Noe is freed on $1 million bond in Florida; coin dealer set to appear in Toledo federal court on Monday

10/29/2005

ORLANDO, Fla. - Tom Noe got his first taste of the federal justice system yesterday when he appeared in shackles and handcuffs before a U.S. magistrate on charges that he laundered $45,400 into President Bush's re-election campaign.

Mr. Noe left the federal courthouse in the afternoon after posting a $1 million bond secured by the Florida Keys home that is listed under the name of his wife, Bernadette. He did not talk to reporters.

Mr. Noe, 51, surrendered to the FBI in the morning, and authorities fingerprinted him, took his mug shot, and placed him into a holding cell. He shared the cell with other detainees, some of whom were suspected drug offenders, officials said.

Myles Malman, Mr. Noe's attorney in Florida, said Mr. Noe maintains his innocence.

"He looks forward to returning to Ohio and continuing his cooperation and resolving this case," Mr. Malman said.

The court appearance occurred a day after a federal grand jury returned a three-count indictment against Mr. Noe, the controversial former coin-dealer whose failed $50 million rare-coin investment with the Ohio Bureau of Workers' Compensation has brought scandal to the Statehouse.

Prosecutors charge that Mr. Noe provided money to 24 people in order for them to give money to the Bush-Cheney campaign. He faces up to 15 years in prison and a fine of nearly $1 million if convicted on three separate counts.

Mr. Noe is expected to appear in a Toledo federal court Monday, when he will be arraigned on the charges before U.S. Mag-istrate Vernelis Armstrong.

The Noes have lived in Florida for several months after selling their Maumee River condominium to former state representative Lynn Olman and their Catawba Island home to a Findlay industrialist.

The court appearance took place in Orlando because the federal courthouse in the Miami area was closed because of the damage caused by Hurricane Wilma.

Meanwhile, prosecutors again found themselves yesterday answering questions about why they did not name nor indict any of the 24 people who they believe Mr. Noe used to funnel $45,400 to the Bush-Cheney campaign.

Prosecutors said they cannot talk about other people not named in the indictment. But, they said that it is Justice Department policy not to prosecute low-level participants in a conduit scheme if they help prosecutors convict the "big fish."

"We cannot comment on why things didn't happen. We do not have any comment on how things happened," David Bauer, the assistant U.S. Attorney in charge of the Toledo office, said.

Three current or former public officials testified before the grand jury investigating Mr. Noe and each contributed to the Bush-Cheney campaign at the October, 2003, Columbus fund-raiser at the center of the case.

City Councilman Betty Shultz, Lucas County Commissioner Maggie Thurber, and Donna Owens, a former Toledo mayor who was a member of the Ohio Industrial Commission, all testified before the grand jury.

Potentially complicating matters for the public officials is the requirement that they disclose all sources of income to the Ohio Ethics Commission. None of them has indicated in past filings that she received money from Mr. Noe.

Ritchey Hollenbaugh, a Columbus attorney representing the three women, said he had not received any word yet whether the Ethics Commission had referred their cases for possible prosecution. The commission met yesterday in private.

Paul Nick, the commission's chief investigative attorney, would not comment on whether current or former public officials would be referred for possible criminal prosecution.

"It is hard to figure out who the Ethics Commission is pursuing because they are pursuing people down so many different avenues. The Ethics Commission does its work in its investigation, and they turn it over to the prosecutors to determine if it is appropriate to file charges," Mr. Hollenbaugh said.

Mr. Hollenbaugh told The Blade yesterday that each of his clients was given immunity from federal prosecution in exchange for her testimony.

It is a first-degree misdemeanor to knowingly fail to disclose the source of gifts on an annual financial disclosure statement. The penalty is up to six months in jail and/or a $1,000 fine.

Franklin County Prosecutor Ron O'Brien did not return a message seeking comment.

Yesterday, David Schulz - one of Ms. Shultz's opponents in the Nov. 8 race for City Council and no relation to the councilman - demanded that she answer questions about whether Mr. Noe gave her money for the fund-raiser.

"Voters have the right to know if she is a conduit in the Tom Noe indictment. If she gave her own money and wasn't reimbursed or advanced the money, then she has nothing to hide. Either way, the public should know this," Mr. Schulz said.

Ms. Shultz declined to answer that question yesterday, as she has since she testified in June. She said she cannot comment on an "ongoing investigation." Earlier this year, she told The Blade she used her own money to pay for the fund-raiser.

She said she hopes voters will "judge her for what I do."

Both Gov. Bob Taft and his former chief of staff, Brian Hicks, were convicted earlier this year with ethics violations stemming in part from their relationship with Mr. Noe.

Most Ohioans became familiar with Mr. Noe after The Blade began writing stories in April about his failed coin deal with the state. His attorneys have since acknowledged that up to $13 million is missing from the funds.

For years, Mr. Noe has been a confidant of top Republican politicians, someone they can expect a campaign check from and whom they could appoint to a key commission or post. Over time, Mr. Noe would be appointed to the board at Bowling Green State University, the Ohio Board of Regents, and the Ohio Turnpike Commission.

Gregory White, the U.S. attorney for the Northern District of Ohio and a Bush appointee, said politics played no role in the investigation of Mr. Noe or of anyone connected with the case.

Noel Hillman, section chief for the public integrity section of the Justice Department, said the Justice Department frowns on abuses by public officials.

"We hold all public officials to the highest standards. We expect them to live up to their oaths of office, and if we find that they have violated the trust the public has placed in them, and we can prove it, we're going to prosecute them. And that matters not to me whether they're the dogcatcher or somebody a lot higher," he said.

"The point is, there is no small crime when it comes to violating the public trust."

For all but one of the "conduits," the offenses would be misdemeanors, Mr. Hillman said. An offense does not become a felony until it involves $10,000, he said.

More important to prosecutors, he said, was identifying the mastermind of the conduit scheme.

"It is common in these cases to look for the source of the money and the people orchestrating these schemes as the individual most culpable and most likely to face federal charges," he said.

Earlier this month, The Blade reported that Mr. Noe transferred $800,000 from one of the state coin funds he controlled to his personal business on Oct. 6, 2003. Prosecutors said Mr. Noe began disbursing the checks to the conduits on Oct. 22.

But they have not alleged that the money came from the coin funds. If they did, and it was illegal, it could add to any potential penalty, prosecutors said.

Rep. Chris Redfern (D., Catawba Island), urged President Bush yesterday to return all of the money Mr. Noe raised for the campaign. He raised at least $100,000 and was dubbed a "pioneer" by the campaign.

"Prosecutors have made it clear that President George Bush took dirty money from Tom Noe. In fact, this money may very well belong to the injured workers and small businesspeople of Ohio," Mr. Redfern said.

The Bush-Cheney campaign has donated $6,000 that it received from Mr. Noe and his wife, Bernadette, to charity, according to a spokesman for the Republican National Committee. The Noes gave $4,000 to Bush-Cheney and $2,000 to the RNC.

From 1998 until earlier this year, the Bureau of Workers' Compensation invested $50 million with Mr. Noe's coin business. The revelations led to search warrants and investigations involving 11 agencies, including both U.S. attorneys in Ohio and the prosecutors of Lucas and Franklin counties.

Investigators are also looking at other suspect investments of the bureau, including one fund that lost $215 million in an offshore hedge fund.

The Associated Press contributed to this report.

Contact Mike Wilkinson at:

mwilkinson@theblade.com

or 419-724-6104.