COLUMBUS - With its intrigue of missing rare coins bought with state funds and campaign cash flowing to Ohio Republican leaders, some are predicting that "Coingate" will be a bigger scandal than the one that led to a near-Democratic sweep of statewide offices in 1970.
Ohio Sen. Marc Dann (D., Liberty) predicts voters in 2006 will punish Republican candidates at the polls.
KIICHIRO SATO / AP Enlarge
But the question now is whether Democrats will capitalize on the growing Republican scandal surrounding the state's $10 million to $12 million loss in rare-coin investments controlled by Tom Noe, a prominent Toledo-area GOP fund-raiser and coin dealer.
"The people in the state of Ohio are going to want to elect people in 2006 who they can trust will not use their positions to help their contributors," said state Sen. Marc Dann, a Democrat from suburban Youngstown. "The folks in charge now have shown their willingness to help their contributors at the expense of the state."
Federal and state authorities Thursday said they are pursuing criminal and civil charges against Mr. Noe for allegedly misappropriating millions from the state's rare-coin investment.
It's unclear whether Mr. Noe used some of the state's money to make contributions to Republican candidates, including President Bush's re-election campaign, said Ron O'Brien, Franklin County prosecutor.
The U.S. Attorney's Office and the FBI are investigating whether Mr. Noe violated campaign-finance laws. That probe has focused on an October, 2003, fund-raiser in Columbus that generated $1.4 million for the Bush campaign.
The Bush-Cheney campaign lists Mr. Noe as a "pioneer" for raising from $100,000 to $250,000 for the President's re-election campaign.
Ohio ended up being the most crucial swing-state win for Mr. Bush in last year's election, with Democrat John Kerry conceding the race on the day after the election only after it became clear that Ohio's electoral votes would go to Mr. Bush.
Investigators and Ohio Highway Patrol officers load a truck with materials confiscated from rare-coin dealer Tom Noe's shop in Monclova Township Thursday.
Political observers have said the GOP's control of state government, and GOP fund-raising in the state, was crucial to Mr. Bush's win.
Ohio Democrats haven't won a governor's race since 1986.
Republicans have swept all statewide executive posts in the past three elections. The GOP controls both chambers of the General Assembly, six of the seven state Supreme Court seats, both U.S. Senate seats, and a majority of congressional districts.
Mr. Noe and his wife, Bernadette, have contributed more than $200,000 to politicians, political parties, and political action committees over the last 15 years. Their giving increased greatly in 1998, the year Mr. Noe's coin fund received the first of two $25 million payments from the bureau to invest in rare coins.
Since 1990, Mr. Noe has contributed $12,350 to Gov. Bob Taft, $4,350 to state Auditor Betty Montgomery, and $2,500 to Secretary of State Ken Blackwell. Attorney General Jim Petro has said he received $6,100 in contributions from Mr. Noe since 1994.
Like a prairie fire, the controversy over the state's $50 million rare-coin investment controlled by Mr. Noe crackled and heated up in the days and weeks after The Blade's first story on the unusual investment was published on April 3.
But the flames now threatened to immolate Republican leaders, with last week's revelation that Mr. Noe's attorneys had told law-enforcement authorities that $10 million to $12 million of Capital Coin's assets are "unaccounted for."
And the story-turned-scandal is no longer just an Ohio story.
In addition to broadcast and cable TV coverage, the New York Times yesterday ran a front-page story on it above the fold with the headline: "Coins Go Missing, and GOP insider becomes outcast."
The Democratic National Committee on Friday called for President Bush to return all of the money that Mr. Noe raised for his re-election bid.
"The problem is that President Bush has seized on that access from the scandal-plagued characters such as Jack Abramoff, and now Tom Noe," said Josh Earnest, a spokesman for the Democratic National Committee.
Mr. Abramoff is a powerhouse lobbyist who has been embroiled in a scandal reaching top Republicans in Washington, including House Majority Leader Tom DeLay. Mr. Abramoff's clients allegedly paid for free overseas trips for Mr. DeLay. Moreover, Mr. Abramoff is being investigated by the Justice Department for allegedly bilking Indian tribes of millions of dollars in fees.
Mr. Earnest said a culture of corruption that mirrors Ohio's political climate exists also in Washington, where Republicans have control of the presidency, the Senate, and the House.
"In Washington, D.C., we've seen Republicans like [House Majority Leader] Tom DeLay and [Senate Leader] Bill Frist abuse their political influence to selfishly benefit their own political careers," Mr. Earnest said. "Now Republicans in Ohio, starting with Governor Taft on down, have abused their power in Ohio's Republican-controlled government.
