Tom Noe s former vice president admitted yesterday to doctoring hundreds of sales records in order to fool accountants checking on the solvency of the Noe-managed state coin funds.
Tim LaPointe, the star witness for prosecutors seeking to convict Noe of 44 felonies, said he was the man at the computer creating the fraudulent documents that kept the state at bay.
But he said he did everything with Noe s consent.
He was the one who had to approve it, Mr. LaPointe said.
For the first time in the trial, jurors yesterday heard someone admit to the type of wholesale fraud that prosecutors have been claiming for nearly three weeks.
The admissions were made by Mr. LaPointe, the trusted former friend and employee of Noe s Vintage Coins and Collectibles who is a co-defendant charged with seven felonies.
Mr. LaPointe repeatedly took the blame for creating the phony records and repeatedly said Noe worked with him on it and was aware of the scheme.
I physically did it with Tom s approval, he said.
Prosecutors have alleged that Noe transferred millions of dollars from the two Capital Coin funds fueled by $50 million from the Ohio Bureau of Workers Compensation into Vintage and covered up the thefts with fake sales records.
Noe used the money to fund his lifestyle, which included three waterfront homes, prosecutors said. He has pleaded not guilty.
Defense attorneys appeared pleased yesterday with Mr. LaPointe s testimony. He confirmed their belief that he entered all the fraudulent computer records and that both he and Noe considered the transfers loans or advances.
I assumed Tom would pay back later, Mr. LaPointe said. He also told defense attorney John Mitchell that he did not have any notes or e-mails from Noe telling him to fake the sales records.
During his three hours on the witness stand, Mr. LaPointe painted a picture for jurors of a business, Vintage Coins, that rode a fiscal roller coaster. In the down times, Noe would turn to the coin funds, he said, and in 2004, Vintage leaned heavily on the funds.
As the day-to-day manager of Noe s business, Mr. LaPointe said he was constantly aware of the company s cash.
Whenever there was a shortfall, Mr. LaPointe said he would tell Noe, who would then approve transferring money from the state coin funds.
Judge Thomas Osowik of Lucas County Common Pleas Court, right, pauses to consider a point in the Noe proceedings. Testimony is slated to resume today.
We borrowed a lot of money from the coin funds, Mr. LaPointe said.
He said the transferred money was recorded as advances on future profits or advances for coin sales. But he said few coins were purchased with the money, and that caused a problem when the bureau decided it wanted the inventory checked on a regular basis.
Mr. LaPointe said he and Noe knew there weren t enough coins to cover what was supposed to be at Vintage.
We didn t have much inventory, so it wasn t very hard [to count it], he said.
So in order to create an inventory that would pass muster with accountants from Plante & Moran, Mr. LaPointe said he and Noe would call coin collectors and coin dealers and ask them to send their coins to Vintage.
Noe and Mr. LaPointe would tell the dealers and collectors that the coins were being considered for sale to a third party or they would give another reason all bogus.
Defense attorney Bill Wilkinson talks to Tom Noe during the trial of the former coin shop owner and GOP fund-raiser. Noe is accused of embezzling from a workers comp bureau investment.
Once the coins would show up at Vintage s Monclova Township store, Mr. LaPointe would create purchase orders to make it look like the coin funds owned the coins.
I would go in and do phony purchase orders to add them to the system, he said. All the while, he said Noe was aware.
After the accountants saw the inventory, more documents would be created showing fake sales and the coins would be returned to their proper owners, Mr. LaPointe said.
Bigger problems loomed, just after The Blade began publishing stories in April, 2005, about problems in the coin funds.
The state began an investigation days later and the bureau decided to do spot-checks on the coins. In previous years, Mr. LaPointe said he and Noe had months to assemble the necessary inventory. Now they had a weekend and nowhere near the proper number of coins.
I thought, What are we going to do? Mr. LaPointe said. We did not have enough time to get it done.
They survived, he said, by showing the coins they had and telling the bureau s investigators that other coins were out of the shop on loan. As Noe was talking with investigators, Mr. LaPointe said he was in another room creating fraudulent documents.
Afterward, they were relieved.
Tom was very upbeat and thought everything would be OK, Mr. LaPointe said.
But a couple of weeks later, the bureau was back. And just a day or so before they arrived, Mr. LaPointe testified that he was shocked to learn how much they had to come up with $13 million in coins.
He said they only had a few million in coins in inventory.
My reaction was, Where s the money? he said. Finally, I said, There s no way we can do this.
Luckily, he said, officials from the Ohio Bureau of Workers Compensation only wanted to see a few coins during the second surprise check and did not notice the wholesale fraud he said he had concocted with Noe s approval.
Within days, he said he left Noe s employ. He returned to delete millions in coins from the computer records, then began cooperating with authorities.
Near the end of Mr. LaPointe s testimony for the prosecution, assistant prosecutor Jeffrey Lingo asked him an obvious question: Why did he do it? Why did he cover up the missing coin inventory with fraud?
As he answered, Mr. LaPointe s voice broke.
He said he and Noe always believed they could make up the money they had taken from the bureau s coin funds and make it good.
And I did it for money and I did it for Tom, he said.
Prosecutors have said Noe poured the state s money into his past debt and his waterfront luxury homes. Mr. LaPointe said he was paid a salary, got an occasional bonus, and enjoyed nice restaurants and staying in nice places, including visits to Noe s home in the Florida Keys.
After making between $65,100 and $99,1000 from 1998 until 2003, he got a big bump in 2004, when he was paid $168,200, including a $75,000 bonus.
He admitted, however, that $25,000 of that bonus was not written as payroll but as a direct check. The reason: to avoid paying taxes, Mr. LaPointe said.
Mr. LaPointe remains in the coin business, pending his scheduled Nov. 20 trial. His cooperation agreement says prosecutors may recommend leniency to Judge Charles Doneghy, who will hear that case.
Although Mr. Mitchell suggested that the charges may be dropped if prosecutors believe he did well in the Noe trial, Mr. LaPointe disagreed.
I have no guarantees of anything, he said.
Mr. LaPointe told jurors he had considered Noe a good friend, and Noe is the godfather of his youngest son. But with the multiagency investigation and the indictments of both men, the relationship has soured.
The last couple of years haven t been very good, he said.
Prosecutors are expected to call their last witness today, investigator Dineen Day. The defense will begin calling its witnesses on Monday.
Contact Mike Wilkinson at: firstname.lastname@example.org or 419-724-6104.
Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Comments that violate these standards, or our privacy statement or visitor's agreement, are subject to being removed and commenters are subject to being banned. To post comments, you must be a registered user on toledoblade.com. To find out more, please visit the FAQ.