it will take, said Jeremy Jackson, spokesman for the Bureau of Workers’ Compensation.

DEVELOPMENTS

• Attorneys representing the bureau, the auditor, and the former judge assigned to liquidate the state’s coin inventory asked Tom Noe to step down as general manager of Capital Coin Fund I and II. Mr. Noe will remain in that post until a successor is chosen.

• Eight to 10 of the bureau’s fraud investigators, representatives of the state auditor’s office, and employees of Sotheby’s auction house had planned
to start checking the coins at fi ve locations where Mr. Noe’s Capital Coin Fund Limited maintains inventories: Monclova Township, Broomall, Pa., Wilmington, Del., Sarasota, Fla., and Evergreen, Colo. But Mr. Noe’s attorney, Bill Wilkinson, advised him not to agree
to the inspections until he could have attorneys present
at all the locations.

Noe asked to quit

At a meeting yesterday, attorneys representing the bureau, the auditor, and the former judge assigned to liquidate the state’s coin inventory asked Mr. Noe to step down as general manager of Capital Coin Fund I and II, Mr. Wilkinson said.

Mr. Noe will remain in that post until a successor is chosen by William T. Bodoh, a former chief judge of the U.S. Bankruptcy Court for the Northern District of Ohio who was appointed by Attorney General Jim Petro as the “independent third party” to oversee the bureau’s withdrawal from the rare-coin investment.

Mr. Bodoh, a Columbus attorney, suffered a recent illness, but details were not available. The bureau said it doesn’t expect the illness to affect the timetable.

Ms. Montgomery has hired Sotheby’s to assist in the review of the inventory. She is discussing with other state officials whether the state’s coins should be transferred to the New York office of the international art auction house.

Sotheby’s will appraise the coin collection, said Matthew Weigman, a senior vice president and company spokesman.

An aide to Ms. Montgomery said a special audit of the state’s rare coins — which she announced on May 16 — already called for checking the complete inventory of coins against the list that the bureau possessed before Mr. Taft’s order.

Mr. Taft’s directive to the bureau came a day after several newspapers around the country published an in-depth story about Ohio’s controversial investment in rare coins by the Associated Press that was based, in part, on previous stories in The Blade.

Also Sunday, The Blade reported that a California rare-coin dealer hired by Mr. Noe to buy and sell rare coins with state money did not list Capital Coin as a creditor when he filed for bankruptcy in 1999 in Lexington, Ky.

Mark Chrans told The Blade that Mr. Noe, who wrote off $850,000 in bad debt from Chrans, never told him that a $250,000 loan and $25,000-a-month advances from Mr. Noe came from the Bureau of Workers’ Compensation.

Mr. Rickel said the timing of Mr. Taft’s order had no relation to weekend press reports.

Bill Wilkinson, Tom Noe’s attorney, told his client not to let investigators into Mr. Noe’s Monclova Township office and others.
( THE BLADE/HERRAL LONG )

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Timing questioned

Senator Dann questioned why Mr. Taft waited so long to order the bureau to check the entire inventory of rare coins.

“While Governor Taft has waited to execute an investigation, we are left speculating if Ohio will be able to recoup the money individuals and businesses paid to the state,’’ Mr. Dann said.

On May 2, James Conrad, the bureau’s administrator-CEO, told The Blade that bureau inspectors had visited Mr. Noe’s Monclova Township office to conduct a spot-check of coins.

Mr. Jackson yesterday said “to the best of my knowledge,” the spot checks over the past few weeks did not find any problems in the state’s coin inventory.

“When we’ve asked to see a coin, we have been shown that coin and in instances where a coin is not shown, they have documented where it is out on consignment with the customer,’’ Mr. Jackson said.

Jen Detwiler, a spokesman for Ms. Montgomery, offered an account of the state’s check of the rare-coin inventory that conflicted on some details with the bureau’s.

She said investigators from the auditor’s office and Sotheby’s employees are expected to visit three of the five sites — in Monclova Township, Wilmington, Del., and Broomall, Pa., — where Capital Coin holds the rare-coin inventory by the end of today.

Ms. Detwiler said the auditor’s office didn’t have any problems gaining access to the sites.

Mr. Weigman, the senior vice president and company spokesman for Sotheby’s, said the 260-year-old firm has extensive knowledge of rare coins.

In 2002, Sotheby’s sold, on behalf of the U.S. government, a 1933 Double Eagle for $7 million, which is the auction record for a coin, he said. Fifteen years ago, Sotheby’s sold the Hunt Brothers’ coin collection for $23 million.

