Oklahoma's tax credit fraud is as simple as it gets, yet few get it! It is the secrecy, stupid!

December 21, 2009

Oklahoma's tax credit fraud works the same as counterfeiters taking large bills to a bank insider and exchanging the counterfeit bills for legal bills. The bank insider then hides or destroys the counterfeit money and cooks the books to hide the losses. Something a bank's system of accountability would immediately catch. Now imagine a bank that had no system of accountability and relied on the insider to keep the books?

That is exactly how Oklahoma's tax credit fraud works, with a couple of minor twist. Instead of taking counterfeit money to a bank; false investment claims are taken to an insider at the Oklahoma Tax Commission and exchanged for tax credits. Oklahoma has no system of accountability for its tax credit programs and relies on the OTC insider to keep the books.

Oklahoma officials justified eliminating the system of accountability by claiming some would be reluctant to participate in the program if their involvement could be learned. Imagine that? Something Oklahoma officials failed to mention is Oklahoma law allows state officials, to participate in these fraud ridden programs and profit from stolen state funds. Is there a dim light starting to appear at the end of the tunnel?

State officials enshrouding in secrecy a program they can benefit? A program replete with documented evidence revealing false claims, false loans, false reports hiding $100s million in missing revenue?
Evidence has been uncovered revealing Paul Doughty, president of First State Bank Altus, recently seized by the FDIC, created $643 million in counterfeit loans, during 2005. The $643 million in counterfeit loans were taken by Altus Ventures and Affinity Ventures to Tony Mastin, the OTC insider, and presented as documentation to support Altus Ventures and Affinity Ventures' claims of having invested the $643 million in new business ventures. In return Mastin handed Altus Ventures and Affinity Ventures' $192 million in tax credits. For those not familiar that is the same as writing a check on the state treasury. Mastin then used secrecy to hide the claims, disguised and falsified OTC reports to hide the cost from the public.

Here is one example of Mastin's false reporting. Four of Oklahoma's 80 plus tax credit programs, are closely related and have confusingly similar names. Two of the four Small Business Ventures (SBV) and Rural Small Business Ventures (RSBV) have never been included on any report by Mastin. Except on the Tax Expenditure report where Mastin reports SBV costing $0 for all of 2005 thru 2008. RSBV is not even listed on the report, instead a similar program Rural Small Business Capital is listed twice, both false amounts.

A check of Mastin's Capco reports, which list tax credits authorized, also failed to include SBV and RSBV programs. These Capco reports list $1.6 Billion tax credits were given out for the years 2006, 07 and 08. (No Capco reports were available for 2005, the year the $643 million in fake loans mentioned above were used.) Instead on the 2006 – 07 – 08 reports, $587 million was listed as invested under the vague label "invested in conjunction." There is no such program. An examination of all the programs reveals funds "invested in conjunction" is a term that only relates to and is found buried in the details of SBV and RSBV programs.

This reveals Mastin disguised and hid some $170 million in taxpayer cost for a program that Oklahoma law allows state officials to participate and profit. Evidence has been uncovered to show that during 2005 $189 million of the $643 million in fake loans was claimed to have been invested under the RSBV program. Denied access to all public documents related to these programs it would be unreasonable to think the remaining $454 was not used. Other evidence suggests more counterfeit loans were issued by Doughty during 2006 and 2007.

This tells us that at least $58 million and more likely $192 million in public funds were secretly given to unidentified recipients that never invested one dime to earn, during 2005. Other evidence reveals much of the $170 million in public funds handed out since went into these same unidentified pockets.

$362 million in stolen tax revenue, Oklahoma law allows public officials to participate and profit. A program state officials created to operate in secrecy, void of oversight and accountability. A program state officials passionately defend and continue ignoring evidence of fake loans, false claims and false reporting.

It is the secrecy, stupid!
Secrecy aided and abetted by a state of cowards. If this offends anyone, then Great! While you are licking your tender pride, try thinking about those children and senior citizens who were stripped of their only nutritious meals to make up for money taken by corrupt officials. Give some thought to the state's suffering educational system; teachers working for barely pauper wages, to educate the children of the corrupt officials and cronies stealing the teacher's wages; the missed wages of the hard working dedicated and innocent state employees at the bottom of the pay ladder; and all other state programs we pay for but receive no money.