Where is the $189 million investment claimed to justify $66 million in tax credits?
Were the "so called investor/shareholders" properly informed who was obligated to repay the $189 million loan?
Evidence has surfaced raising questions about what happened to $189 million Altus Venture (AV), claimed it would invest in Quartz Mountain Aerospace (QMA), to qualify for $66 million in tax credits. An April 17, 2006, AP article described how AV promised investors a return of $2 for every $1 invested in the $32 million AV/QMA venture, using Oklahoma's tax credit incentive program. The program only offers 30% of the amount invested in tax credits. To meet the promise AV obtained a $189 million loan to inflate the $32 million to $221 million in order to get $66 million in tax credits. Yet, according to the article, AV only invested $32 million in QMA and split the $66 million in tax credits with investors.
AP reported AV claimed the bank loan was to be used for credit financing when airplanes are sold. That should have been a red flag to state officials for several reasons, most obviously the law states the investment must be made immediately. Several years have passed plus:
In late August 2008 QMA having exhausted the $32 million, asked the City of Altus for a $1 million loan to pay wages and salaries until QMA could obtain more new financing. As history has once again proven, financial schemes long on promises and short of substance fall like a house of cards when the money is gone. Now we see three possible scenarios.
A. The $189 million was never legitimately available as claimed, but merely a financial paper shuffle to defraud the public of over $126 million in excessive tax credits?
B. The $189 million is missing and cannot be properly accounted for?
C. The $189 million is being claimed as a business loss. A hard case to make in view of how few jobs were created and how little has resulted from the investment. According to knowledgeable sources 75 jobs for less than 4 years (100 was the maximum number QMA employees, that was only for a short period) before QMA started laying off. Telling us is cost the Oklahoma taxpayers in the $3 to $4 million range per job created. This leaves us with two obvious issues of immediate concern. Not one airplane was sold to an outside customer. Those behind the scheme setup a company to buy and lease about 7 airplanes. The leasing company soon pulled out of that lease based on dissatisfaction.
1. For over 10 years the state has failed to monitor and audit these programs and protect the public interest. Officials have a constitutional duty to exhaust all resources to recover public money wrongly obtained and investigate all programs to insure the proper usage and results.
2. If the loan was valid and is outstanding who is responsible for repayment? The law states tax credits "may also be claimed for funds borrowed by the pass-through entity to make a qualified investment if a shareholder, partner or member to whom the credit is allocated has a legal obligation to repay the borrowed funds&."
Are the "so called investor/shareholders" aware of this? Were they properly informed of their obligations regarding the $189 million loan? It is not unreasonable to assume the investors never ask the questions they didn't know to ask.
Disclaimer: The information provided here is not intended to be legal advice, but merely conveys general information related to the issue.