Tuesday, May 22, 2018
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Taft: Coin deal a 'bad decision'

Bureau head who backed Tom Noe's fund resigns

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    James Conrad

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    James Conrad has resigned as administrator of the Bureau of Workers' Compensation.



James Conrad has resigned as administrator of the Bureau of Workers' Compensation.


COLUMBUS -- Gov. Bob Taft, who initially defended the state's $50 million investment in rare coins and personally supported Tom Noe, said yesterday that the Bureau of Workers Compensation had made a bad decision by investing with the wrong person.

"Mr. Noe has clearly deceived and betrayed many people at organizations and has irresponsibly managed the state's moneys," Mr. Taft said at a Statehouse news conference. "If he is guilty of criminal conduct, he should receive the most severe punishment possible under law."

The governor also announced yesterday that the man in charge of the bureau, administrator/CEO James Conrad, was stepping down from his $150,696-a-year post after consistently backing the agency's failed rare-coin investment. Mr. Conrad's support did not waver even after his own internal auditor raised questions about a lack of safeguards in the funds.

Mr. Taft said Mr. Conrad's decision to resign was "mutual."

The governor said the bureau "failed to implement proper controls to safeguard this investment."

State and federal authorities said Thursday they were pursuing criminal and civil charges against Mr. Noe for allegedly misappropriating $10 million to $12 million from the state's rare-coin funds that he controlled.

A law enforcement source said this week's searches at Mr. Noe's coin shop in Monclova Township revealed records of questionable coin transactions, a law enforcement source said.

One of them involved a coin purchased for more than $100,000 that was later sold for less than a dollar.

Inspector General Tom Charles announced yesterday he is coordinating a task force to investigate the bureau's rare-coin investment with Mr. Noe, along with allegations of wrongdoing by state employees.

And Secretary of State J. Kenneth Blackwell called on the Public Integrity Section of the U.S. Department of Justice to take control of the investigation into Mr. Noe's alleged misappropriation.

"The Justice Department's involvement will eliminate the potential of any conflicts of interest," Mr. Blackwell said in a written statement.

Mr. Conrad said his resignation would take effect June 3.

"The last thing I want to do is distract from the outstanding progress we have made together over the years," Mr. Conrad said in a written statement.

Mr. Taft denied yesterday that Mr. Noe had ever "informed me or to my knowledge, any member of my senior staff about his state contract with the Ohio Bureau of Workers Compensation."

In response to a question, Mr. Taft said he had visited Mr. Noe's coin shop in Monclova Township, where authorities executed a search warrant Thursday.

The governor said he didn't know how many times he had visited the coin shop and when asked why he went there, Mr. Taft replied: Just a visit. An aide to Mr. Taft said he didn't have any dates of when Mr. Taft dropped by Vintage Coins & Collectibles.

Asked if he and his high-ranking staff members solicited Mr. Noe to raise campaign contributions for President Bush's re-election and the Republican Governors Association, Mr. Taft replied: "I'm sure we did."

Mr. Noe at one time was chairman of the Lucas County Republican Party. He was a business leader in Toledo, said Mr. Taft, who was chairman of the Republican Governors Association during President Bush's re-election campaign.

Mr. Taft said neither Mr. Conrad nor any member of his staff ever informed me about the bureau's investment in rare coins.

Mr. Taft said he didn't learn about the state's investment in rare coins until he read The Blade's April 3 story. He said bureau officials then told him the investment was not only profitable, but safe.

Yesterday, Mr. Taft noted that Mr. Noe didn't disclose his contract with the bureau to the Ohio Ethics Commission when he was appointed to the Ohio Board of Regents and the Ohio Turnpike Commission.

In fact, Mr. Noe didn't file that disclosure with the Ethics Commission until after The Blade's first story about the rare-coin investment.

Failure to file the disclosure is a first-degree misdemeanor punishable by six months in jail and/or a $1,000 fine.

Attorneys representing Mr. Noe surrendered his passport yesterday to the Franklin County prosecutor.

Mr. Noe's attorneys didn't return messages seeking comment.

Franklin County Prosecutor Ron O Brien said Mr. Noe's attorneys have said he will cooperate with investigators and that could involve taking a polygraph test.

Former federal Judge William Bodoh announced yesterday that he had appointed Development Specialists, Inc., which has an office in Columbus, as the new general manager of the Capital Coin funds. The firm replaces Mr. Noe.

Attorney General Jim Petro chose Judge Bodoh on May 13 to be the independent third party charged with overseeing the withdrawal from the rare-coin fund.

The firm will work to divest the bureau's assets over a reasonable amount of time, Judge Bodoh said.

Mr. Noe's financial trouble deepened yesterday.

National City Bank, from which Mr. Noe borrowed $400,000 in November, 1997, for his business, Thomas Noe, Inc., went into court and essentially called for the balance of the loan, or more than $203,000, yesterday.

An attorney representing Mr. Noe did not contest the request.

