toledoblade.com --

COLUMBUS - Tom Noe was a no-show at a large coin show in Columbus this weekend, but that did not squash the buzz surrounding the state's controversial $50 million rare-coin venture with the Maumee coin dealer.

Mr. Noe was scheduled to give a speech about the state quarter program on Saturday morning, but organizers of the Ohio State Numismatic Association Coin Show said he canceled a few days ago.

The three-day show at the Franklin County Veterans Memorial, which ended yesterday, included more than 100 dealers from Ohio and as far away as Texas, California, and Illinois.

The Blade first reported April 3 that Mr. Noe - the central figure in the scandal dubbed "Coingate" by Ohio Democrats - had received two installments of $25 million since 1998 from the Ohio Bureau of Workers' Compensation to invest in rare coins for the state. The bureau dissolved the venture earlier this month amid concerns about its management.

Despite Mr. Noe's absence, Bill Krizsan, one of the show's chairmen, said the coin controversy generated plenty of talk among dealers and collectors. Many of the dealers questioned the state's decision to invest in coins, the proper tactics for divesting, and why other dealers weren't given an opportunity to compete with Mr. Noe for the state's contract.

"People are talking about it," said Mr. Krizsan, a Cleveland-area coin collector. "[It's] gossip, wondering what's going on, where the coins are. They are worried about where the money is and where the coins are."

Additionally, he said, "I don't think the state should be in the coin business. It's too up and down. It's risky."

Steve Rugis, a collector and part-time dealer from the Columbus area, said he didn't see any problem with putting a chunk of the bureau's investments in tangible assets like rare coins. But, he insisted, there should have been a competitive bidding process for coin dealers and far more controls on the investment.

If done properly, Mr. Rugis said the profit easily should have "skyrocketed" in the past few years in a booming coin market.

The $50 million coin venture generated a profit of $13.3 million since 1998, according to the bureau.

Jonathan Kern of Lexington, Ky., says the coin-collecting business will withstand the controversy surrounding Tom Noe because people will always yearn for 'a piece of history.'
( SPECIAL TO THE BLADE/WILL SHILLING )

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'Should have doubled'

The Blade reported last week that Mr. Noe was allowed to reinvest $5.4 million of those profits, increasing the state's total investment with Mr. Noe to $55.4 million.

"If this is invested a little more prudently, that $50 million should have easily doubled even with administrative fees," Mr. Rugis said.

Several state agencies are now investigating the coin venture after The Blade reported that Mr. Noe had employed a convicted felon who caused the fund to write off $850,000 in bad debt and that 121 coins worth $400,000 were lost or stolen from a Colorado office set up to buy and sell rare coins for Ohio.

The FBI is also investigating Mr. Noe, a prominent Republican campaign contributor, for alleged campaign-finance violations.

State Sen. Marc Dann, a Democrat from suburban Youngstown, had two staff members at the show Friday. The staff members spoke with dealers about the coin industry and the effect on the state's investment if details of its coin inventory are released publicly.

Jim Huffman of Numismania, in Beavercreek, Ohio, said there is no good reason to keep the inventory private.

"If anything, it could improve the business," he said. "When large quantities have come onto the market, it actually has helped the price. I find no reason to guard it closely."

Both Mr. Dann and the Columbus Dispatch newspaper have followed The Blade in suing for the release of the inventory. Mr. Noe's lawyers have filed a countersuit, claiming that the information would reveal "trade secrets."

Mr. Huffman speculated that the dealers do not want to say publicly how much they paid for coins.

"A right to know'

"Things could get embarrassing, perhaps," he said. "It is not because divulging the information would hurt the value. People absolutely have a right to know what's there. If there's a problem with the inventory, I'd like to know that."

John Skuratowicz, a retired Columbus coin dealer, said he worries that the release of details of the inventory could hurt the value of the investment.

"It behooves [them] for the inventory not to be released and announced, so no one can identify them," he said.

And, Mr. Skuratowicz said the dispersal must be better managed with more oversight than the investment, considering the problems uncovered in recent weeks.

"It is so imprudent for someone to involve themselves with a convicted felon," he said. "How can coins be missing from a grading company? The manager had too much power."

The fallout from the coin scandal has caused Democrats to call for the elimination of a 16-year-old sales-tax exemption for coins and bullion.

State Rep. Peter Ujvagi (D., Toledo) introduced a bill on Friday looking to repeal the so-called "Noe amendment," which gives tax breaks to coin dealers.

Mr. Ujvagi said estimates show the tax break has deprived state and local governments of millions in tax revenue since 1992.

In the late 1980s, Mr. Noe hired two lobbyists to convince lawmakers to implement a ban on taxing investment coins.

But Mr. Skuratowicz, a retired Columbus coin dealer, said many traders were involved in the push for the ban.

"I resent the implication that [Mr. Noe] was instrumental or the sole mover," Mr. Skuratowicz said. "There was a grass-roots effort by everyone in the industry to exempt coins for taxes."

Tax break lauded

Paul Knowles, a California coin dealer who flew to Columbus for the coin show, said the tax break constitutes a major incentive for out-of-state traders to attend shows in Ohio. He said states that have a tax on coin trading have "killed the business."

"The only reason I am here is because there was no tax," he said. "I wouldn't have even considered coming if there were a tax."

Coin dealers at the Columbus show were hopeful the scandal would not have an effect on the hobby.

Jonathan Kern, a Lexington, Ky., coin trader, said the hobby seems safe, but the perception of coins as an investment could be diminished.

The hobby, Mr. Kern said, is hundreds of years old and continues to grow because people always yearn for "a piece of history."

"The coin business is a great hobby," he said. "Numismatics is my life."

Mr. Kern said the coin industry doesn't have any more unethical people than any other industry that deals with large sums of money.

"Any industry where there is money will attract a certain breed of scumbags," he said. "Scumbags don't look to take money from people who don't have it."

Stan Bednarczyk, a Columbus coin dealer, said he's had to deflect questions from customers about "Coingate."

"When my customers come in and ask what I know about this, I tell them I haven't made a nickel off this, and I never will," he said. "We know nothing."

Steve Eder can be reached at: seder@theblade.com or 419-724-6728.

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