TAFT’S POSITIONS ON RARE COINS

Since The Blade first reported April 3 on the Ohio Bureau
of Workers’ Compensation’s $50 million rare-coin investment with Tom Noe, Gov. Bob Taft and his spokesman, Mark Rickel, have been approached
numerous times for their reactions to developments in the scandal.

• April 4: After a public appearance in Cleveland, Mr. Taft refused to comment on the coin investment and said he had not read The Blade’s first report on it. “Talk to the Bureau of Workers’ Compensation. They’re the ones who make the investments,” he said.

• April 7: During an interview with Blade reporters in Toledo, Mr. Taft was questioned about
the bureau’s investment: “The bottom line is: Is it making money for the state? And it was. He was making money for the state; what’s the problem?”

• April 28: After a Statehouse event, Mr. Taft spoke to a Blade reporter about the status of the investment: “It obviously has achieved a return for the state of Ohio. It’s been part of the overall successful
investment policy of the bureau,” he said.

• April 30: The governor’s offi ce defl ected questions to the bureau about reports in The Blade that 121 coins were missing. Mr. Rickel said: “This is their management. This is news we’ll have to talk to the bureau about.”

• May 9: As the bureau announced plans to dissolve its $50 million coin investment, Mr. Rickel said: “Although the investment was profitable, insufficient safeguards were in place.”

• May 10: Mr. Taft addressed the divestment, saying: “I became increasingly concerned about the security of the fund as more information came to light.”

• May 23: Calling for state offi cials to inventory all coins bought for the bureau, Mr. Taft’s press secretary said: “The governor is fed up. He wants to get to the bottom of this.” Gov. Bob Taft is ‘fed up’ with
the coin funds controversy.

Ethics panel investigates

Also yesterday, the Ohio Ethics Commission confirmed that it is investigating possible state law violations related to what Democrats and some Republicans are referring to as “Coingate.”

David Freel, the commission’s executive director, noted that on April 22, the Ethics Commission issued an “informal advisory opinion” that Mr. Noe could not be a member of the Ohio Board of Regents while having a financial interest in a start-up business at the University of Toledo.

Mr. Noe on May 10 stepped down from the Board of Regents and the Ohio Turnpike Commission.

“The [ethics] commission also believes that everyone, whether they be state or local officials, have to be held to the same accountability standards, whether it be conflicts of interest or disclosure or other restrictions of the ethics laws,’’ Mr. Freel said.

He said state law barred him from providing details about the ethics commission’s investigation.

Also yesterday, Mr. Taft asked the bureau and 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.

“We need to balance the public’s right to know with the BWC’s fiduciary responsiblity,’’ said Mr. Rickel, using the bureau’s acronym. “We will make a final decision after getting the opinion from the attorney general’s office.”

On May 11, The Blade 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.

Six days later, Mr. Dann filed a similar lawsuit. A day after Mr. Dann filed his lawsuit, the Columbus Dispatch newspaper sued the bureau seeking the same information.

The bureau has maintained that details are exempt from Ohio’s Open Records Act as a “trade secret.”

Five of the seven Supreme Court justices — all recipients of campaign contributions from Mr. Noe — have recused themselves from the case.

Injunction sought

Yesterday, an aide to Mr. Dann hand-delivered a letter to Mr. Petro, repeating a request for the attorney general to file a lawsuit on behalf of the bureau against Mr. Noe’s Capital Coin Fund I and II and related subsidiaries.

The lawsuit should seek an injunction immediately freezing all assets pending the planned liquidation, and asking for a court order to appoint a receiver for the rare coin investment.

Mr. Dann made his first request for Mr. Petro to take legal action on May 3.

“It’s time the attorney general stops stalling with addressing this growing scandal,’’ Mr. Dann said. “Given the evidence of what the public now knows of the scandal, it is Petro’s elected duty to take matters into his own hands and get to the bottom of this problem.

The bottom line comes down to the state needs to protect workers and injured workers’ and small business’ hard-earned money and that’s not happening.”

Kim Norris, a spokesman for Mr. Petro, said the attorney general’s office continues to evaluate its options.

Also yesterday, Sen. Lynn Wachtmann (R., Napoleon) said he is working on a bill in reaction to what he called “Coingate.”

He said the legislation is expected to take a series of ethics reforms and additional legislative oversight of the five state pension systems “and plug them into the Bureau of Workers’ Comp.”

“I have encouraged the governor’s office in two conversations to be extremely thorough in flushing out what is going on there in their investment world,’’ Mr. Wachtmann said.

Blade Staff Writers Christopher Kirkpatrick and Steve Eder contributed to this report.
Contact James Drew at:jdrew@theblade.comor 614-221-0496.

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