Altus Venture $126 million View
Scissortail $90 million View
Foxborough $300 million View
|
Venture capital (also known as VC or Venture) is a type of private equity capital typically provided to early-stage, high-potential, growth companies where the rewards are years out and carry a high risk. Venture capital is a special kind of funding to create a foundation for building the businesses that will replace today's diminishing industry and jobs. Oklahoma's venture tax credit program was intended to incentivize that venture capital funding needed by rewarding investors tax credits worth 20 to 30% of their at risk investment. |
|
Oklahoma's Capital Formation Incentive Act, Myths and truths Note: the intent of this program, to attract outside investors, was quickly subverted when language was included that restricted participation to a very small group of OK cronies. SECTION 2. AMENDATORY 68 O.S. 2001, Section 2357.7 Qualified venture capital company B. Capitalization of not less than Five Million Dollars ($5,000,000.00) C. The credit provided for in subSection A of this Section shall be twenty percent (20%) of the cash amount invested in qualified venture capital companies which is subsequently invested in an Oklahoma business venture by the Qualified venture capital company. D. No investor in a venture capital company organized after July 1, 1992, may claim tax credits under the provisions of this Section. F. Authorizes selling the tax credits. G. The credit may also be claimed for funds borrowed. SECTION 9. AMENDATORY 68 O.S. 2001, Section 2357.63 B.4 B. 20% B. 4 Allows small business capital company. two hundred percent (200%) C: No investor in a venture capital company organized after July 1, 1992, may claim tax credits under the provisions of this Section. Allows small business capital company. two hundred percent (200%) SECTION 20. AMENDATORY 68 O.S. 2001, Section 2357.74 B.4 B. 30% B. 4 Allows small business capital company. two hundred percent (200%) C: No investor in a venture capital company organized after January 1, 2001, may claim tax credits under the provisions of this Section. Note: The area of the law addressing the 200% limitations is ambiguous leaving it unclear, what, if anything, is in fact limited to 200%. |
And, Oklahoma is so Proud?
To encourage investments in new business ventures, traditionally more risky than established businesses, Oklahoma officials created two Capital Formation Incentive Acts to offset up to 30% of the investor risk, using tax credits.
Note: What is known as the Capital Formation Incentive Act is not a single document as such, but rather a series of legislative amendments to, and scattered throughout, the more than 1,000 pages of Oklahoma Statute Title 68. Revenue and Taxation or what is generally know as "the Oklahoma Tax Code".
The acts are:
- Small Business Capital Formation Incentive Act. Eligible for 20% in tax credits.
- Rural Venture Capital Formation Incentive Act. Eligible for 30% in tax credits.
|
Basics Tax credit allowed: 20% of amount invested for urban investments (counties with >100,000 people) Tax credit allowed: 30% credit of amount invested for rural investments (counties <100,000 people) Has a capitalization of not less than 1 million dollars, (or 500 thousand for the rural credit) Has not invested more than 20% of its capitalization (25% for rural tax credits) in any one company at any one time
End investment must be to qualifying Oklahoma small business venture that: Needs financial assistance to commence or expand such business which provides or intends to provide goods or services Qualifies as a "small business" under Small Business Administration guidelines Is not primarily engaged in oil & gas exploration, real estate development, real estate sales or rentals, wholesale sales, retail sales, farming, ranching, banking, or lending or investing funds in other businesses. Has a Standard Industrial Classification code under any Major Group Number of Divisions A, C, D, E, F or I, with the following exceptions:
Expends at least 50% of the proceeds of the qualified investment for the acquisition of tangible or intangible assets within 18 months after the date of the qualified investment For the rural tax credit, the principal place of business must also be located within a Nonmetropolitan area of the state & deriving 75% of its gross revenue from a NMA. Small business venture may not use invested funds to acquire 51% or more of any other legal entity within six months of investment. See for yourself. For complete details download the act in PDF format. Download |
Here are two of several important angles to be aware.
-
|
Oklahoma's own homegrown "Venture Counterfeit Cronies" feeding at the public trough of greed. With state officials standing guard so "our own crony boys" can feast like starving hogs on tax payers hard earned money without interference.