"Voters in Ohio, like voters across the country, who are fed up with power-abusing Republicans, like Frist and DeLay, are going to hold the Republican majority accountable when they go to the ballot box in 2006," Mr. Earnest predicted.
Gov. Bob Taft has received $12,350 in campaign contributions from coin dealer Tom Noe since 1990. Mr. Taft's father was one of the few Ohio Republicans who survived a scandal in 1970.
A White House spokesman yesterday declined to comment on whether Mr. Bush would return contributions from Mr. Noe. She deferred questions about the Ohio coin scandal to the Republican National Committee, saying, "the White House does not raise money."
Danny Diaz, a spokesman for the Republican National Committee, would not say whether Mr. Bush is pondering the return of money raised for his campaign by Mr. Noe.
He refused to comment about the involvement of influential Republicans in Ohio's coin scandal.
Politically, he said Democrats should focus their attention on other issues.
"The DNC would be well served to focus its attention and energy behind helping the Democrat Party come up with ideas or solutions that address the pressing issues confronting our nation," Mr. Diaz said.
U.S. Rep. Marcy Kaptur (D., Toledo) said she is confident the scandal will hurt Republican candidates, especially in Ohio.
"I think it is going to have ramifications across the board in the state," she said. "The average taxpayer, they are going to want checks and balances."
She said the coin scandal is a reflection of the relaxed attitude among some politicians concerning the use of public money.
"Coins in many ways are a gamble," said Miss Kaptur. who is calling for reform of the largely unregulated coin industry. "It's this free-wheeling, risk-based behavior that is infecting public service, and people are trying to cash in on the public."
Bill Allison, the spokesman for the Washington-based Center for Public Integrity, said yesterday that "missing money is one of the easiest things to understand" for the public.
"The public really does care about corruption and scandals, especially when it is really clear-cut," he said.
He cited a number of examples in recent years, including Sen. Robert Torricelli, a New Jersey Democrat, who withdrew from his re-election bid in 2002 amid allegations he improperly accepted gifts from a campaign donor. He also mentioned former California Gov. Gray Davis, a Democrat, who was recalled amid fund-raising allegations - and budget concerns.
"With ethics, either a scandal has to be really bad or another factor has to be involved," Mr. Allison said. "There are other factors that get involved. The public does care and when Election Day comes, they do look at these kinds of issues."
Much detail still needs to emerge, Mr. Allison said, before the public can understand the entirety of the scandal. The people, he said, need to know the connections of the politicians involved and have all the details of how the deal came about to determine if there was political pressure.
Mr. Allison said the backlash could be severe if "there is real involvement, beyond just defending, and if it can be shown they helped him get this deal. If we see they did intercede on his behalf, that is the kind of thing voters do remember," he said.
In 1970, Henry Eckhart was the treasurer of Democrat John Gilligan's campaign for governor when the "Crofters" scandal broke.
Led by a prominent Republican, Crofters Inc. was a Columbus money-finding firm that received $1 million in fees for helping several businesses get loans from the GOP-controlled Ohio Treasurer's office and the School Employees Retirement System.
When it was revealed that the state had exceeded its limit on commercial paper, an $8 million loan to a Denver mineral company and a $4 million loan to an Oklahoma-based nursing home chain were put at risk.
Partners in Crofters had contributed about $30,000 to GOP statewide candidates.
The three Republicans running for governor, attorney general, and auditor lost in the 1970 election - which led to the Democrats taking over the legislature through control of the board that rewrites voting district boundaries.
By 1982, the state ended up recovering $14.9 million - $1 million more than the total of faulty loans of state funds made in 1970 by state Treasurer John Herbert, a Republican.
Mr. Eckhart said the growing furor over the state's rare-coin investment "is going to be worse than Crofters."
"There are more people involved, more money has been lost, and people can look at an investment in coins and say, 'Why?' In Crofters, at least they were doing venture-capital deals and securities such as nursing homes," said Mr. Eckhart, a 72-year-old Columbus attorney.
Bob Bennett, chairman of the Ohio Republican Party, said Republican officeholders - including Mr. Petro and Betty Montgomery - acted quickly to address the coin scandal, and he said they deserved to be commended.
He expects Democrats to make Mr. Noe and rare coins an issue in upcoming campaigns.
But, he warned, Democrats "better be very careful about what they are alleging here" because he said it has been "literally weeks" to bring the scandal to the point of exposing Mr. Noe. He said Republican leaders had to comply with the laws when conducting their investigations and audits.
