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COLUMBUS -- A day after the state said it would pull $50 million in investments managed by Toledo area coin dealer Tom Noe, he resigned yesterday from both the Ohio Turnpike Commission and the Ohio Board of Regents.
Gov. Bob Taft said he did not request the resignations, but he did accept them.
An aide to the governor said Mr. Noe s resignation letter was hand-delivered yesterday morning.
At about the same time, Senate Democrats demanded that Mr. Noe must be immediately removed from both agencies.
"He is in a position to grant contracts, special favors, and benefits to other Republican donors," said state Sen. Marc Dann of suburban Youngstown.
Mr. Noe, 50, a prominent Republican fund-raiser, and the rare-coin funds he manages for the Ohio Bureau of Workers Compensation have been under scrutiny since The Blade last month reported details of the investment.
Ohio Inspector General Tom Charles is investigating the deal for possible wrongdoing and Democrats have been calling for more investigations.
In addition to the state review of the coin deal, Mr. Noe is the subject of an FBI investigation into possible violations of campaign finance laws stemming from a re-election fund-raiser for President Bush in late 2003.
In his letter to the governor, Mr. Noe said he was proud of his service on the Turnpike Commission and the Board of Regents, but said he had to put a greater priority on both my professional and personal life and can no longer commit the time needed to serve these important organizations.
Mr. Noe did not return calls yesterday, but his wife, Bernadette Noe, yesterday told WSPD-AM radio: He has done nothing wrong. He has done a terrific job. I m extremely proud of him for what he has done for the workers and the employers in the state of Ohio.
Senate Minority Leader C.J. Prentiss (D., Cleveland) said Mr. Noe made a "smart decision."
You can t have someone with a cloud hanging over them like that representing those two great organizations, Ms. Prentiss said.
First appointed to the regents by former Gov. George Voinovich, Mr. Noe was reappointed in 1999 by Mr. Taft, who appointed him to the Ohio Turnpike Commission in June, 2003. At the time of that appointment, the governor s press secretary called Mr. Noe kind of a go-to guy for Mr. Taft.
Mr. Taft yesterday said he understood Mr. Noe s decision to resign from both positions and called him an effective and strong member of the regents and the turnpike panel.
Members of the Turnpike Commission and the Board of Regents are appointed by the governor. Turnpike commissioners are paid $5,000 per year, plus expenses. Regents are not paid.
Mr. Taft strongly defended Mr. Noe after the initial wave of news reports in The Blade about the coin deal. He said yesterday that after he read the first stories about the bureau s rare-coins venture, advisers told him it had been a "profitable investment for the state."
In an April 7 interview with The Blade, he repeatedly pointed to profits the coin fund returned. "The bottom line is: Is it making money for the state? And it was, he said during the interview. He was making money for the state; what s the problem?"
The governor struck a different tone yesterday, following additional reports by The Blade, which reported the loss and possible theft of 121 state-owned coins. Other stories revealed that one of Mr. Noe s coin-fund managers, who caused the loss of $650,000 in state funds, had a felony record.
"But as more and more information came to light, it became evident that insufficient safeguards were in place to protect public money specifically, the inadequate controls of inventory, the failure to perform background checks on associates," Governor Taft said. "I became increasingly concerned about the security of the fund as more information came to light."
Despite the move by the bureau to dissolve the Noe coin funds, and just hours before Mr. Noe s resignations were announced, senate Democrats yesterday demanded that Republican officeholders take steps to prevent Mr. Noe from profiting as the state liquidates its $50 million rare-coin investment.
"Tom Noe shouldn't receive any commissions or other compensation during the liquidation process," Mr. Dann said." He is making money coming and going in this enterprise."
Mr. Taft said it would be "inappropriate" for him to say whether Mr. Noe s Capital Coin should be barred from receiving commissions or other compensation.
"The terms of the liquidation are under negotiation right now," he said.
Jeremy Jackson, press secretary for the Bureau of Workers Compensation, said it s unclear whether Mr. Noe s Capital Coin could make money through the liquidation.
Attorneys representing the bureau and Mr. Noe are discussing those issues, Mr. Jackson said.
At a Statehouse news conference, Mr. Dann and Sen. Teresa Fedor (D., Toledo) released a 12-point action plan that they said would ensure protection of the state s $50 million investment in rare coins and to restore public confidence in the state s ability to competently invest public dollars.
"This is not the end of this situation. This is the beginning," Mr. Dann said.
Special audit sought
Joined by several of their Democratic colleagues, Mr. Dann and Ms. Fedor said Auditor Betty Montgomery must conduct a special audit of all bureau and other governor-controlled investments.
Senate Democrats had assignments for all of the Republicans who control every statewide executive post: Governor Taft, Attorney General Jim Petro, Auditor Betty Montgomery, Treasurer Jennette Bradley, and Secretary of State Kenneth Blackwell.
Three of them Mr. Petro, Mr. Blackwell, and Ms. Montgomery are running for their party s nomination for governor in 2006 and none would talk to The Blade yesterday.
Mr. Taft, who is barred from running for re-election because of term limits, answered questions from reporters after a Statehouse event.
