By Peter Slevin
Washington Post Staff Writer
Sunday, November 27, 2005
COLUMBUS, Ohio -- The scandal began as a curiosity. Tom Noe, a gregarious businessman and Republican Party leader in northwest Ohio, had been entrusted with $50 million in state money to invest in rare coins, with the idea of winning fat returns for the workers' compensation fund.
It seemed an oddity at most, but like a loose thread on a jacket, the more investigators pulled, the more the garment unraveled, revealing members of Ohio's Republican establishment who had been wined, dined and enriched by Noe.
Gov. Bob Taft (R), heir to the state's most famous political name, pleaded no contest in August to accepting secret freebies from Noe and others and was fined $4,000. Members of his staff admitted borrowing money from Noe or using his Florida Keys vacation home. Millions in state funds proved to be missing from Noe's accounts.
As Republicans raced to distance themselves from Noe, a federal grand jury in Toledo indicted him last month on charges that he illegally funneled $45,400 in campaign contributions to President Bush's reelection campaign. Prosecutors said he circumvented the $2,000 limit on individual contributions by getting 24 friends and associates to make the contributions, and reimbursing them.
Although Noe protests he is innocent, investigators are asking how far the growing scandal will go, and political consultants are measuring the potential fallout in a crucial Midwestern state controlled by the GOP. Historically, power has been split between the major parties in Ohio, but Republicans have won the past two presidential elections, and taken hold of both U.S. Senate seats and the state legislature in recent years. Republicans have occupied the governor's office since 1990.
The Republican brand in Ohio last week picked up another dent when six-term Rep. Robert W. Ney was identified as the recipient of favors -- including a golf trip to Scotland, meals and sports tickets -- from lobbyists Jack Abramoff and Michael Scanlon in return for official actions. A lawyer for the central Ohio congressman denied the allegations.
Last year, the GOP caucus in the state legislature was buffeted by reports of improper fundraising and self-dealing by two consultants working for the Republican speaker of the state House.
With Ney under a cloud and Taft's approval rating diving to a historically low 15 percent in a Columbus Dispatch poll, Democrats hope to harness the scandals as part of a national campaign to paint their opponents as purveyors of arrogance and greed.
"My great fear politically is the Republicans will push him out of office," Rep. Chris Redfern, leader of the Democratic minority in the statehouse, said of Taft. "Keeping him in office is better for the Democrats than allowing him to leave under the cover of darkness."
Taft has pledged to finish his term and leave office in January 2007, as he is required to do by term limits. The governor's spokesman, Mark Rickel, dismissed the Democrats' criticisms of Taft.
"When the voters wanted solutions," Rickel said of Ohio Democrats, "they failed to offer solutions."
Ohio is the bellwether state that pushed President Bush over the top against Sen. John F. Kerry (D-Mass.) in the final hours of the November 2004 vote-counting. Often studied for signals of national importance, the state is suffering from a flat economy and damage to the president's standing by the increasingly unpopular war in Iraq.
If the Democrats get traction on the scandal issue in Ohio, it likely will be because of the dealings of Noe, an entrepreneur who parlayed his political ties into the chairmanships of the Ohio Turnpike Commission and the Ohio Board of Regents.
In Toledo, he chaired the Lucas County Republican Party, as did his wife, Bernadette, and contributed generously to GOP candidates at all levels. He was so anxious to honor his pledge to the Bush-Cheney campaign, prosecutors said Oct. 27 in issuing a three-count indictment, that he funneled money through friends, including local elected officials.
Noe was later named one of 19 Ohio "Pioneers," those who had raised at least $100,000 for the president's successful reelection. There is no evidence that Bush-Cheney officials knew of the alleged laundering operation, investigators said. A total of $6,000 contributed directly by the Noes to the presidential campaign and the Republican National Committee has been donated to charity, said RNC spokesman Aaron McLear.
Investigators for the Ohio Ethics Commission, highway patrol, attorney general's office and an array of other agencies have uncovered a web of business transactions they are still trying to untangle. Central to the case are two stakes of $25 million each that Noe was given by the Bureau of Workers' Compensation to invest in rare coins, artwork and other collectibles.
The money, a small fraction of a fund valued at more than $15 billion, was intended as a creative way to diversify the bureau's portfolio. After the Toledo Blade revealed Noe's coin investment contract in April, an agency spokesman said that "there is not one iota of evidence showing politics played a role."
Investigators continue to examine that issue. Taft said he was fooled by Noe and did not know of the coin stake until the Blade reported it -- a point disputed by Noe. Ohio Inspector General Thomas P. Charles asked Taft about his staff receiving benefits, leading to the governor's disclosure of 52 gifts from an array of people -- such as golf outings, meals and hockey tickets -- that he had failed to report as required by public ethics laws.
A tearful Taft pleaded no contest Aug. 18 to misdemeanor charges. After vowing earlier not to tolerate ethics violations in his administration, he said he had failed to live up to his own standards and public expectations.
"I am disappointed in myself," said Taft, the son and grandson of U.S. senators and the great-grandson of President William Howard Taft. "I just want to say there are no words to express the deep remorse that I feel over the embarrassment I have caused."
Two Taft aides pleaded no contest to accepting items of value from Noe. Ohio newspapers have identified two other former staff members as having received loans from Noe, who allegedly treated members of the governor's staff so often that dinners were called "The Noe Supper Club."
"It was a two-way street, back and forth, where influence was used and influence was sought," said one investigator who spoke on the condition of anonymity because the inquiry is continuing.
Noe's attorney has said more than $11 million is missing from the coin fund that Noe established with workers' compensation money. Attorney General Jim Petro (R), who has joined the large field of contestants for next year's open governor's race, filed a civil lawsuit accusing Noe of diverting as much as $4 million for his own use.
Ethics specialists and prosecutors working on the continuing investigation say they do not yet know whether state money was channeled to political campaigns or what Noe may have received in return for his largess.
The Bureau of Workers' Compensation, meanwhile, fired 69 investment managers this month and announced that it will shift $7.2 billion from the stock market into safer fixed-income investments. The coin investments -- the ones the bureau can find -- are being liquidated.