"It is easy for the Democrats to start throwing bricks," Mr. Bennett said. "The final determination by the voters of Ohio is going to be how the elected officials handled this very problem."
And, he said, "The voters are very fair in their judgment and they are going to wait and see how this plays out."
Mr. Bennett last week called for ethics training for GOP candidates.
Denny White, chairman of the Ohio Democratic Party, said Democrats agree that the "GOP desperately needs a lesson in ethics."
"The only problem is, asking a Republican to lead a training on ethics is like asking a child to teach a physics lesson - neither one is qualified," Mr. White said.
But GOP operatives maintain the controversy over the rare-coin investment won't affect how voters perceive the three Republicans running for governor next year.
They are Mr. Petro, Ms. Montgomery, and Mr. Blackwell.
Another potential obstacle to Democrats capitalizing politically on "Coingate" is the role in the rare-coin investment of Bill Burga, president of the Ohio AFL-CIO.
Mr. Burga, who has enormous power within the Ohio Democratic Party, sits on the Bureau of Workers' Compensation five-member Oversight Commission.
In March, 1998, the bureau's Oversight Commission approved a list of 28 investment managers, including Mr. Noe's Capital Coin. By August of that year, Capital Coin had received its first $25 million.
The bureau provided another $25 million in 2001.
"And Burga helped to drive the Democratic train over the cliff when he insisted on nominating Rob Burch for governor" in 1994, said Mary Anne Sharkey, a former statehouse bureau chief for the Plain Dealer of Cleveland and ex-communications director for Mr. Taft.
Ms. Sharkey said she joked in the 1980s that Crofters would be on the back pages compared to the scandals during the administration of Gov. Richard Celeste, a Democrat.
She compared Mr. Noe to Marvin Warner, who was the head of Home State Bank when it collapsed in March, 1985. Mr. Celeste shut down 69 other privately insured savings and loans until they obtained federal deposit insurance.
"Marvin was to the Democrats what Noe is to the Republicans, big contributor, huge ego, loved to hob-nob with presidents and governors, was appointed to boards, and picked up tabs at lavish restaurants and jetted around the country," Ms. Sharkey said in an e-mail.
Mr. Warner served 28 months of a 3 1/2-year sentence for securities fraud and other violations as part of Home State's collapse.
Yet, Mr. Celeste defeated 77-year-old former Gov. Jim Rhodes in the 1986 election.
Several scandals rocked the Celeste administration, including the indictment of James Rogers, director of the state Department of Youth Services. He was convicted and imprisoned for soliciting bribes, accepting kickbacks, and theft in office in1987.
Mr. Celeste could not run for re-election in 1990 because of term limits. George Voinovich, a former Cleveland mayor, won the 1990 governor's race and was re-elected by a landslide in 1994.
But Mr. Voinovich's administration also was scarred by scandal.
A scandal over a sweetheart deal on Mr. Mifsud's future wife's home - from a contractor who had won lucrative state contracts - landed him in a jail work-release program. He served six months in Union County, northwest of Columbus, and was released in April, 1998.
In November, 1998, Mr. Voinovich defeated Democrat Mary Boyle for the U.S. Senate. Mr. Taft defeated former Democratic Attorney General Lee Fisher in the governor's race.
Mr. Voinovich won re-election in 1994, and Mr. Taft defeated former Democratic Attorney General Lee Fisher in 1998.
That year, Mr. Eckhart, the campaign treasurer for Mr. Gilligan, said part of his job was clipping news articles about Crofters.
"It was great because I love to read about scandals," he said.
Crofters "kept building and building and getting worse," he recalled.
The investigation of the state treasurer's office began in May, 1970.
A month later, a Franklin County grand jury began looking into possible criminal fraud, conspiracy, and bribery charges in connection with the state's loans.
In June, 1970, a special audit showed that Republican Roger Cloud, the state auditor and GOP candidate for governor, had solicited "campaign help" from Gerald A. Donahue, a partner in Crofters and a former state tax commissioner.
On Oct. 21, the eve of the statewide election, a Franklin County grand jury indicted three Crofters executives and a former Schoool Employees Retirement System official on bribery charges.
Although The Blade's first story on the rare-coin investment ran 19 months before the next statewide election, Democratic state Sen. Marc Dann has seen a similar dynamic with what he calls "Coingate."
Mr. Eckhart said the Democrats should not stop harping on "Coingate" until the final poll locations close on election night in November, 2006.
"They have no potential liability in it. They played no part in it," he said.
Columbus Mayor Michael Coleman, who is seeking his party's nomination for governor, attacked the state's investment in rare coins on the day The Blade published its first story.
