October 10, 2008

Where is the missing $189 million?

Were investors properly informed of their obligation for a $189 million loan?

New 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.

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. Now we see three possible scenarios.

A. The $189 million was never legitimately available, but merely a financial paper shuffle to defraud the public of over $55 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. Considering how few jobs were created and how little has resulted from the investment would never pass the scrutiny of those knowledge of the business.

The results of for over 10 years the state has failed to monitor and audit these programs and protect the public interest.

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?