COLUMBUS - A Columbus-based watchdog group called yesterday for Ohio lawmakers to revamp campaign finance laws following the news that a prominent Toledo Republican got $50 million in state money to invest in rare coins.
Catherine Turcer, legislative director for Ohio Citizen Action, said the investment with local coin dealer Tom Noe is another reason why state law should require fund-raisers - not just campaign contributors - to disclose their activities, including who organized the event and who hosted it.
The amount that political fund-raisers like Mr. Noe generate is much larger than what they or their spouses contribute to candidates, political parties, and political-action committees, Ms. Turcer said.
"Money in politics is about influence," she said.
Since 1990, campaign finance records kept by the state show that Mr. Noe has contributed more than $110,000 to candidates for state offices and to various state Republican Party committees.
His political contributions to Republicans increased more than tenfold in 1998, a statewide election year. That same year his coin fund received its first $25 million from the Ohio Bureau of Workers' Compensation to invest in coins.
His contributions more than doubled in 2002, another statewide election year, one year after the bureau gave Mr. Noe's funds a second $25 million to invest in rare coins.
Mr. Noe has helped candidates in other ways. He served as chairman of the successful campaign that Judith Ann Lanzinger ran for Ohio Supreme Court justice last year. He also contributed $2,500 to her campaign.
Contacted yesterday, Mr. Noe said he did not want to talk about the campaign-contribution issue raised by Ms. Turcer.
"I don't even want to get into a discussion about it," he said. "I guess I don't have any comment about it."
Ohio Democrats yesterday stepped up their call for an investigation by Ohio Inspector General Tom Charles.
Senate Democrats sent him a letter yesterday expressing concern that said the bureau "may be in breach of its responsibility" under state law to Ohio taxpayers to "safeguard public dollars."
The letter was signed by Senate Minority Leader C.J. Prentiss (D., Cleveland), Assistant Minority Leader Mark Mallory (D., Cincinnati), Minority Whip Teresa Fedor (D., Toledo), and Assistant Minority Leader Robert Hagan (D., Youngstown).
The Democratic legislators also said they were concerned with the "political appearance of BWC's decision to invest so heavily in such risky business."
"We are concerned with the appearance that political connections, rather than sound financial planning, motivated BWC's decision to invest millions in Mr. Noe's rare coins," the Democratic senators wrote to Mr. Charles.
Mr. Noe and the bureau separately have said that politics had nothing to do with the bureau's investment in Mr. Noe's rare coin funds.
Yesterday, Jeremy Jackson, the bureau's press secretary, said it was "unfortunate that there is a group of legislators trying to use taxpayers dollars to investigate a profitable investment. In our opinion, that is the real waste of taxpayers' dollars."
Mr. Jackson said the bureau welcomes any scrutiny of a state agency with an investment policy that has returned $10 billion to Ohio businesses, including $350 million to businesses in Lucas County over the last 10 years.
Mr. Charles confirmed that he received a hand-delivered letter from Senate Democratic leaders asking for an investigation.
"We will review it, see what the allegations are, and if an investigation is needed, we will proceed," said Mr. Charles, who was appointed in 1998 by then-Gov. George Voinovich as the state's anti-corruption watchdog.
The Blade reported Sunday that a number of issues arose regarding the Capital Coin funds for which Mr. Noe was the managing partner:
●Two coins purchased with state money and worth roughly $300,000 were lost in the mail in 2003.
●The funds wrote off $850,000 in debt over the last three years to cover a failed business relationship between Mr. Noe's Capital Coin and a fellow coin dealer who was managing a subsidiary set up by Mr. Noe.
●Capital Coin had loaned some of the state's money to a Toledo real estate business that buys and sells central-city homes. A state auditor could not find documents to prove if the loans were sufficiently covered by the value of real estate that a Capital Coin subsidiary held as collateral.
Yesterday, the bureau released updated information increasing the amount of money that Capital Coin made for the state, as well as increasing the profit for Mr. Noe and his partners.
The bureau said yesterday that in 2003 it received $2.98 million from the Capital Coin deals. The money represents 80 percent of the profit split between the state and the coin dealers, who kept $744,000.
All told, the state has received profit of $13.2 million since 1998, while Mr. Noe and his partners have split $3.3 million.
