Through the Cracks of the Coin Scandal

With all the fervor surrounding the Ohio Coin Scandal, there's almost too much corruption to take notice to every instance. Just a few days ago it was revealed that $225 million, almost a quarter billion dollars, was lost from the Ohio Workers Compensation Fund. And what's worse is that Taft's office was told about the loss last October (not something you want to let the public know, let alone a month before the elections)! Taft's case of plausible denial is that an aide never told him about it. But it gets worse... much worse...

...The part that is slipping through the cracks right now is where the COIN FUND, a $55 million investment of OWC money to Tom Noe's Capital Coin business, was allocated.

We have read about the $300,000 in missing coins, suspicions of money being funneled into politcal campaigns, but the one link that isn't getting much attention: real estate investment.

John Ulmer: a Toledo Area Real Estate investor, is one of those who received investment funding from Noe's COIN FUND. As this section of the Blade's article reads...

"Questions arise

Almost since the beginning of its relationship with the state, Capital has invested state money - totaling nearly $1 million - with controversial Ottawa Hills real estate mogul John Ulmer. Mr. Ulmer's companies agreed to pay Rare Coin Enterprises, one of Capital Coin's wholly owned subsidiaries, 10 or 12 percent on the investment.

Mr. Ulmer takes investors' money and buys homes, often in the lower-income parts of Toledo. He then fixes them and resells them, acting as a private bank that charges interest rates above traditional banks and mortgage companies.

The resulting revenue stream allows him to provide healthy returns to his investors.

But some community activists and Toledo leaders have accused Mr. Ulmer of buying substandard homes for cheap prices and then reselling them to poor buyers who must pay him inflated prices plus high interest rates. Mr. Ulmer has countered that he's helped people with poor credit realize the American Dream and helped rehabilitate neighborhoods in the process.

Mr. Cowman, the former chief investment officer for the bureau and now director of investment for the Ohio School Employees Retirement System, said he knew Mr. Noe had investments in real estate but said they were short term, which he defined as less than a year. He didn't recall the specific investments, saying there were too many managers to know every single investment.

"We pretty well let our managers use their discretion," he said.

Records filed in Lucas County, however, show that the loans to Mr. Ulmer lasted from a year to five years. Capital Coin, through its subsidiaries, still holds three mortgages valued at $352,000 with Mr. Ulmer's companies, although Mr. Noe has not loaned new money to the company since August, 2000.

Also, Mr. Elliott, the bureau's manager of internal audits, raised questions about the mortgages. He said the bureau had no documentation that the loans to Mr. Ulmer were properly covered by the value of the properties listed on the mortgages.

"While the various notes receivable were collateralized by real estate, as evidenced by mortgages, we found no documentation for appraisals or title searches performed to ensure that the property collateralizing the receivables was of adequate value for the loans," Mr. Elliott wrote.

Last week, the state refused to provide copies of mortgage documentation, which the bureau later required from Mr. Noe, citing the potential that they could be considered "trade secrets" and thus exempt from Ohio's public records law.

But a Blade review of the properties in Lucas County revealed that one of the properties was worth far less than the mortgage value.

Capital Coin, through its Rare Coin Enterprises subsidiary, invested $160,000 in July, 1999, with Ulmer-managed Haven Holdings. In return for the investment, Haven granted Rare Coin a mortgage on a parcel just off Airport Highway in Springfield Township that once had a small single-family home upon it.

According to the Lucas County auditor, that land - now vacant - is worth $25,800. Mr. Ulmer's company, Westhaven Group, LLC, bought it in 1999 for $32,000."

So,let's recap...

1) Ulmer's Westahven firm has received around $1 million in state money
2) Capital Coin, along with Ulmer's companies, still hold $352,000 of real estate
3) If the state of Ohio has any info on the investments, such as mortgage documentation, they a stonewalling by refusing to release records, claiming such info is a "trade secret".

4) Capital Coin, invested $160,000 into a property that was listed as being purchased for $32,000. Where did the $128,000 go?!??! FOLLOW THE MONEY, DAMMIT!

5) Community activists have accused Mr. Ulmer of buying substandard homes for cheap prices and then reselling them to poor buyers who must pay him inflated prices plus high interest rates.

Here' a Toledo Blade Interview with Gov. Taft which asks about the state investing in Ulmer's real estate ventures:

An excerpt...
"TAFT: He's [Noe] making money for the state. What's the problem? Funds invest in commodities all the time. People invest in commodities. What's so surprising? People invest in gold. People invest in silver.

BLADE: I'm sure the Lagrange Development people would love to take you on a tour and show you what state money has bought in Toledo - blighted homes that are sitting empty today, purchased by John Ulmer. They'd probably be happy to have you interview poor folks who have been charged above-market interest rates [to buy these homes].

TAFT: Then write a story about John Ulmer. The issue is the return, the rate of return for the state.

BLADE: Regardless of its effect on neighborhoods in Toledo?

TAFT: These people, these firms, they are hired to do a job. They are hired to get a return for the state on its investment.

BLADE: And it doesn't matter how they get that return?