The scam was legislated when the Capital Formation Incentive Act, was written so state funding (tax credits) had to pass through a select group of unnecessary middle men, we have labeled "Venture Counterfeit Cronies", who in turn skim all they can inflate a business ventures requested funding on the way to the purpose the funding was intended.
It is readily apparent by the trail of failed business ventures the "Venture Counterfeit Cronies" know little if anything about evaluating business ventures. With this state legislated scam you don't even need a real business.
Example: The Quartz Mountain Aerospace
-
|
Example: The Quartz Mountain Aerospace project was seeking $32 million. Altus Ventures using a financial shell game inflated the amount claimed to be $221 million in order to receive $66.3 million in tax credits from the state. Altus Ventures investors who appeared to be risking $32 million were actually receiving $64 million ($2.3 million went to shell gaming fees) in taxpayer money. Quartz Mountain Aerospace, like two other similar scams Great Plains and Rocketplane started failing from the git-go. It mattered not because "Venture Counterfeit Cronies" were guaranteed in tax credits, $2 to $5 for every $1 invested long before they filed the claims. Actually $3 or $6 for $1 since they keep the investment, and the $2 or $5 is all incentive. The business venture thingy is only for appearances in when the IRS comes snooping around. |
Oklahoma has many other areas of fraud!
-
|
Note: At this point we have not investigated all the actual business ventures to determine their direct involvement. The scam can operate without any direct involvement by the business venture. Based on what we have learned it appears that it is a mixed bag, and many business ventures have some level of knowledge and involvement. While others had no knowledge and were blind sided. One example came to light when E-Z ????? filed a lawsuit. To make this look legit the middle men are referred to as Venture Capital Companies. It should be noted anyone can label themselves a "Venture Capital Company." The good Venture Capital Companies are evaluated under a microscope by large and knowledgeable investors who provide most of their funding. E.g., retirement funds, large companies, the very wealthy, etc. The act was written with criteria to eliminate all the reputable and successful Venture Capital Companies, leaving "Venture Counterfeit Cronies" to feed at the public trough of greed. Oklahoma being void of any reputable and successful Venture Capital Companies, this was easily accomplished, one restrictive criteria being only "Venture Counterfeit Cronies" could participate. We do have to give state officials credit where credit is due. They did demonstrate good insight by requiring that only the wealthy could participate. Otherwise anyone could have got in on the fraud. It obviously would not be smart to start allowing the common taxpayers to belly up to the trough of greed. That would leave no one to pay the taxes. You just can't have good public fraud without a tax base. This gets much deeper so stay tuned as we peel additional layers off the onion, revealing how state agencies, state officials and names of those outside the government who are involved. Other ways they protected the "Venture Counterfeit Crony" fraudsters. |
Simple oversights? Or???
-
|
State protected captive market?
The act requires that any business venture wishing to participate in this program must go through one of a small but very select group of crony Oklahoma "Venture Capital Companies." Only these "Venture Capital Companies" are eligible to apply for the tax credits. These "Venture Capital Companies" These crony "Venture Capital Companies" then use the tax credits to lure investors. In the end the "Venture Capital Companies" not only realize a huge windfall profit, all paid by the Oklahoma taxpayer, the "Venture Capital Company", not the investors, own a sizeable portion of every successful business. In theory this small group could own and control virtually all of Oklahoma's new business growth. State subsidized money tree! Hard to imagine when you read the bill, and see there were several issues that were covered in lengthy and specific detail.
In addition to the protection the act gives
While void of the most fundamental protection for the public:
|
For your convenience we have provided a link to the complete "Capital Formation Incentive Act"
-
|
We encourage you to read the act for yourself, but don't expect to find highlighted wording stating "this is how we are going to cheat the tax payers". A catty remark to emphasize the point, that the scheme is obviously very well disguised. Part of disguise is the document is extremely wordy, 86 pages, with a lot of redundancy. The first pages are one sentence with wording repeated over and over. The key is to look for what is missing as mentioned elsewhere. Borrowing the words of David Hariton, a tax partner at law firm Sullivan & Cromwell in New York, "They hide the ball within a matrix of boiler-plate recitations of complex regulations." To read online go to the following Website and search for Senate Bill 1577 passed in 2006. Go search To download in PDF format. Download |