OTC tax credit cover-up! It is the secrecy, stupid!

October 22, 2009

A previous news alert "The black hole of corruption! A law created to strip the public of its constitutional protection!" described how Oklahoma's Tax Commission Administrator position, held by Tony Mastin, had been morphed into an independent free standing, quasi-government, Mafia style Overlord. Here is an analogy to illustrate how this works.

This Overlord position is located at the headwaters of the state's tax revenue stream, where the states incoming tax revenue can be diverted away into hidden underground tunnels to be channeled to unidentified recipients, before the flow is metered and measured.

The Overlord has total control of the valve gating system that controls how much revenue is channeled into each of the hidden underground tunnels. The Overlord has sole discretion in deciding which channels will receive how much flow. Those receiving the flow of each channel present their case for a share of the flow in whatever form or fashion suits the Overlord. Afterwards, revenue recipients are required to report how they used their share of the flow. A typical report being the equivalent of: name the counties you spent your share and how much you spent in each city? Yes, it is about that informative.

That valve gating system is surrounded by a secure perimeter protected by the full power of state government. No one, not even other state officials, is allowed to see what is inside that secured perimeter. The amount and destination of revenue channeled away is and will be only be known to the Overlord. There is no one, nor is there any meaningful information even collected that would allow someone to see what was occurring. That would require subpoenaing financial records of those involved to learn what has been occurring.

The Overlord is asked to keep his own records of how much revenue was diverted into the system of hidden channels. Once a year the Overlord sends a report revealing how much revenue was channeled, where. Each channel identified by some meaningless LLC setup solely to have a secret label for each channel. Where and how much revenue flows from there? Only the Overlord knows.

Evaluating the Overlord's reports reveals very little, and that little is suspiciously confusing. Efforts to reconcile the reports exposes numerous significant differences; amounts that appear to be in the wrong columns; large amounts entered in a column labeled "in conjunction" (a vague term meaning undisclosed); and little that computes. Oddly the Overlord's reports to not include totals, only amounts listed under non-descript heading and disclaimers like "There is no uniformity in reporting……………"

It would appear the reports are intended to give the impression that tax credits were allowed on no more than $1,243 Million; the suggested amount invested in new business ventures. That $352 Million has been taken in tax credits. New evidence helps resolve many discrepancies revealing the tax credits were claimed on investments totaling more than $2,200 Million, or more than $619 Million in unearned tax revenue.

Here is one interesting example of one discrepancy involving suspicious reporting. OTC tax credit filings are for reporting how much was invested that qualified for tax credits; who invested how much of the investments that qualified for tax credits; where the money was invested; all for the previous year. Note: The actual tax credits are not shown on the report. Only the amounts claimed to have been invested, leaving the readers to draw their own conclusions.

For the period 2006 thru 2008, McClendon Venture Company reported receiving a total $245,663,932; in investments, all from individuals, named McClendon. $224,319,758 was invested by Aubrey K. McClendon, by far the programs largest individual investor. Only $24,761,360 or approximately 10% of the $245,663,932 was identified as having been invested, suggesting tax credits where only taken on $24,761,360. Doesn't compute! Just another little $220,902,572 discrepancy. Tax credits on the full $224,319,758 would have caught a lot of attention.

So we go to Openbooks to see what the McClendon's used in tax credits. There we could not find one of these McClendon's listed as using tax credits. As it turns out that is not so unusual for Openbooks. We can't find any of the names of any of those involved in the funds or large investors listed as using the tax credits under the two programs.

Imagine that potentially more than $600 Million in tax credits and not one of the big players (99.86%) of the claimed tax credit qualifying investments, where listed as having used those tax credits?

Just to insure the searches might have missed something, the entire list of every tax credit program was downloaded. Still couldn't find those people, except one little thing that was equally as interesting. A couple of those names were listed under a different tax credit category. That is another story revealing even more to be addressed later.

Suffice to say there are so many discrepancies in both OTC reports and claims that it would take a staff of auditors with full subpoena power months to track down and describe.

Yet the very expensive and highly secret program void of any accountability resides in the hands of one person. A program that stacks of uncovered evidence disputes every part of the claims and reports.

The most obvious of all discrepancies is: where are the jobs? Where is the economic growth?

It is the secrecy, stupid!
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