The coin funds have generated profits of between 1.4 percent and 11 percent to the state since its inception.
Most of the bureau's other investments - mainly in bonds and stock funds - lost money in some years.
James Conrad, administrator of the bureau, sent letters this week to several Ohio Democrats who were critical of the coin deal. In his letter, Mr. Conrad said the bureau made money on the investment and that it was properly vetted.
"The fact is both Capital Coin funds have performed well for the benefit of Ohio's employers and injured workers," Mr. Conrad wrote.
Mr. Conrad, who declined several requests for interviews from The Blade, wrote that politics had nothing to do with the bureau's decision to hire Mr. Noe and his partners.
"They were selected primarily because they were Ohio-qualified and proposed a unique, coin-related investment that would serve as a hedge against an under-performing stock market," he wrote.
The bureau's oversight commission first approved Mr. Noe's Capital Coin fund in March, 1998. At the time, the stock markets were more than two years from their peak.
Ms. Fedor, who received one of the letters from Mr. Conrad, said she was outraged that he would take her and her fellow legislators to task.
"We have a right to question whether state dollars have been misused," she said.
"I'm outraged that he's this bold and arrogant that he's going to take us to task for our obligation to have oversight over state government," she said.
House Minority Leader Chris Redfern (D., Catawba Island) said yesterday that the issue is not whether Mr. Noe's Capital Coin investments made money.
"I'm questioning how we came to the process of investing in rare coins as a state," he said.
"Money buys access in Columbus, Ohio, and that's why we desperately need campaign finance reform," Mr. Redfern said.
An aide to Columbus Mayor Michael Coleman yesterday delivered a letter to Gov. Bob Taft, repeating his request that the governor start an independent investigation of state investment practices.
"Calls for more ethical behavior in state government have been the cornerstone of your tenure in office," Mr. Coleman wrote. "That is why I strongly encourage you to conduct a thorough review of the investment practices at the Ohio Bureau of Workers' Compensation."
Mr. Coleman, a Democrat who is running for governor in 2006, also asked the three GOP candidates for governor to state their support for a review of investment practices.
Secretary of State Ken Blackwell, who was state treasurer from 1994 to 1999, said he fought unsuccessfully in the mid-1990s for the bureau to handle insurance and for the state treasurer to oversee bureau investments.
Mr. Blackwell said his position hasn't changed, but he said he would not criticize the bureau's investment in rare coin funds.
"I would never have any reason to question Jim Conrad's integrity. When you run a fund size of $18 billion and you're looking at $50 million, 'Beyond what one's disposition might be, is that an irresponsible amount of risk?' Most people would say no," he said.
Mr. Blackwell said the issues surrounding the bureau's investment in Mr. Noe's rare coin funds "won't be swept under the rug."
"One of the great things of our two-party system is we're never at a loss for alarms. Alarms are ringing in city hall. They're ringing in the capital," Mr. Blackwell said.
An aide to Attorney General Jim Petro said on Monday that he would not comment because his office represents the Bureau of Workers' Compensation. A call seeking comment yesterday was not returned.
An aide said state Auditor Betty Montgomery was not available to be interviewed yesterday.
Jen Detwiler, a spokesman for Ms. Montgomery, said the rare coin fund investments have not surfaced in previous audits contracted by the state auditor's office. She said there appeared to be no allegation that state law was violated.
Reached for comment yesterday after a tree-planting ceremony on the Statehouse lawn, Mr. Taft was asked by The Blade if the state should invest in rare coin funds.
He replied that the Bureau of Workers' Compensation would respond to The Blade's article.
"From everything I can gather, their process for selecting investment managers is very open and fair," he said.
When asked if campaign contributions from Mr. Noe gave him access to investing $50 million of the bureau's investment portfolio, Mr. Taft replied: "I have no knowledge of what the bureau does with regards to specific investment decisions."
Mr. Taft said he didn't know that Mr. Noe's Capital Coin funds invested bureau dollars until The Blade reported it on Sunday.
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A Columbus-based watchdog group called Ohio Citizen Action, which is directed by Catherine Turcer, called yesterday for Ohio lawmakers to revamp campaign finance laws following the news that a prominent Toledo Republican got $50 million in state money to invest in rare coins.