NORMAN OK (April 13, 2009) - Now 10 more tax credit fraud schemes OTC is covering up!
Details at http://prowlingowl.com/OKTaxCom/10MoreCasesOfTaxCreditAbuse.cfm
The Oklahoma Tax Commission issued 24 determination letters for investment schemes to receive tax credits under the 2006 Grandfather clause. At least ten of the plans were the same as the Scissortail scheme that was allowed tax credits worth $5.40 for every $1 invested by misrepresenting the amount invested at risk. The law clearly states the investment must be "at risk" in order to qualify for tax credits. A not so well disguised shell game was used to claim tax credits on funds borrowed on the assets of the business venture the investment was intended to help. Leaving Scissortail with no risk and the "so called investors'" risk limited to their $5 million. This not only violates the law, but defeats the program by eliminating the very business ventures, venture capital funding and this program were originally created to help.
OTC has exclusive access to all the evidence. We have obtained documentation for two tax credit schemes, both of which have been exposed as fraudulent. The Altus group (currently under investigation for filing a $200 million false claim and multiple other issues) and Scissortail which cost the taxpayers $27 million to generate a mere $5 million in qualified funding.
Scissortail without investing one dime pockets $17 million. The "so called investors" pocket a $10 million profit. Both virtually overnight.
An analogy to help understand the shell game and the element of risk.
Say you own a building worth $100,000 free and clear. You decide to start a business but need another $100,000 for start up.
Someone comes along offering to invest the $100,000 for one-half interest in your business. The investor will create a LLC and invest $5,000 cash. The LLC will mortgage your building to borrow the other $95,000. The loan repayment will be a business expense.
The investor goes to the state and claims investing $100,000 at risk and receives 30% or $30,000 in tax credits given as an incentive for those willing to take the risk to help a business.
Within a few days the entire business is destroyed. The $100,000 was in inventory and in the safe that was destroyed. You lost everything, including the $5,000. The bank is left with the value of the land. The "so called investor" walked away with a $25,000 profit. There was no way for the investor to lose but was guaranteed a $25,000 in profit. Courtesy of being allowed to misrepresent the amount of their risk exposure and anyone gullible enough to take the deal.
Who would be so foolish to get involved in a deal like this with their own money? This is the same scheme OTC is allowing some to use to reap huge unearned profits from taxpayers.