An aide to Ms. Montgomery said she was in Washington, and didn t have time for an interview yesterday. Jen Detwiler, a spokesman for Ms. Montgomery, said a special audit is not needed at this point in time.
"We have been in close contact with the inspector general s office and we are mindful of allowing both the IG and the FBI [to] do whatever they need to do as part of their investigation. Certainly, if and when it is appropriate to do something like a special audit, we stand ready to do that," Ms. Detwiler said.
Yesterday, Inspector Charles said the state s decision to dissolve the rare-coin investments has no effect on his probe.
Mr. Charles said he recently asked Ms. Montgomery about the process for hiring an independent audit firm to examine the rare-coin investments, but he had not made a decision on how to proceed.
Senator Dann again called on the bureau to disclose the coin inventory. The bureau has said the details are exempt from the state Open Records Act as a trade secret, and have provided Mr. Dann with a copy of the coin inventory with large sections blacked out.
If the information is not provided by Friday, Mr. Dann said a lawyer he has hired, Fred Gittes, will file a lawsuit asking the Ohio Supreme Court to order the bureau to do so.
Dann cites concerns
"Every instinct I have is the money's not there. I will be thrilled if we find out that there is not only the $50 million, but even more," he said.
Mr. Dann said the state should hire an expert, perhaps from an auction house, to audit the current value of the coin inventory. Mr. Jackson said that option and others are being worked out.
"We know what coins are in possession of the state," said James McLean, the bureau's chief investment officer.
Mr. Dann said the attorney general must seek recovery of the full value of the 121 missing coins from Mr. Noe's Capital Coin Fund II.
Mr. Jackson noted that Mr. Noe withheld $900,000 in bonuses that a Colorado coin dealer, Mike Storeim, would have received and also confiscated $400,000 worth of coins. That $1.3 million makes the bureau's investment safe," he said.
Mr. Petro was not available for an interview yesterday, said spokesman Kim Norris.
She said the attorney general s office is working on the bureau's request to appoint an "independent third party" to make sure the divestiture is "conducted in the best interest of the state Insurance Fund."
Mr. Dann said Mr. Petro must file a lawsuit against Mr. Noe to refund any illegal fees he has collected through fraudulent or negligent mismanagement.
Ms. Norris said she didn t know if the attorney general s office has reviewed any contracts related to the rare-coin investments.
"This is not a Democratic or Republican issue," Mr. Dann said.
"This fellow is the attorney general for the whole state of Ohio. He is charged with representing all of the people who have their money held in that Bureau of Workers Comp fund."
Treasurer Bradley, a Republican and former lieutenant governor under Mr. Taft, must certify that no other "risky, out-of-the-mainstream investments" exist in other state investment portfolios, Mr. Dann said.
"That's her job," he said.
Ms. Bradley did not return a request for comment.
Mr. Dann and Ms. Fedor asked Mr. Charles to expand his investigation to include what has happened since The Blade published its first story on the rare- coin investment on April 3.
'Under the rug'
That expanded probe should include what efforts have been made in the offices that Mr. Taft, Mr. Petro, and Ms. Montgomery control to "try to sweep" the controversy "under the rug."
Mr. Charles said: "Anything that is relative to state government and under my jurisdiction, I am going to look at."
Mr. Dann said Secretary of State Blackwell must investigate whether Mr. Noe has violated any state campaign finance laws.
Mr. Blackwell would not talk to The Blade yesterday.
James Lee, a spokesman for Mr. Blackwell, said the secretary of state s lawyers and campaign finance staff members are reviewing Ms. Fedor s request to investigate possible state campaign violations.
Mr. Dann urged his fellow lawmakers to bar campaign contributors from receiving investment contracts, and limit the types of investments that the bureau and state pension funds can pursue.
Senate President Bill Harris (R., Ashland) said legislators "want to make sure there are very tight controls on these types of actions in the future."
Mr. Harris said "in hindsight," the state's investment in rare coins "probably wasn't a good idea. The important thing is that we learn from what has taken place here, and we don t allow those things that have happened to happen in the future."
Conflict of interest
Mr. Noe s resignation from the board of regents was not unexpected.
On April 22, the Ohio Ethics Commission agreed that Mr. Noe had a conflict of interest between his service on the regents and his financial stake in a start-up business based at the University of Toledo.
Mr. Noe is a general partner and an investor of Hi-Genomics, a young company that has a method for rapid and efficient plant genetic engineering that was developed by two UT professors.
Peers lauded Mr. Noe s service on the Turnpike Commission and the regents.
"Two years of tireless, consummate leadership as chairman of the Ohio Board of Regents and a decade of selfless service as a board member put Tom Noe in a class few others achieve," said Edmund J. Adams, chairman of the Ohio Board of Regents.
Mr. Adams said Mr. Noe helped the regents in several areas, including heightened public awareness of the importance of higher education to the future of Ohio.
"I think that Tom was a strong leader and the Turnpike Commission benefited from his enthusiasm and dedication," said Gary Suhadolnik, executive director of the Ohio Turnpike Commission.
Contact James Drew at:firstname.lastname@example.org or 614-221-0496.