One way tax credit abuse kickbacks could work, very clever!
December 4, 2008
Even for those in denial or turning their backs we all have to admire the cleverness of the scheme enacted into law that allows so many to reap huge unearned profits at the expense of the public, in return for little of nothing. And, do it for so long.
Let's visit how the folks serving as CAPCOs or "pass-through entities" using Oklahoma's tax credits can make others a lot of money without the need for those benefiting to put up one dime. How to insure a friend or whatever could earn say a few $100,000, $million or what it would take to make someone happy. It is in the time line.
I have copies of "determination letters" issued by the Oklahoma Tax Commission validating tax credits taken by "pass-through entities." This letters were turned around almost immediately. Issue dates on some "determination letters" were one or two business days after the dates on the letters requesting the "determination letters."
A "pass-through entity" having already lined up tax credit buyers, which any smart business person would have done, can within a few days converted a business plan to $2 in cash for every $1 it claimed would be invested. Cash to fund the give the venture as little as 50 cents ($1 if you prefer) of the planned investment. dollar and split the other $1.50 or $1 with "so called investors." All before investors were required to put up a dime.
On a deal like Quartz Mountain Aerospace where Altus Venture had some $66 million in hand before they gave QMA what new evidence suggests was as little as $16 million. But, we can stay with the old $1 to $1 split and $32 to make the point. $32 million free and clear and no one has needed to put up one dime. That could give some financial security to a lot of people.
People who could rationalize they were helping create jobs and doing nothing illegal in the process.
$100s million per year!
Are you comfortable with this? Should we be comfortable with this?