Ohio’s workers’ compensation director, once hailed as government’s “Mr. Fixit,” has resigned because of a growing scandal about the disappearance of about $10 million worth of rare coins the agency bought as an investment.
Gov. Bob Taft took responsibility for the investments Friday when he announced the resignation of workers’ comp Administrator James Conrad, long known as a skilled administrator capable of fixing serious problems in state agencies.
“I am outraged, I am angered, I am saddened, and I am sickened,” Taft said of the missing money.
Neither Conrad nor any member of his staff told the governor about the state’s investment in coins, Taft said. When questions arose in April, officials told Taft the investment was profitable and safe.
State officials say they plan to sue coin dealer Tom Noe and seek criminal charges after his attorney told them Thursday that $10 million to $12 million of the state’s $55 million investment in rare coins is missing — dramatically more than the previous estimate of $400,000.
The state plans to sell off its coin collection, which represents less than 1 percent of the bureau’s total $14 billion in investments.
Taft said he believes Conrad, who will leave next Friday, understands the investment was a mistake and that he is responsible as agency administrator. Taft wouldn’t say if he fired Conrad, calling it a mutual decision.
In a statement, Conrad said the issue was getting in the way of the bureau’s mission to serve injured workers and employers.
“The last thing I want to do is distract from the outstanding progress we have made together over the years,” he said.
The agency learned for the first time this week that Noe claimed to have bought artwork, autographs and other collectibles instead of coins.
Coin dealers and two national groups that track state investments said they know of no other state that has invested in rare coins, autographs or other collectibles.
Noe, 50, a leading GOP donor who operates a coin shop near Toledo, was hired in 1998, the year before Taft took office, to invest in coins as a way to hedge the agency’s investments in stocks and bonds. While Noe is a respected coin expert, Democrats have alleged that he was awarded the state’s business in return for campaign contributions to Republicans, who control most of state government. Noe gave Taft $1,000 in 2004, for example.
Noe has resigned as fund manager. On Friday, former federal bankruptcy judge William T. Bodoh named corporate restructuring expert William Brandt to take Noe’s place. Brandt’s company, Development Specialists Inc., has offices in Columbus. Bodoh previously was appointed to oversee the funds’ liquidation.
State officials said they do not know where he is or which coins are missing. Franklin County Common Pleas Court Judge David Cain on Friday froze all personal and business assets of Noe and his wife.
Also Friday, Franklin County Prosecutor Ron O’Brien said Noe’s attorneys were delivering his passport to O’Brien at his request.
Jud Scheaf, a law partner of Noe’s attorney, said only that the coin dealer was cooperating with the investigation.
Conrad’s departure was an ugly conclusion to his time at the Bureau, where he was credited with overhauling an agency that former Gov. George Voinovich once dubbed “the silent killer of jobs” because of the poor management of injury claims and the high premiums that employers paid.
Four years ago, Taft tapped Conrad to oversee a team reviewing the state’s then-troubled human services department.
“What he’s done has been nothing short of stupendous in the time that he’s been down there,” Andy Doehrel, president of the Ohio Chamber of Commerce, said Friday. “Taking what had been an unstable situation, and not just righting the ship, but literally reconfiguring and moving the bureau into the 21st century in just a huge way.”
The investment purchases included a 1792 silver piece worth about $2 million and gold coins minted in 1845 and 1855. Before the new estimate on the number of missing coins was disclosed, officials had said the state at times did better than the stock market, clearing a profit of nearly 40 percent, less Noe’s commission.
The bureau had made $15.3 million from the investments while Noe has collected about $3.8 million in commission.
Questions about the investment surfaced in April when The (Toledo) Blade found that the two 1800s-era gold coins had disappeared. Noe said they were sent to a Colorado coin dealer but got lost in the mail in 2003.
The newspaper then reported that 119 other coins were missing. Noe said he thought the coins had been stolen by the Colorado dealer. Colorado authorities are investigating.
Separately, federal authorities are investigating accusations that Noe bypassed campaign finance limits by giving money to other people to donate to President Bush’s re-election campaign.
Democrats called on statewide officeholders to return any campaign contributions they received from Noe.
“We have a culture of corruption in Columbus that ought to alarm people in every corner of the state of Ohio,” Sen. Marc Dann of Youngstown said.
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