When the bank will be paid is unclear because the state has frozen all of Mr. Noe's assets.

Yesterday, Judge David Cain of Franklin County Common Pleas Court approved the state's request to bar Mr. Noe from transferring or selling any personal property in excess of $15,000 without the state's consent or court approval.

"This order shall not impair the ability of the Noes to pay legal fees or reasonable and necessary living expenses, such as mortgage payments, utilities, groceries, and other such reasonable living requirements," Judge Cain wrote.

Mr. Taft pledged the state would try to recoup the full value of the state's investment in rare coins, cooperate with state and federal investigations, and work with lawmakers to prohibit investments in this kind of commodity.

Mr. Taft started the news conference in the governor's ceremonial office at the Statehouse by saying the state started the rare-coin investment under Republican Gov. George Voinovich, now a U.S. senator, and it continued under the Taft administration.

"As governor, the Bureau of Workers Compensation reports to me, and therefore I accept responsibility for what has happened," Mr. Taft said.

I'm outraged. I'm angered. I'm saddened. And I'm sickened by what we learned yesterday from Mr. Noe's attorneys with respect to up to $12 million of bureau investments in the Capital Coin funds being unaccounted for, Mr. Taft said.

Mr. Taft also said yesterday he wanted to assure workers and employers that the workers compensation fund remains strong and is in a position to meet present and future commitments to injured workers.

That didn't mollify several citizens who have dealt with the workers compensation system, especially a day after the bureau's Oversight Commission voted to increase private employer premiums by an average of 4.4 percent starting July 1.

Harold Fitzgerald, a 57-year-old Columbus resident who said he suffered a workplace injury in 1987, said he suspects that both Mr. Taft and Mr. Conrad were aware of the sweetheart deal with Mr. Noe.

This is how bureaucrats cover themselves, he said.

Mr. Taft said he will work with House and Senate leaders on proposals to eliminate the possibility that what happened in this instance will ever happen again.

On Thursday, Senate Republican leaders announced several 'reform provisions" that they intend to insert into the state operating budget bill.

They include prohibiting the bureau from investing in unregulated investments such as coins, artwork, horses, jewelry, gems, stamps, antiques, artifacts, collectibles, and other memorabilia.

Ohio Democrats, emboldened by the scandal that they say has cast a shadow over the state's Republican leadership, held a news conference at the Statehouse immediately following the governor's appearance.

Democrats presented a 12-point "Coingate: Action List" yesterday morning. They called on Republicans to take a number of actions, including returning contributions from the Noes to the bureau; recusing themselves from the investigation and allowing a third party to investigate, and determining whether any elected officials committed wrongdoing associated with the coin scandal.

"I believe Tom Noe is the little minnow in the pond," State Sen. Teresa Fedor (D., Toledo) said.

There are much bigger fish, and we need to get to the bottom of this.

State Sen. Marc Dann, a Democrat from suburban Youngstown, called for Mr. Charles to receive additional tools to investigate the coin scandal.

He called Mr. Charles and The Blade, because of its reporting, the only heroes in this controversy.

"When [Mr. Charles] finally got a chance to take a look at what was in Noe's office, he picked up the phone and called the police," Mr. Dann said.

Mr. Dann said Mr. Taft, Mr. Petro, and Auditor Betty Montgomery were absent in their duties to Ohio residents. He said the scandal has now shifted from pay-to-play to pay-to-steal.

"We've gotten to the point where the leaders of our state don't even know it is wrong, he said. They put their loyalty to their contributors ahead of the state of Ohio."

Mr. Petro, who is seeking the GOP nomination for governor in 2006, would not talk to The Blade yesterday.

His spokesman, Kim Norris, said Mr. Petro is consulting with the Ohio Elections Commission about how to return $6,100 in campaign contributions from Mr. Noe over 11 years, possibly to the workers compensation fund.

Shortly after The Blade's first story on the rare-coin investment, state Sen. Randy Gardner (R., Bowling Green) said: "Do the Democrats have evidence that money was lost? Is there any evidence of political favoritism? Have there been any funds lost? What has been the track record? These are all questions. They're fair to ask. I'm not sure we have answers to all of them."

Yesterday, Mr. Gardner said that the only charges left to be proven are those made by Democrats of political favoritism by the GOP in choosing Mr. Noe.

I think there were clearly mistakes made and bad judgments made with this investment. Both Republicans and Democrats approved this investment. In terms of choosing unwise investment policies, there is bipartisan blame to go around, and I hope the solution can be a bipartisan solution, he said.

Democrats in Washington shared the same disbelief as the Ohio politicians.

Josh Earnest, a spokesman for the Democratic National Committee, called on President Bush to return all of the money that Tom Noe has raised for him.

"In Republican circles, access to high dollar donors is the coin of the realm," Mr. Earnest said.

Blade Staff Writers Steve Eder and Christopher D. Kirkpatrick contributed to this report.

Contact James Drew at:jdrew@theblade.com or 614-221-0496.

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