Porkocalypse - a program state lawmakers created to earn their own 200% instant profits, quickly ballooned, now forcing denial
February 24, 2010
State officials are finding it harder to ignore the mounting evidence of more than $500 million fraudulently obtained public funds. Fraud operates using tax credit programs that allow state officials to personally benefit, by skimming investments intended for, and needed by businesses, causing those businesses to fail and lose jobs, for lack of funds. While state official withhold the information that would reveal their involvement; they cannot present documented evidence of new business growth or new jobs resulting from this missing $500 million. Now facing evidence that will expose their own involvement state official first tried ignoring; and are now dismissing evidence, as not credible; the hallmark of the guilty.
Twice before, 2004 and 2006, when evidence surfaced that tax credits abuses were occurring, state officials quickly blamed loopholes and claimed "nothing illegal" was occurring, to avoid an investigation that would lead to exposing their involvement and force them to return stolen public money. In both cases lawmakers claimed to have closed a loophole. Sending the programs back in the closet of secrecy only to later find abuses and fraud had more than doubled.
Now evidence has again surfaced showing the events leading up to the 2006 actions involved, counterfeit bank loans, and not a loophole as claimed. How campaign donations and additional tax credits obtained using additional counterfeit bank loans appear to have played a major role in blocking the 2006 effort to close the loophole. How that played out, will be covered in a companion follow up mailout. To understand how that played out we need to first understand how the investments use tax credits to pay state officials and others; guaranteed 200% profit.
To clarify why state officials are allowed to benefit from public funded programs. According to the state Ethics Commission, Oklahoma has no laws limiting state officials' involvement in business interest. Instead, Oklahoma relies on legislators and other state officials to report their business interest to the Ethics Commission to be made available for the public to view; and let the public decide if it feels there is anything of concern. Sounds great, but.....
Lawmakers short circuited that approach by creating tax credit programs to operate in secrecy; denying the public access to the identities of those receiving public funds, how much is being taken, and what the funds where to be used. That provided the cover for four tax credit programs, currently siphoning off $100s million in tax revenue, without creating new growth or jobs. The four programs are: Small Business Capital Company (SBC), Rural Small Business Capital Company (RSBC), Small Business Venture (SBV), and Rural Small Business Venture (RSBV).
As a reminder, there are two key issues discussed here. 1) state officials are allowed to benefit. 2) the methods used to guarantee 200% profit are fraudulent, is a second reason for hiding these program in secrecy?
How do state officials invest and receive profits? This is the magic trickery!
The short answer is state officials can receive $million in tax credits without investing one dime in a new business! That defeats and destroys the very purpose of the program!`
Advice: It works best for some to avoid trying to relate these investments to the simple investments familiar to the average person; where we might invest in our friends business. Typically in these simple cases we invest directly into a business and get a predetermined share. Profits, and in this case if there were tax credits would all be shared based on our invested share.
With these four programs, there are two classes of investors, "Common" and "Preferred" investors.
- One class "Common" invests all the money, that goes to the investment, and receive shares of interest in the business venture; but receives no tax credits;
- The other class "Preferred" investors only invest in the Capco or pass-through entity, and does not receive any interest in the business venture; but receives all the tax credits.
68 O.S. 2357.73 G
How the program allows the "Preferred" investors to receive all of the tax credits, without contributing one dime to help the business ventures, reveals the intent and method to defraud. This is only the means to funnel all the tax credits to those who invest little or no money. The false claims, fake loans, etc. shell games, are over in the misrepresentation of the Common investments. Obviously, finding someone to invest their money, and allow others to get all the tax credits, is not going to happen. That is where the shell games are used to give the illusion money was invested in the true sense of the investment having full use. The variety of shell games are too lengthy for this space and found on http://prowlingowl.com
How that works with real money!
"John Doe Nursing Homes" is a rural business with unencumbered assets to borrow $10 million. The Capco is "Money Laundry." A name that aptly describes the one and only function the Capco serves in this case.
"John Doe Nursing Homes" borrows $10 million, which it gives to "Money Laundry" as a Common investment. "Money Laundry" then returns the $10 million to "John Doe Nursing Homes," labeling this as an investment.
"Money Laundry" files a claim with the tax commission claiming $10 million was invested in "John Doe Nursing Homes" and receives $3 million in tax credits.
Now "Money Laundry" has $3 million to be divided between "Preferred" investors, who may have invested as little as $1.
The beauty is this $3 million can be divided up in whatever fashion the parties agree.
Obviously, the Capco is going to get their cut, as is "John Doe Nursing Homes" owner for using their business in the scheme. Who else gets in on this deal? Anyone the Capco and possibly "John Doe Nursing Homes" owner wants to let in.
This is where state officials make their play. State officials created this program, cover for this program, and have final say if the deal is allowed.
In summary, this is state officials' very own pork barrel. They don't have to hand a lot out, to get a little back. They can have a big slice. That is what is unusual about this scheme, unlike other schemes where repayment for favors done while in office have to be delayed until after leaving office; this scheme allows state officials to reap their rewards now while they are in total control. That provides a strong bargaining position. These folks aren't going to settle for the crumbs of some job where they receive their money over years. This paid in advance, with more bargaining power, and in a way it is legal under Oklahoma law.
There is plenty wrong here, but the other wrong is in the false claims. There is no way to earn a 200% profit up front on any legitimate investment under this program. That is foolhardy to ever buy that story.
Next will follow the largest and most blatant of all cases where evidence now exists that fake loans were used to take $127 million in tax credits, for a company that soon failed, revealing it has only received $32 million in actual investments. Evidence of the fake loans has been uncovered. State officials continue ignoring. The reason is state officials received a huge part of those tax credits for their efforts in keeping the loophole open in 2006. We will show how that played out.
More importantly, what state officials have known for some time, yet totally ignored.
Note: For those who might have noticed this is not limited to $2 for $1 and can be all over the board. The original scheme, years ago, worked out to $2 for $1, and that moniker sort of stuck.
See rest of story at http://prowlingowl.com
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