Arnold Schwarzenegger received contributions from coin dealer at center of Ohio investment scandal

California Gov. Arnold Schwarzenegger won’t return $10,000 in contributions he received from a coin dealer at the center of an Ohio investment scandal, a spokesman said Friday.

Coin dealer Thomas Noe gave the money last year to a Schwarzenegger fund that supports the Republican governor’s legislative priorities, such as limiting state borrowing to balance the budget.

Ohio’s Inspector General is investigating Noe’s investment of $50 million in state money in rare coins, while federal authorities are investigating whether Noe bypassed election laws in donations to Bush.

Noe’s attorney said May 26 that $10 million to $12 million is missing from the fund, which was given to Noe by the state’s Bureau of Worker’s Compensation to raise money for the bureau by investing in rare coins.

"Allegations about Mr. Noe became public a year after we accepted his contribution," Marty Wilson, executive director of Schwarzenegger’s fund, said Friday. "As he was an active Ohio Republican party fund-raiser and donor, we had no reason at the time to question his contribution."

Under California law, the California Recovery Team organization can accept unlimited corporate or individual contributions.

Noe also gave thousands of dollars to state and federal candidates in Ohio, many of whom are rushing to return the money. U.S. Rep. Patrick Tiberi was the latest, saying Friday he would give $4,000 he received from Noe in 1999 and 2000 to charity.

President Bush is returning $4,000 and the Republican National Committee is returning $2,000 in contributions.

"There are some serious allegations that have been raised against this individual," White House press secretary Scott McClellan said in Texas Friday while Bush spent time at his ranch.

"They have raised concerns with people in Ohio. They have raised concerns with the White House. And the president felt it was the right thing to return those contributions that came directly from him," McClellan said.

Noe also gave $2,000 to a South Dakota congressional candidate involved in a closely watched race last year, records show.

Republican Larry Diedrich twice ran unsuccessfully against Democrat Stephanie Herseth, in a special election in June 2004 and then again in November.

Diedrich raised about $2.5 million, about 40 percent of which came from out-of-state contributors, Mark Berg, his former campaign manager, said Friday.

Berg said he was unaware of the Noe contribution or the actions of Ohio lawmakers in returning their donations.

"Everybody in the country that was a political junkie was focused on the race," Berg said. "It was unheard-of money for a congressional race."

State GOP chairman Bob Bennett said that "every once in a while a bad apple does come along" and that party leaders are dealing with the Noe allegations by returning contributions and investigating the missing money.

Bennett said it’s too early to determine the source of Noe’s campaign contributions and whether they came from the $50 million.

"It doesn’t mean anyone received tainted funds," he said. "We won’t know and you won’t know until the facts come out."

In Ohio, Rep. David Hobson gave away $1,000 he received last year to charity. Rep. Paul Gilmor received $1,500 in 1999 and 2000 and hasn’t decided yet what to do with the donation, spokesman Brad Mascho said Friday.

Meanwhile, H. Douglas Talbott, a former governor’s aide has told federal authorities that he gave $2,000 to Bush’s re-election campaign at the urging of Noe and was later reimbursed by the coin dealer, The Plain Dealer reported Friday. A message was left seeking comment Friday.

Talbott appeared this week before a federal grand jury in Toledo that is looking into whether Noe, who headed the Bush-Cheney campaign in northwest Ohio, skirted campaign finance laws by giving others money to donate.

The grand jury is examining whether Noe illegally reimbursed up to two dozen contributors to a Bush fund-raiser in October 2003. Campaign finance laws limit how much an individual can donate.

The Plain Dealer also reported that Doug Moorman, another former Taft assistant, accepted a $5,000 loan from Noe last year, about 13 months after he left state government to join the Greater Cincinnati Chamber of Commerce. Moorman told the newspaper he plans to repay the loan when he sells his home in Columbus.

"We continued to have two house payments, and Tom had offered to me that if things got tight, he’d help out if he could," Moorman said. A message was left seeking comment.

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2005/06/03/state/n185729D83.DTL