Noe indictment names "unwitting partners"
Michigan
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COIN SCANDAL
Not all Noe deals involved criminals; indictment names unwitting partners
Gailliot
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By MIKE WILKINSON and JAMES DREW
BLADE STAFF WRITERS
In its indictment of Tom Noe, a Lucas County grand jury identified a business network that it felt had participated in Mr. Noe's alleged crimes.
It listed the obvious: Mr. Noe's main business in Monclova Township, the two coin funds he managed for the Ohio Bureau of Workers' Compensation, and most of the funds' subsidiaries.
But the grand jury also listed another group never mentioned before that collectively has done millions of dollars in coin business with Mr. Noe and the state-financed funds, with some buying and selling coins and others borrowing money.
The coin dealers, coin collectors, and the bureau itself were identified as "unwitting participants" in the "ongoing criminal enterprise."
Although they found their names in an indictment that amplified an ongoing scandal that has engulfed the Ohio Republican Party, none is considered a criminal, officials said.
"They just got used," said John Weglian, the assistant Lucas County prosecutor who had led the Noe investigation.
Members of the group did frequent business deals with the funds, borrowing hundreds of thousands of dollars and buying and selling millions of dollars of coins, according to records obtained by The Blade.
For instance, Classic Coin Co. of suburban New York City did more than $4 million in business. When Ohio shut down the coin funds, Classic Coin paid off the balance of $100,000 that it owed to the funds to the liquidator appointed by Ohio Attorney General Jim Petro.
"It was just a coin deal I came across," said Brian Hendleson, listed in the indictment. He borrowed money from Mr. Noe's state funds on behalf of Classic Coin. "I would give him coins as collateral."
Mr. Noe charged slightly better than the prime rate set by the Federal Reserve Bank. Mr. Hendleson said it averaged 1 percent a month. He added that he provided records to Ohio investigators but was not told how he fit into the case.
Like others, he was surprised to hear that Mr. Noe was accused of any wrongdoing.
"I think the majority of the business has been shocked to hear what happened," he said.
The others listed as "unwitting" range from the obscure to the familiar, from the small time to the wealthy. They live in Ohio and in California, Florida, New York, and Pennsylvania. It also includes the bureau itself.
They include Henry J. Gailliot, a well-heeled former executive with Federated Investors and prominent Pittsburgh coin collector, and less visible coin dealers from around the country.
Mr. Noe has known Mr. Gailliot for more than a decade. In 1993, Mr. Noe testified during his divorce that his "No. 1 client" was on the board of Catholic University of America's fund-raising board with him. That was Mr. Gailliot.
When he applied for the chance to manage money for the workers' compensation bureau, he also listed Mr. Gailliot as one of his customers. Bill Brandt, the state's liquidator, said Mr. Gailliot sold coins on consignment through Mr. Noe's Toledo area coin shop.
What is not clear is how Mr. Gailliot, Mr. Hendleson, or the other "unwitting" participated in the alleged crimes. None was the victim of the 22 counts of forgery, Mr. Weglian said. He declined to explain how they were involved.
Several of them, Mr. Gailliot included, would not talk with The Blade about their dealings with Mr. Noe.
"I haven't read it; I have no comment," Mr. Gailliot said.
But others used the news to announce their innocence.
Jeremy Jackson, press secretary for the Bureau of Workers' Compensation, said the agency's interpretation is that "we were not a participant in the crime."
"We are not part of the indictments. The bureau in its role was not a co-conspirator in the alleged crimes," he said.
Jonathan Kern, a member of the Professional Numismatists Guild board of directors, said it was well known in the coin industry that Mr. Noe was the man to see if you needed money to fund a coin deal. He was not listed in the indictment.
"People knew Tom had money to invest. They'd borrow millions to split a deal with him and if they both made $40,000, it was a done deal," he said. "Coin dealers tend to like coins. We tend to run up our bank line. And if another deal comes along, you might run out of money."
Others were unaware of their alleged roles.
National Gold Exchange in Tampa did millions of dollars in business with the coin funds. Its attorney, Kevin Kline, said he did not know why the company was on the list.
"We are a large national coin dealership that sells coins all over the world. We have business transactions with thousands and thousands of people," he said.
Among the unwitting participants listed in the indictment was Spectrum Numismatics, which received more than $10.7 million in loans and direct investment from the coin funds.
The Escala Group, which is the publicly traded parent company of Spectrum Numismatics, declined to comment on the indictment. Escala stated in November that it was not a target of the state's investigation.
