The Toledo Blade's reports on Coingate - the unfolding tale of how Ohio's Bureau of Workers' Compensation misused funds - deserve much more national attention than they have received so far. For one thing, it's an entertaining story that seems to get weirder by the week. More important, it's an object lesson in what happens when you have one-party rule untrammeled by any quaint notions of independent oversight.
In April, The Blade reported that the bureau, which provides financial support for workers injured on the job, had invested $50 million in Capital Coin, a rare-coin trading operation run by Tom Noe, an influential Republican fund-raiser.
At first, state officials angrily insisted that this unusual use of state funds was a good investment that had nothing to do with Mr. Noe's political connections. An accounting investigation revealed, however, that Mr. Noe's claims to be running a profitable business were fictitious: he had lost millions, and 121 valuable coins were missing.
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Meanwhile, The Blade uncovered an even bigger story: the Bureau of Workers' Compensation invested $225 million in a hedge fund managed by MDL Capital, whose chairman had strong political connections. When this investment started to go sour, the bureau's chief financial officer told another top agency official that he had been told to "give MDL a break."
By October 2004, state officials knew that MDL had lost almost the entire investment, but they kept the loss hidden until this month.
How could such things happen? The answer, it has become clear, lies in a web of financial connections between state officials and the businessmen who got to play with state funds.
To follow the playing out of this story, go to The Toledo Blade, or Americablog
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