A discrepancy uncovered during an annual audit should have been a tip-off that there were problems with the state’s investment in rare coins, a state official acknowledged. An audit of the $55 million investment for the Ohio Bureau of Workers’ Compensation found only $42 million in coins last year, a bureau spokesman said.
Also Tuesday, Attorney General Jim Petro and the bureau said a $3 million loan the former coin investment manager made to himself to buy stock might have violated his contract.
Accountants audited investments handled by Toledo-area coin dealer Tom Noe, now under state and federal investigation for his investment and campaign fund-raising practices for the Republican Party. The audit should have brought closer scrutiny, bureau spokesman Jeremy Jackson said. “It should have been a red flag,” Jackson said. “At the time folks didn’t think it was too out of the ordinary.”
On Wednesday, The Columbus Dispatch reported that Noe took a $200,000 advance in expected profits from the state’s coin investment in mid-May, shortly before a $13 million shortfall was reported.
An unidentified source told the newspaper that it appears Noe sold several hundred thousand dollars of stock in April and May. The stock was bought with bureau funds that he managed, the newspaper said. Noe’s lawyer said he was unaware of any advance or stock sales, but noted that Noe’s contract allowed him to collect 20 percent of the profit from all transactions.
The bureau’s former administrator and chief financial officer have resigned amid growing scandals involving Noe. His attorney, William Wilkinson, has told the state that up to $13 million could be missing.
Records show that a review conducted by Toledo-based Plante & Moran found about 119 coins worth $93,000 were missing. Bureau officials later determined two more valuable coins worth $300,000 were missing after being mailed to a Colorado dealer.
The records, obtained by The Associated Press and other media organizations, were made public following lawsuits against the bureau filed by The Columbus Dispatch, The Toledo Blade and Sen. Marc Dann, a Youngstown Democrat. “There was a colony of red flags,” Dann said. “Clearly no one was willing to raise questions regarding the politically connected campaign contributors” such as Noe.
Also, Noe’s loan to buy $3 million in stock in a Florida coin-grading company should not have been approved under his contract, which only allowed him to make small, short-term loans from the fund, Jackson said. “I’m not sure how well we understood the full scope of that transaction,” he said.
Petro said his reading of the contract indicates that Noe could not borrow money to buy stock in his name. “This is a bona fide loan on which Mr. Noe has been paying interest,” Wilkinson said. “The bureau has known about the loan for years because it’s been reported annually on the accountant’s audit.”
Noe’s attorneys complained last week that Petro wouldn’t allow Noe to sell the stock back to the privately held company to repay the loan.
A judge on Tuesday allowed Noe to sell a boat and continue under an order freezing his assets except to pay for groceries and attorneys, Wilkinson said.
The judge did not rule on the stock sale and denied Petro’s request to set up a procedure for selling personal property that would send half the proceeds to the state and half to a trust fund for attorney fees.
Petro said he won’t sign off on the stock sale until it’s clear whether Noe or the state is legally entitled to the proceeds.