Allegations of '04 cover-up keep BWC scandal bubbling

Thursday, August 17, 2006 Just when you thought there couldn't be any more shocking news than the loss of $215 million in Ohio Bureau of Workers' Compensation funds due to bad investments, now comes allegations of a cover-up of that loss in the fall of 2004. And at the heart of this egregious violation of the public trust, if the allegations turn out to be true, is James Conrad, former chief executive officer of the BWC. With this latest revelation — added to what has already been widely reported about a parallel BWC scam called "coingate" — Ohio taxpayers have reason to wonder about the breadth and the depth of this scandal. The alleged cover-up of the failed investment scheme was reported Sunday by the Toledo Blade, which first blew the lid off "coingate." According to the story by reporters James Drew and Steve Eder, Conrad urged subordinates to make sure that the $215 million loss did not become public as the 2004 November general election drew to a close. The money had been invested in a hedge-fund with Pittsburgh-based MDL Capital Management. MDL founder Mark Lay alleges in court documents that BWC officials hid the loss until after the election in Ohio — an election in which President Bush narrowly defeated Democrat John Kerry. That victory gave the Republican incumbent the electoral votes he needed for re-election. The workers' comp bureau is suing MDL to recoup its losses. The Blade reported Sunday that the existence of the investment loss was subsequently acknowledged by BWC officials on June 7, 2005, in the midst of revelations about the bureau's failed $50 million rare-coin fund managed by major Republican donor and fund-raiser Tom Noe. Noe is facing a slew of state criminal charges stemming from the ill-fated $50 million coin investment that he managed for BWC. He pleaded innocent to the charge that he embezzled at least $1 million and to 52 other charges, including racketeering, forgery, theft, money laundering and tampering with records. Bush's re-election Noe has pleaded guilty to federal charges that he illegally funneled about $45,500 to President Bush's money directly or indirectly to 24 friends and associates, who made campaign contributions in their own names. That move allowed the coin dealer from Toledo with close ties to many Republican officeholders to skirt the $2,000 limit on individual contributions. As a result of "coingate" becoming a part of Ohio's political landscape, Conrad resigned as chief executive officer of BWC and Terrence Gasper, former chief financial officer, pleaded guilty to state and federal charges that he received $25,000 from Noe as a bribe in return for doling out investment business from the workers' comp bureau to Noe. But while those sordid details of the pay-to-play culture has put Republicans on the defensive, Sunday's allegations of Conrad's cover-up plan are just as shocking because they go to the heart of the corruption of the political system in Ohio. The Blade reported that Conrad not only advised subordinates how to handle staff who were concerned about the investment loss, but on Oct. 26, 2004, a week before the general election, he informed James Samuel, a former BWC official who was Gov. Bob Taft's executive assistant for business and industry, about the problem. He said in an e-mail to Samuel that MDL was in danger of collapsing, which would be "likely to make national news." Samuel has said he briefed the governor's chief of staff, Jon Allison, in the fall of 2004 about the MDL loss. The governor demoted Samuel for not informing him about the problems at BWC. Given that Bush beat Kerry by about 100,000 votes in Ohio, the question that deserves to be considered is this: Would a public admission of the $215 million investment loss and the $50 million scandal involving Noe have affected the 2004 presidential election in Ohio? The answer is yes. The investment scandal would have grabbed news headlines away from the president. Since e-mails were flashing across computer screens in state government during Conrad's push to keep the lid on the story, there needs to be definitive list of state government officials who received them, thereby knowing about the cover-up. Full disclosure at all levels is demanded.

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