Coingate: The Gift That Keeps On Giving

April 29th, 2014 by

Imagine, for a moment, that you hold the lofty position of Inspector General for a major midwest US state. Imagine further that down the road and around the corner, before you time, way back in 2005 gross malfeasance and criminal activity happened in your state’s Bureau of Workers’ Compensation (BWC). And people went to jail. All told, there were nineteen criminal convictions, including several prominent Republican politicians. Your governor at the time, a member of the state’s most distinguished political family of the 20th century, a family that includes one member who became both President and Chief Justice of the US Supreme Court, pleaded “no-contest” to criminal charges of misdemeanor ethics violations.
Your name is Randall Meyer, and you inherit this mess in Ohio. You inherit it, because nine years ago, a political lifetime in the past, your office was charged with investigating the whole thing and producing a report that would explain what happened, along with how and why, as well as what the state and Bureau have done to prevent such a sorry affair from ever happening again.
The whole thing came about, because even farther back, in 1998, the BWC gave Thomas Noe, a major Republican fundraiser and professional coin dealer, $50 million to invest in rare coins, an investment with, essentially, no liquidity. And that is probably why no other state in the nation pursued such an investment with its workers comp surplus.
The concept wasn’t complicated: Noe and his partners took the state’s $50 million and, applying their professional experience, bought rare coins, which they then tried to sell at a profit. Sound risky?
In 1999, Keith Elliot, the BWC’s manager of internal audits, picked up the corner of the rare coin rug and tried to see what was growing underneath, because of “the unique nature of the investment.” He asked uncomfortable questions, was able to put a few minor controls in place and was essentially stonewalled by the Bureau’s leaders.
Time passed. Six years, actually. Finally, the whole thing blew up in April, 2005, when Mike Wilkinson and James Drew, of the Toledo Blade, published a long piece on Noe, his business and the, till then, history of what came to be known as “Coingate.”
The scandal was mothers milk to investigative journalists. As so often happens in these situations, the Blade grabbed hold and would not let go. It infuriated comfortable politicians and, in the process, performed huge public service for Ohio. For that service the Blade and its investigative journalism team won more than a dozen national, state and local awards, including being a Pulitzer Finalist for Public Service.
We at the Insider also drank deeply of Coingate’s milk, writing about it numerous times. How could we not?
But, back to you, Randall Meyer, Ohio Inspector General. Last week, you issued your office’s final report on Coingate – and, really, the only reason you released the redacted cat from the bag was because the Toledo Blade sued you to do it.
One would think that a report coming nine years after the investigation began and six years after the last prosecution would be juicy, indeed. But such is not the case. Your report was a mere chronology of events, not much of an investigation. You report that, “As the task force investigation was completed prior to the current inspector general assuming this office, there were no resources utilized to reinvestigate an already completed matter.” So, the Report did not include any investigative records, such as witness interviews. You didn’t even interview Mr. Coingate, himself, Tom Noe.
You did cause a bit of trouble for yourself, however, when you wrote in the Report that Noe’s ex-wife, Bernadette Restivo, was one of those against whom the BWC won civil judgements. The lady reacted strongly to that, and the day after you released the report, you had to change it to take her out of it.
We used to sing a song in my college folk group called The Cat Came Back, a cute little ditty about a cat that would find its way back to the back porch regardless of where you sent it, even outer space. I’m reminded of that song every time I hear something new about Ohio and Coingate. Even now, despite its experience with investing in rare coins, the BWC has decided that safe stocks and bonds still aren’t enough. Nope. On Sunday, the Toledo Blade’s Jim Provance, picking up on a story originally reported by WorkCompCentral’s Peter Mantius, reported that the BWC has invested another $50 million (that’s its limit on investments) “in a Wisconsin health-care real estate fund headed by a major national Republican donor and money-raiser, Jon Hammes.”
I can hardly wait.