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New evidence OTC cover-up - missing documents, hidden refund claims, blocking audits, more!

October 21, 2010

Highlights only. Details, sources and references can be found here.

An extensive examination of Oklahoma Tax Commission (OTC) emails, uncovered startling new evidence of extensive cover-up used in hiding tax credit fraud. Fraud that has been well document on prowlingowl.com.

Multiple means of cover-up at OTC was exposed as a result of reactions triggered by the November 2008 failure of Quartz Mountain Aerospace, two capital companies (CAPCOs) used in false claims, to obtain $66 million in unearned 2006 rural small business tax credits. A few million would come off the top for fees, leaving $64 million investors that had invested $32 million.

The investment failing disqualified the investment, requiring the Tax Commission to recover the entire $66 million tax credits.

Instead, Tony Mastin, head of OTC, directed OTC employees to expedite paying all the claims ASAP, disregarding verifying the claims. In the process, OTC employees paid $30 million twice. Mistake by employees trapped in a dysfunctional and untenable situation.

Uncovered, cover-up included:

  • 1,600+ tax credit refund claims, involving $60 million, stowed in boxes, for 2 years.
  • Instructing claims processors to disregard auditing(A) tax credits, and rush refund payments.
  • Failure to collect and maintain documentation required to qualify for tax credits.
  • Failure to provide a system for tax credit and refund tracking and accountability, resulting in:
    • Taking 8 months, for claims processors to issue refund payments, without auditing.
    • Crediting the same $30 million(5)(6), to two different accounts, increasing the original $135 million to $165 million. Not the fault of claims processor, and raises questions of records tampering.
    • Disguising documentation was missing.
  • 11 months later another unexpected and unrelated event would lead auditors to discovering the missing documentation.
  • Auditors contacting those responsible to providing the missing documentation were restricted to only requesting documentation missing for 2007 claims. Hands off 2006 tax credits.
  • Auditor ignored, after finding - unqualified investment claims recieved tax credit, for 2007. See auditors findings.
  • Only weeks later, in January 2010. The same auditor was ignored again, when questioning eligibility of an $800 million claim filed by a BOK subsidiary, more than one year after the program expired. View
  • Ignoring evidence of false claims, including the 2006 tax credits, reported by a taxpayer, your's truly.

Evidence reveals an additional $61 million, for false claims. Or, $127 million of $135 million in 2006 small business and rural small business tax credits were allowed for false claims.

Evidence of fraud in Oklahoma's similar, but different, "Venture Capital" economic development program, can be seen here.


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