CoinGate Update

Another twist in this developing scandal...

And a whole lot more money is lost this time in an investment gone bad.

The Toledo Blade reports:

Democrats were screaming “cover-up” yesterday after state officials admitted that a high-risk hedge fund that the embattled Ohio Bureau of Workers Compensation had invested in had lost $215 million in just a few months last year.

The bureau acknowledged that the fund, managed by a Pittsburgh-based investment firm, lost the money between February and September, 2004. MDL Capital Management relinquished control of the fund in November.

Although the bureau has known about the losses since September, wasn'tasnÂ’t revealed until yesterday, a day after The Blade began making calls upon learning that state investigators had uncovered huge losses at the bureau.

Aspokesman for Gov. Bob Taft said last night that Mr. Taft had been told in September that there was an investment loss at the bureau - a loss of $10 million to $20 million.

Investment loses are nothing new, they happen all the time. What's the big deal here?

In mid-April, The Blade reported that Ohio Republicans received more than $455,000 in campaign contributions from employees of the fund managers hired by the bureau for the “emerging managers” program in which Mr. Noe participated.

The big winners included the state Republican Party committees, which received $200,750, Secretary of State Ken Blackwell, who received $67,130, and Governor Taft, who got $61,875.

Mr. Lay also confirmed that Mildred Forbes, the daughter of George Forbes, the vice chairman of the bureau’s Oversight Commission, works for his firm. Ms. Forbes is a senior vice president who works on human resources and compliance issues for MDL.

The two met at a conference while she was working for an Ohio investment firm. She has worked for MDL for about three years, Mr. Lay said.

Democrats call this "pay to play" but they have no hard proof, only circumstantial evidence. In the case of Ken Blackwell, it seems that whatever contributions he got were ideologically motivated and not "pay for play" at any rate because he has nothing to do with the BWC. Futhermore, Blackwell has been calling for federal involvement in cleaning up the mess.

Secretary of State J. Kenneth Blackwell, a Republican, repeated his May 27 request that the Public Integrity Section of the U.S. Department of Justice take control of the investigation into the bureau’s investments.

“As it relates to this widening scandal, there is clear and commanding evidence that we need the feds involved in this investigation in a wider way,” Mr. Blackwell said. “This is a serious, serious issue. State investigators cannot do the job. They don’t have all the authority that they need to dig as deep as they can dig. And the integrity of the investigation rests in the believability of its independence."

Seems to me that it is the "moderate" Republicans who have the most to hide here...