Coingate scandal

Coingate is a nickname for the Tom Noe investment scandal in Ohio revealed in early 2005 in part by Toledo, Ohio newspaper The Blade. The Ohio Bureau of Workers' Compensation (BWC) invested hundreds of millions of dollars in high risk or unconventional investment vehicles run by people closely connected to the Ohio Republican Party who had made large campaign contributions to many senior Republican party officials.

A rare coin investment fund has attracted particular scrutiny after it was reported that two coins worth more than $300,000 had been lost. Further investigation then revealed that coins worth $10–$12 million were missing and that only $13 million of the original $50 million invested could be accounted for. Tom Noe was convicted of running a criminal enterprise, the theft of $13 million from the fund, and of keeping a second set of books to cover for it.

In 1996, the Republican-controlled Ohio General Assembly passed a law that struck the requirement that the Ohio state government invest solely in bonds. Fund managers and other brokers then scrambled to offer their services.

The Coingate scandal centers on Tom Noe, an Ohio government figure, GOP fundraiser and coin dealer. In a separate fundraising scandal, Noe was indicted by a federal grand jury in late October 2005, charged with violating campaign contribution laws by using strawmen, or proxies, for contributions. On May 31, 2006, Noe pleaded guilty.

In March 1998, Thomas Noe Inc. was awarded a $50 million investment contract for the Ohio Workers' Compensation fund. The company received $25 million to invest in 1998, and the same again in 2001. Before this, Mr. Noe and his then managers had increased their contributions to Republican candidates by nearly 10 times. By April, according to the February 2006 indictment, Noe had already begun his illegal activities, stealing money from the investment. "His illegal actions continued until it was shut down this past May", the indictment said. To manage the investment, Thomas Noe Inc. used a newly created subsidiary of Noe's company Vintage Coins & Collectibles, called Capital Coin (specifically, Capital Coins Ltd. I and Capital Coins Ltd. II). Capital Coin then created subsidiaries Visionary Rare Coins, Numismatic Professionals, Rare Coin Alliance, and one named Karl D. Hirtzinger.

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