Ohio and Coins

Well the truth is out. Not only was the Ohio Coin Investment a garbage investment, but the guy responsible trimmed a nice $4 million off the top. Did I say trimmed? I meant stole outright.

From Toledo Blade
COLUMBUS — Tom Noe stole millions of dollars from the state and used a “Ponzi” scheme to fabricate profits within the state’s $50 million rare-coin investment, Ohio’s attorney general said yesterday.

“There was an absolute theft of funds going on,” Attorney General Jim Petro said.

Mr. Petro said there is evidence that Mr. Noe pocketed nearly $4 million in money invested with the coin fund through the Ohio Bureau of Workers’ Compensation since 1998.

Mr. Petro asked a judge to further restrict the former Toledo-area coin dealer from selling personal assets because he believes they may have been purchased with state money.

State officials yesterday laid out a complicated scheme of payments between companies Mr. Noe controlled, which they say resulted in the theft of state money.

The attorney general said the theft began on March 31, 1998, the day Mr. Noe received the first of two $25 million payments from the workers’ compensation bureau, and continued until late May — more than eight weeks after The Blade first reported on April 3 that there were problems with the state’s investment.

“On Day One, Tom Noe took $1.375 million and put it in his personal or his business account,” Mr. Petro said. Records show that Mr. Noe immediately began using the state’s money for his personal use, the attorney general said.

A week later, Mr. Noe and his wife, Bernadette, made $4,500 in contributions to then-Secretary of State Bob Taft’s campaign for governor.

In the three months after the $1.375 million transfer of state funds, Mr. Noe made thousands of dollars in political contributions, including an additional $2,500 to Mr. Taft, $2,000 to then-Gov. George Voinovich’s Senate campaign, and $500 to Mr. Petro’s campaign for re-election to the state auditor post he held before becoming attorney general.

When asked if he believed the state’s money had been used for campaign contributions, Mr. Petro said: “I don’t see that. I mean, clearly, Tom Noe personally contributed to campaigns and the source of his funds could very well be public money.”

But Mr. Petro connected the dots on Mr. Noe’s personal purchases, saying the Noes used “public money” to acquire millions of dollars worth of homes, cars, and boats.

UPDATE:I thought I'd put in a definition for Ponzi Scheme, since people keep asking about it. From Wikkipedia:
A Ponzi scheme is a fraudulent investment operation that involves paying returns to investors out of the money raised from subsequent investors, rather than from profits generated by any real business. A Ponzi scheme offers high short-term returns in order to entice new investors, The high returns that Ponzi schemes advertise require an ever-increasing flow of money from investors. Once the flow of new investment stops, the scheme is doomed to collapse.
The scheme is named after a man who became notorious for using the technique, Charles Ponzi, an Italian immigrant in 1903 to the United States. The manner of Ponzi's initial scheme was actually fairly crude, one of the apparent reasons being that he himself believed that he had found a way to legally generate large profits.
Today's schemes are considerably more sophisticated, but the idea behind every Ponzi scheme is to exploit the basic human trait of greed.

This is opposed to the lesser known Fonzi Scheme where you whack an ATM with your fist and the money comes out effortlessly. (Thx Phil)