TOLEDO, Ohio -- Millions of dollars of rare coins that Tom Noe said were the property of two state-funded coin funds were actually the property of former Federated Investors executive Henry Gailliot and former business partner John Russ, the pair testified yesterday.
Mr. Gailliot and Mr. Russ told jurors in the embezzlement trial of the former coin dealer and Republican fund-raiser Noe that they owned coins listed as inventory of the Ohio Bureau of Workers' Compensation's coin funds, and that sales records produced by Mr. Noe's business were bogus.
Mr. Gailliot, for years the chief economist at the Downtown-based mutual fund giant, also said that at times he would sell coins on consignment with Mr. Noe. When the state seized the company's assets in May 2005, some of Mr. Gailliot's coins were seized as well.
Just a week or so before the state moved in, Mr. Gailliot said he asked Mr. Noe for the coins back. "He gave me a very evasive answer and said he wasn't sure where they were," Mr. Gailliot testified.
He was one of several witnesses who testified in Lucas County Common Pleas Court that coin fund invoices were false and that their coins were shown to accountants as if they were owned by the coin funds.
Prosecutors believe Mr. Noe embezzled more than $2 million from the coin funds he managed from the state's workers' compensation bureau and used the money to pay off debt and to fund his lifestyle.
To hide the losses, they believe Mr. Noe and his vice president, Tim LaPointe, used other people's coins to inflate inventory to satisfy accountants checking the state's investment.
Mr. Gailliot said he owns some of the most coveted gold coins in the United States, worth millions of dollars, and that Mr. Noe helped him acquire them. He also said he "would never contemplate selling'' two of his rarest coins, from the Trumpeter collection, and had no explanation why they would be listed in inventories of the rare coin funds.
Mr. Gailliot has known Mr. Noe for more than 15 years. The two met when both were on the board of regents, a fund-raising body for Catholic University of America, and Mr. Noe rekindled Mr. Gailliot's dormant interest in coins.
Mr. Russ, who was part-owner of a business with Mr. Noe, was shown an invoice from May 2004, showing that the state coin funds bought hundreds of coins from him for more than $1.3 million. "These appear to be coins in my collection," Mr. Russ said. He then told assistant prosecutor David Buchman that the transaction never took place and that he still owns most of the coins.
The Block News Alliance consists of the Post-Gazette and The Blade of Toledo, Ohio, which are both owned by Block Communications Inc. Mike Wilkinson is a staff writer for The Blade.