COLOMBUS, Ohio – A prominent Ohio official who is on the hot seat over an investment he made on behalf of a state agency will resign, Gov. Bob Taft said Friday.
The investment the official made was profitable enough, but now some of it seems to have disappeared.
A well-connected player in the Ohio Republican Party, Tom Noe (search) of northwest Ohio, is the focus of a series of investigations centering on tens of thousands of coins he bought with Buckeye state money on behalf of the Ohio Bureau of Workers Compensation. The bureau gives money to Ohioans who cannot work due to injury.
Taft said Friday that the director of Ohio's workers compensation bureau, James Conrad, is resigning over the scandal. Taft said neither Conrad nor any member of his staff told the governor about the state's investment in coins. When questions were raised in April, agency officials told Taft the investment was profitable and safe.
Taft said he believes Conrad, who will resign next Friday, understands the investment was a mistake and that he is responsible as agency administrator. The governor said he also takes responsibility for the situation.
To make sure it always has cash-on-hand, the agency has a $14 billion investment portfolio that includes the unusual holding of $50 million worth of rare coins.
"That $50 million-dollar allocation has generated $15 million dollars in profit so it has been a very successful fund," said Jeremy Jackson, spokesman for the bureau.
But some of the coins bought by Noe have disappeared, according to The Toledo Blade, which first broke the story that 121 coins, worth about $400,000 are missing and possibly stolen. In late reporting on Thursday, the Blade said a lawyer for Noe told state officials that up to $12 million of the state's coin investment can't be located.
The early reports piqued the curiousity of state officials.
"We want to be able to check the inventory of coins and check that inventory against the coins that we can see and taste and touch," said Ohio State Auditor State Betty Montgomery.
The buying and selling of the state's coins were done out of Noe's Toledo-area store and four other coin shops around the country. Recently when auditors showed up at his store to have a look at the coins, they were refused entry at first and then given only limited access.
Legal motions were filed to get complete access to all the coins. One motion heard by the Ohio Supreme Court resulted in five of the seven judges recusing themselves from the case because of ties to Noe.
Ohio Democrats like state Sen. Marc Dann complain Noe is too well-connected to the Republican-dominated state government.
"[Noe] was also chairman of the Ohio Turnpike Commission. He was also at one point chairman of the Ohio Board of Regents," Dann said.
Taft at first defended Noe, accusing newspaper reporters of carrying out a vendetta against Noe. But he's now done an about-face and is backing investigators.
"I am outraged, angered, saddened, sickened by what we learned yesterday from Mr. Noe's attorney," Taft said at a news conference. But in response to reporters' questions, Taft declined to say whether Conrad had been ousted, saying only that the departure was by mutual agreement.
The bureau hired Noe in 1998, the year before Taft took office, to invest in coins as a way to hedge its investments in stocks and bonds. Jackson, the bureau spokesman, said officials do not know what coins are missing or which of the holding sites in five states they're missing from.
Messages seeking comment from Conrad were left Friday at the Bureau of Workers' Compensation.
Coin dealers say they know of no other state that has invested in rare coins. Among the purchases by the Ohio fund were 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.
Click in the video box near the top of the story to watch a report by FOX News' Steve Brown.
The Associated Press contributed to this report.