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June 11, 2005

You Might Want to Wait a Day or Two Before Going to the Bank

The lines at the teller window may be a little long for the next day or two as a host of Republican politicians rush to the banks to arrange the return of tens of thousands of dollars in campaign donations from Tom Noe and his wife. Noe, you may remember, is the central figure in the State of Ohio investment in rare coins(!), of which around $10M worth has gone missing. The money was "invested" by the Ohio Bureau of Workers’ Compensation in Mr. Noe’s Capital Coin funds.

The Toledo Blade has the story of the rush to return the contributions. Even our own governor, Arnold Schwarzenegger, after saying he would not return the money has decided to head for take the high ground.

The actor-turned-governor joins President Bush, the Republican National Committee, and at least 17 Ohio officials returning contributions, including U.S. Sens. George Voinovich and Mike DeWine as well as all three GOP candidates for governor: Attorney General Jim Petro, Secretary of State Ken Blackwell, and Auditor Betty Montgomery, who have given back a total of $17,100.

Gov. Bob Taft has returned the most, $22,190, while Mr. Bush returned $4,000 and the RNC $2,000. Five GOP justices on the Ohio Supreme Court said they, too, will identify and set aside campaign contributions from the Noes.

Great fun.

Via America Blog

Update (June 12, 2005)

The Los Angeles Times has long article on this whole affair. I quote one of juiciest parts.

Initially, Noe's allies in the GOP raced to his defense.

Taft, whom the Noes have reportedly given more than $20,000 in campaign donations over the years, said the fund had been a savvy business move and had netted the state $15 million in profit.

"He's making money for the state," Taft told the Blade in April. "What's the problem?"

But in May, investigators found that as many as 121 coins were missing from storage and inventory facilities in Colorado, Florida, Pennsylvania, Delaware and Ohio.

The governor's support vanished, and the GOP's rush to distance itself from Noe began.

"Mr. Noe has done a great disservice to the people of Ohio by mismanaging our public resources and abusing our trust," Taft said in a statement."

Well, if I may sum up Mr. Taft's position, "the fund had been a savvy business move" until it became apparent that "Mr. Noe has done a great disservice to the people of Ohio by mismanaging our public resources and abusing our trust." But, as the Times article explains, it was a bad idea form the get go,

Currency collectors said that publicly held funds usually shunned such investment strategies because they were considered too risky.

"There clearly are profits to be made — otherwise, there wouldn't be an industry," said Todd Imhof, a director at the trade group Industry Council for Tangible Assets. "But I can't think of a publicly funded group that's invested in coins like Ohio did."

Yep, investing in rare coins is a very well known high-risk investment. How it ranks for risk against junk bonds, I do not know. But it was junk bonds that contributed to the bankruptcy of Orange County as few years ago. You'd think that those in charge of the public trust would learn from the mistakes of other but . . .

Posted by DuaneSmith at June 11, 2005 03:01 PM | Read more on Current Events |

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