California governor bypassed charities, gave cash back to Noe

Toledo Blade
Sep. 04, 2005

California Gov. Arnold Schwarzenegger could have cleared his campaign coffers of Tom Noe’s $10,000 in contributions by donating the money to a charity or the Ohio Bureau of Workers’ Compensation, but instead he sent the cash back to the embattled coin dealer.

Marty Wilson, Mr. Schwarzenegger’s spokesman, said yesterday the governor was not aware there were other options for disposing of the money contributed by Mr. Noe, who is facing accusations that he stole millions of dollars from a $50 million rare-coin fund he managed for the bureau. A long line of Republicans, including President Bush, has already sent the coin dealer’s contributions to charities or the bureau.

“Had we known about the other options, we may have made a different choice, but that’s hindsight,” said Mr. Wilson, adding the money was returned in early June. “The fact is the money has gone out."

“It’s money that clearly wasn’t his money to begin with and Governor Schwarzenegger knew it,” said state Sen. Marc Dann, a Democrat from suburban Youngstown. “I think he ought to give another $10,000 back to the bureau.”

In July, Mr. Dann sent a letter to a number of Republicans who had received contributions from Mr. Noe, including Mr. Schwarzenegger, and demanded the money be returned to the bureau.

“If he wanted to contribute to Tom Noe’s defense fund, that’s up to him,” Mr. Dann said.

Mr. Noe is facing more than a dozen investigations into his handling of the state’s rare-coin funds, and investigators are looking into whether Mr. Noe laundered money into the Bush campaign.

Mr. Noe raised more than $100,000 for Mr. Bush’s re-election campaign, and achieved the exclusive status as a Bush “pioneer” for his fund-raising efforts.

In June, President Bush said he would return $4,000 in contributions he received directly from Mr. Noe and his wife, Bernadette, but the President has resisted calls to return the rest of the money the coin dealer raised for his campaign.

A spokesman for the Republican National Committee said Mr. Bush had donated the $4,000 to the American Heart Association’s “Go Red For Women Campaign.”

Since 1990, Mr. Noe and his wife have contributed more than $200,000 to Republican candidates and causes.

Many of the candidates and officials who received that money pledged to donate the funds in June after Mr. Noe’s attorney predicted a shortfall in the bureau’s coin funds of up to $13 million.

In June, the bureau established an escrow account to handle returned contributions until the investigations are complete.

The only statewide official to put the money in the bureau’s escrow account is state Auditor Betty Montgomery, who is seeking the Republican nomination in the 2006 governor’s race. Her opponents sent their money elsewhere; Attorney General Jim Petro donated to the state Elections Commission, and Secretary of State J. Kenneth Blackwell contributed to the Pregnancy Decision Health Centers in Columbus.

“Betty Montgomery believes the money should be given to the Bureau of Workers’ Compensation,” said Mark Weaver, a spokesman for Ms. Montgomery. “That’s why she did that. Others apparently have different opinions.”

He added, “Everybody is going to have to be accountable for the decisions they make.”

That includes Mr. Schwarzenegger, who initially resisted calls to return the contributions before changing his mind in June. The California governor ended up being among the last to say they would return contributions and the only known official to send the money directly to Mr. Noe.

“We don’t have a political operation in Ohio,” Mr. Wilson said yesterday. “It’s not like Mr. Noe is or was an intimate of the governor’s, somebody that had contributed a lot of money to him in past campaigns.”

Ned Wigglesworth, an analyst with California watchdog group TheRestOfUs.org, said the fact that Mr. Schwarzenegger returned the money to Mr. Noe rather than the bureau is a “slap in the face” to Ohioans.

“Returning money to a man who appears as though he stole at least $4 million from the people of Ohio is not the best way to make sure the people of Ohio get their money back,” Mr. Wigglesworth said. “I think it is ridiculous.”

In another development, attorneys representing Mr. Noe asked a Franklin County Common Pleas Court judge yesterday to dismiss a lawsuit that the Bureau of Workers’ Compensation filed against Mr. Noe on May 24.

Attorney General Jim Petro said there is evidence that Mr. Noe pocketed nearly $4 million in money invested with the coin funds through the bureau since 1998. O. Judson Scheaf III, an attorney with the law firm of Thompson Hine LLP, which represents Mr. Noe, said the bureau has not been “harmed in its individual capacity” and the only plaintiffs that can assert a claim are the two coin funds that Mr. Noe once controlled.

Mr. Noe’s attorneys also are asking Judge David Cain to dismiss the state’s claims against Mr. Noe, asserting that Thomas Noe, Inc. managed Capital Coin Fund I and II, not Mr. Noe or employees of Thomas Noe, Inc.

“This is basic, fundamental corporate law 101,” Mr. Scheaf said.
The attorney general’s office has two weeks to file a response to the motion that Mr. Noe’s attorneys filed yesterday.