Not all Noe deals involved criminals; indictment names unwitting partners
Gailliot
Zoom | Photo Reprints
By MIKE WILKINSON and JAMES DREW
BLADE STAFF WRITERS
In its indictment of Tom Noe, a Lucas County grand jury identified a business network that it felt had participated in Mr. Noe's alleged crimes.
It listed the obvious: Mr. Noe's main business in Monclova Township, the two coin funds he managed for the Ohio Bureau of Workers' Compensation, and most of the funds' subsidiaries.
But the grand jury also listed another group never mentioned before that collectively has done millions of dollars in coin business with Mr. Noe and the state-financed funds, with some buying and selling coins and others borrowing money.
The coin dealers, coin collectors, and the bureau itself were identified as "unwitting participants" in the "ongoing criminal enterprise."
Although they found their names in an indictment that amplified an ongoing scandal that has engulfed the Ohio Republican Party, none is considered a criminal, officials said.
"They just got used," said John Weglian, the assistant Lucas County prosecutor who had led the Noe investigation.
Members of the group did frequent business deals with the funds, borrowing hundreds of thousands of dollars and buying and selling millions of dollars of coins, according to records obtained by The Blade.
For instance, Classic Coin Co. of suburban New York City did more than $4 million in business. When Ohio shut down the coin funds, Classic Coin paid off the balance of $100,000 that it owed to the funds to the liquidator appointed by Ohio Attorney General Jim Petro.
"It was just a coin deal I came across," said Brian Hendleson, listed in the indictment. He borrowed money from Mr. Noe's state funds on behalf of Classic Coin. "I would give him coins as collateral."
Mr. Noe charged slightly better than the prime rate set by the Federal Reserve Bank. Mr. Hendleson said it averaged 1 percent a month. He added that he provided records to Ohio investigators but was not told how he fit into the case.
Like others, he was surprised to hear that Mr. Noe was accused of any wrongdoing.
"I think the majority of the business has been shocked to hear what happened," he said.
The others listed as "unwitting" range from the obscure to the familiar, from the small time to the wealthy. They live in Ohio and in California, Florida, New York, and Pennsylvania. It also includes the bureau itself.
They include Henry J. Gailliot, a well-heeled former executive with Federated Investors and prominent Pittsburgh coin collector, and less visible coin dealers from around the country.
Mr. Noe has known Mr. Gailliot for more than a decade. In 1993, Mr. Noe testified during his divorce that his "No. 1 client" was on the board of Catholic University of America's fund-raising board with him. That was Mr. Gailliot.
When he applied for the chance to manage money for the workers' compensation bureau, he also listed Mr. Gailliot as one of his customers. Bill Brandt, the state's liquidator, said Mr. Gailliot sold coins on consignment through Mr. Noe's Toledo area coin shop.
What is not clear is how Mr. Gailliot, Mr. Hendleson, or the other "unwitting" participated in the alleged crimes. None was the victim of the 22 counts of forgery, Mr. Weglian said. He declined to explain how they were involved.
Several of them, Mr. Gailliot included, would not talk with The Blade about their dealings with Mr. Noe.
"I haven't read it; I have no comment," Mr. Gailliot said.
But others used the news to announce their innocence.
Jeremy Jackson, press secretary for the Bureau of Workers' Compensation, said the agency's interpretation is that "we were not a participant in the crime."
"We are not part of the indictments. The bureau in its role was not a co-conspirator in the alleged crimes," he said.
Jonathan Kern, a member of the Professional Numismatists Guild board of directors, said it was well known in the coin industry that Mr. Noe was the man to see if you needed money to fund a coin deal. He was not listed in the indictment.
"People knew Tom had money to invest. They'd borrow millions to split a deal with him and if they both made $40,000, it was a done deal," he said. "Coin dealers tend to like coins. We tend to run up our bank line. And if another deal comes along, you might run out of money."
Others were unaware of their alleged roles.
National Gold Exchange in Tampa did millions of dollars in business with the coin funds. Its attorney, Kevin Kline, said he did not know why the company was on the list.
"We are a large national coin dealership that sells coins all over the world. We have business transactions with thousands and thousands of people," he said.
Among the unwitting participants listed in the indictment was Spectrum Numismatics, which received more than $10.7 million in loans and direct investment from the coin funds.
The Escala Group, which is the publicly traded parent company of Spectrum Numismatics, declined to comment on the indictment. Escala stated in November that it was not a target of the state's investigation.
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