TAFT: Of course it matters. It's got to be legal and so forth. This is an investment that's given a return for the state. It's helped us lower workers' compensation rates, which is good for the state.

BLADE: We don't want to imply or state that you don't care that Ohioans are being charged above-market interest rates, poor Ohioans, based on a state investment.

TAFT: You're looking for whatever angle you can find, and that's fine if you want to do that. I don't have all the facts on that. All I can say is that the Workers' Compensation Bureau has a very open, a very competitive policy with regard to how they choose investors. They hold them accountable for results, and that policy seems to have worked in this case to the advantage of the state."

At least Ohio State Senator Theresa Fedor is on top of this...
"About 25 people gathered on the overgrown lawn. Ms. Fedor reminded the group of Gov. Bob Taft's comments, in an April 7 interview with The Blade, that Mr. Noe "was making money for the state; what's the problem?"

"Well, let's look behind us and see what the problem is. We want our money back," she said.

Harm was done to the fabric of Toledo, "unfortunately, supported by state funds," she said.

She said Mr. Ulmer is responsible for "hooking people into a cycle of indebtedness from which they cannot escape. And now we know because of Tom Noe, [Mr. Ulmer] has been doing so with state money. Our money. And we want it back."

Beth Lewandowski, president of Lagrange Village Council, said "The state of Ohio is very likely a Toledo slumlord."

She called on politicians to contribute donations from Mr. Noe to Lagrange Development Corp. "to help people harmed by John Ulmer." She asked Mr. Ulmer to contribute $500,000 "to begin undoing the damage caused by his presence in the Lagrange neighborhood.""

For those unfamiliar with the Lagrange Neighborhood, click on this link...

...So, is Westhaven helping people realize the American Dream of owning their own home or just another slumlord? With that question, I will leave this...

I did a google search for Westhaven and Toledo and Escrow...

Here are some cases that turned up listed in The Ohio Legal Services against Ulmer's Westhaven Group:

Dorothy and Roger Bailey v. Westhaven Group, et al.
(Lucas County Court of Common Pleas; CI-200205554)
ABLE represents Dorothy and Roger Bailey, who were tenants living in a home in poor condition when John Ulmer, d.b.a. Westhaven Group, LLC, bought the property. There were problems with the heat, plumbing, foundation, in addition to several other problems that affected our clients’ health and safety. The Baileys complained about these problems and were told by defendants that they would be fixed.

Defendants orally agreed to lease the property to the Baileys for two years after which they would have the opportunity to purchase the home on land contract. During the first year of the lease, the Baileys continued to complain about the condition of the property. In January of 2001, after several broken promises, the Baileys decided to put their rent in escrow. The Toledo Municipal Court appointed a housing specialist to inspect the property. In February of 2001, after the housing specialist reported that the property was unfit for habitation, the housing magistrate issued an order ordering the Baileys to vacate the property and Defendant Ulmer to fix the property. The Baileys and their eight minor children were forced to move into a hotel for three months before they could find other housing.

ABLE filed a complaint on the Baileys’ behalf against Westhaven Group, John Ulmer, and Scott Ulmer, for breach of contract, constructive eviction, negligence per se, negligent infliction of emotional distress, and breach of the covenant of quiet enjoyment. Case is pending.

...and here's another one in the same document...

Sonya Kimball v. Westhaven Group, et al.
(Lucas County Court of Common Pleas; CI-200302744)
ABLE represents Sonya Kimball, who purchased a home on a land contract from John Ulmer, d.b.a. Westhaven Group, LLC, in April of 2001. She was told that the home would be extensively renovated including replacing the roof. Ms. Kimball moved into her new home before the renovations were complete. Ulmer sent out two construction companies to replace her roof. The first company was negligent; Ms. Kimball’s roof was not finished and the inside of her house was exposed to the elements. Despite her efforts to cover her roof with a tarp, rain damaged Ms. Kimball’s property inside the home. The second company hired by defendants did not repair the roof properly. Ms. Kimball’s home was damaged by moisture and mold.

Ms. Kimball subsequently stopped paying rent in response to Ulmer’s failure to repair her roof.
Defendants filed an eviction proceeding against her and she agreed to leave.

ABLE filed a complaint on Ms. Kimball’s behalf against John Ulmer, Westhaven Group, LLC, Larry Sorter, Eric Guilliod, Ohio Fair Plan Underwriting, Vic Joseph, Maumee Bay Remodelers, James Huffman, and Executive Remodelers. We are claiming breach of contract against Ulmer, Sorter, and Westhaven Group, LLC. We are claiming fraud against Ulmer, Westhaven Group, LLC, Sorter, Eric Guilliod, and Ohio Fair Plan Underwriting. We are also claiming negligent hiring and negligence per se against Ulmer, Westhaven Group, LLC, Joseph, Maumee Bay Remodelers, Huffman, and Executive Remodelers. We are further claiming negligent infliction of emotional distress against Ulmer, Westhaven Group, LLC, and Sorter. Finally, we are claiming civil conspiracy among Ulmer, Westhaven Group, LLC, Sorter, Guilliod, and Ohio Fair Plan Underwriting.