Did failed airplane company expose state officials' benefiting from tax credit abuse?
Oklahoma has a combination of laws that allows state officials to benefit as investors in a state funded program that is being used to guarantee investors $2 for every $1 they invest, and hides the identities of those involved. The guaranteed $2 for $1 comes about because some are allowed to abuse what they claim are loopholes in the law that officials continue to ignore by claiming they know of nothing illegal occurring. The investors do not have to wait for the business to succeed or fail to receive the $2 profit. They receive the tax credits upfront and can sell for cash or wait until the year end to use the credits to avoid paying state income taxes.
For this we will show how Oklahoma state officials have surrendered their responsibility to properly use and protect public funds to private entities with a history of financial misdeeds.
One scheme involved Quartz Mountain Aerospace and operated by Altus Venture. Altus Venture is one of a group of subsidiaries of FSB Bancorp Altus (the Altus group) which includes First State Bank, Altus.
As reported in a series of 2006 articles by the Associated Press and the Oklahoman Paul Doughty, president of Altus Venture, was directly involved in the tax credits scheme involving a financial shell game to overstate the amount invested in QMA. Using a the shell game Altus Venture claimed $64 to $66 million in tax credits, for what as at most a $32 million investment. The investment should have qualified for no more than $9.6 million in tax credits. Another lawsuit EZ-Way involved tax credits, but the original owner a small business man, lost everything in the scheme and was left with no funds to obtain qualified legal counsel and fight those with millions in public funds.
Update: Additional evidence was uncovered revealing Altus Venture claimed investing $221 million in 2005, then claimed investing another $200 million in 2006. Altus Venture received $66 million in tax credits for 2005 and another $60 million in 2006. This same evidence shows Altus Venture invested only $32 million and part of the $32 million was invested in 2004. We have yet to uncover information to show how much Altus Venture claimed to have invested in 2004 or how much they received in tax credits?
Recent events surrounding the failure of QMA, has exposed what has long been obvious to most, but ignored by state officials. The true investment was grossly inflated to claim unearned tax credits. This failure has stripped any and all pretenses used by state officials to justify ignoring false claims misrepresenting the amount actually invested which is the basis for the financial shell game. A growing list of lawsuits, including those recently filed, and some for totally unrelated causes, accuses key figures of this group of financial wrongs. These lawsuits add to a growing mound of evidence that a full investigation is long overdue.
The QMA failure also exposed other financial wrongs resulting in at least two lawsuits against QMA and others in the Altus group and has brought at least one federal agency into to investigate the misuse of employee withholdings.
Coincidental to the instate issues two lawsuit were recently filed in Colorado charging the same key figures of the Altus Group with using financial schemes to defraud land owners of money and property involving some $25 million in what was to be potentially a $billion resort area development project. Two key figures, Paul Doughty and Don Anderson, serving as officers in various FSB Bancorp subsidiaries keep surfacing in all cases. Bill Grissom a former financial officer who has since left the group also keep cropping up.
These same key figures were part of a group making a large bundled campaign donation to Kevin Calvey's 2006 run for US Congress. Calvey, at the time chairman of the House Revenue and Taxation Committee was involved in writing an amendment to a bill that originated in the Senate to close the loopholes used by Altus Venture. The large donation came while the amendment was in Calvey's committee. Calvey allowed Doughty to assist in writing the amendment. The amendment remained pigeonholed until the closing session leaving no time for lawmakers to read or discuss. The amendment passed with nary a nay vote in either chamber. Examining the amended law reveals the loopholes remain open, and new language appeared that attempts to prevents the state from recovering tax credits taken in violation of the law.
There are several elements of the tax credit law that disqualify the inflated claims and warrant recovery of the excess tax credits. Yet state officials continue ignoring the scam. For example: To be eligible for the 30% at risk venture capital tax credits the investment has to be at risk. The financial shell game to guarantee $2 for $1 eliminated all risk. The maximum amount of time to complete the investment including extensions has expired. Althought the $189 million disappeared even if the money would have been used as claimed in 2006 to purchase planes for a lease program this use would have created so few jobs, it would not have met the intended use of the program. The cost per job created would have been beyond reason. State officials were negligent in ever allowing this claim to stand.
It is not unreasonable to question if state officials were involved and benefiting. It is not only reasonable to ask, but irresponsible not to ask for full disclosure, an open investigation and steps to recover the misappropriated $55 million. There is no other reasonable conclusion other than personal gain to explain why state officials continue to protect and cover for such a blatant misuse of public funds?
Tax credit information that recently became available on Openbooks is at best incomplete and inaccurate. Only the names of those using tax credits to avoid paying state income taxes are listed. There are no names of those who preferred to sell their share of tax credits and receive cash. Other evidence suggests that there are missing names and some listed under the wrong tax credit categories.