"This is a reckless investment, a very bad precedent, and it is inconsistent in how the state should invest public funds," Mr. Coleman told The Blade on April 3.
On Friday, speaking in the corridor after Governor Taft's news conference, Mr. Coleman said, "Noe benefited from doing business with the state of Ohio. Taft, Petro, Blackwell, and Montgomery benefited from contributions from Tom Noe. All four should transfer all campaign contributions they received from Noe, his wife, and his known associates to the Bureau of Workers' Compensation to help cover the losses the state is now suffering."
U.S. Rep. Ted Strickland, a Democrat from southeast Ohio who also is running for governor, said Republican leaders of state government should be held accountable.
"I don't know what the governor knew and when he knew it. I don't know what the others knew and when they knew it. We need to find out," he said.
Lee Fisher, a former Democratic attorney general who lost to Mr. Taft in the 1998 governor's race and is weighing whether to run statewide next year, said the rare-coin investment scandal was a result of one political party being in office too long.
"When either political party is in office too long, too many of the political officeholders begin to care more about their perks and power than fulfilling their solemn oath of office they were sworn to uphold," he said.
In the 2002 governor's race, Democrat Tim Hagan repeatedly referred to the "arrogance of one-party rule."
But underfunded and disorganized, the Democrats again lost every statewide executive office on the ballot - despite a controversy over the state Department of Job and Family Services illegally withholding $38 million in child support payments to thousands of families and scandals that rocked the School Facilities Commission and Turnpike Commission.
Mr. Strickland said Mr. Hagan, a Cuyahoga County commissioner, was "ahead of his time."
"For whatever reason, people weren't ready to hear it. There's a more receptive audience now. The people of Ohio deserve better than this.
"I am tempted to say this is a result of one-party rule for an extended period of time, but it actually is people who lack character and are willing to make decisions based on political expediency," Mr. Strickland said.
D.C. Feingold Sachs, editor of D.C. Political Report and a political oddsmaker, said Republicans were already facing some troubles in the upcoming state elections with no clear-cut favorite to replace Mr. Taft.
"This just sounds like it is going to be some more weight to carry," said Mr. Sachs, a Democrat, who analyzes statewide and federal campaigns from a nonpartisan point of view.
Mr. Sachs said Ohio Democrats have gone through a drought and this might be a watershed moment for the minority party in the Buckeye state.
"The Democrats have been shut out of state elections," he said. "I can't imagine there is not going to be a backlash against the Republicans for this."
Mr. Sachs said it remains to be seen whether the scandal will influence the President and Republican candidates in federal races.
"Unless they can show that the Bush Administration also gave this guy some favors, I don't think it is going to come back to hurt Bush and the federal government," he said.
But, he said, that could change with more revelations of wrongdoing.
"If it turns out that state funds were converted into campaign contributions or money for get-out-the-vote efforts, this could turn out to have legs," Mr. Sachs said.
In June, 1970, Mr. Taft's father was running for the U.S. Senate.
Robert Taft, Jr., said he was unhappy with the way his party's leaders were handling the Crofters scandal. He called for an independent investigation.
Mr. Taft - who defeated Democrat Howard Metzenbaum - was among only three Republicans who survived the scandal at the ballot box. The others were Secretary of State Ted Brown and Lt. Gov. John Brown.
Asked Friday if he was afraid "Coingate" is "Crofters II," Mr. Taft said he's not thinking about next year's election.
"I was elected to do a job as governor, and that's to manage state government," Mr. Taft said.
Because of term limits, Mr. Taft cannot run for a third consecutive term.
As of May 10, according to a national poll, Mr. Taft has the lowest approval rating of any governor in the nation.
Mr. Taft, who defended the state's investment in rare coins and personally backed Mr. Noe shortly after The Blade's April 3 story, also was asked at the press conference whether "Coingate" has tarnished his family's name.
"I feel we're going to clean up and pursue this issue," Mr. Taft replied. "We're going to leave the state a better and more accountable place than when I found it. We're going to have better laws. We're going to have better oversight. We're going to have restrictions on investments."
But Mr. Dann, the Democratic state senator, said citizens won't get more checks and balances from Republicans.
"We have a culture of corruption in Columbus that ought to alarm people in every corner of the state of Ohio," Mr. Dann said during a news conference after Mr. Taft's Friday appearance at the Statehouse. "We've watched Ohio's statewide officeholders continue to stonewall and delay. And as a result, certainly the governor, the attorney general, and the auditor are accomplices to this crime after the fact."
Contact James Drew at: firstname.lastname@example.org or 614-221-0496.