OTC cover-up - missing documents, hidden refund claims, blocking audits, more!
Oklahoma Tax Commission cover-up. Missing documents. Hidden refund claims. Blocking audits.
An extensive examination of confidential Oklahoma Tax Commission (OTC) emails, cross-referenced(1) with related documents uncovered, revealing new evidence of vast cover-up used in hiding tax credit fraud. Fraud extensively documented 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, used in false claims, to obtain $66 million in unearned 2006 rural small business tax credits.
Those who received the 2006 tax credits were eligible to receive refunds after October 31, 2006. Tax credits could be exchanged for previously paid gross production taxes, with no limit on how far back. Some went back to the year 2000. There was no reason to wait, and to wait would mean losing serious money in interest.
Claims were filed but stashed in boxes, where the claims would remain for two years; when concerns arose, the claims might draw attention. This would cost those waiting, a significant loss in interest. Chaparral Energy, received $30 million in tax credits, for investing $15 million, in QMA through Altus Ventures. Chaparral was still waiting after two years for nearly $28 million in interest. Serious money. On the other hand, exposure could mean the loss of both the $60 million in tax credits, plus their original $30 investment. The failure of QMA meant they should lose both their $64 million in unearned tax credits plus $32 million investment.
The point obviously, none of this would have occurred, if the tax credits were legitimate. No one would sit by quietly, losing interest on $60 plus million when they had a legitimate claim. Money talks and money said, there is public corruption at the tax commission, and at every agency and involving every official, turning their backs.
Fraud on fraud.
With cover-up hiding the false claim, the claimed investments failed far short of meeting eligibility requirements, were the first visible disqualification of the investment. This automatically required the Oklahoma Tax Commission (OTC) to recover the entire $66 million tax credits.
Instead, Tony Mastin, head of OTC, in blatant disregard law, directed OTC employees to expedite ensuring those still waiting to receive all of their promised unearned public money, plus slip in an extra $30 million. Now the public has been robbed of $96 million.
Ensuring those received their unearned money would force the state to take proactive action to recover the stolen money. Something state officials cannot afford to do, without some exposing their own involvement, and others exposing their failures to protect the public interest.
In all the disarray, $30 million was credited twice, boosting a stolen $66 million to $96 million, and a stolen $135 million to $165 million. The way this played out suggests, not just missing documentation, and poor record-keeping, but tampering.
The lack of documentation and record-keeping kept OTC employees trying to sort out the impossible. Initially, on January 23, 2009, they had the amount at $165,514,495. January 26, 2009, someone correctly discovered $20,364,324, and $10,014,810 had been transferred from one account to another and counted both places. The total was reduced to $135,135,36, in line with the Capco reports or original claims showing $138,180,927. There was nothing found in the emails to account for the difference between $138 and $135 million.
The $20,364,324 and $10,014,810 would be Altus Ventures (and possibly some of Affinity Ventures, both managed by Paul Doughty) and Chaparral. Chaparral's SEC filings identify Altus Ventures as the source of $20,364,324. The $10,014,810 showed up on a later filing and avoided identifying.
June 4, 2009, the $10,014,810 reappears, raising the total to $145,150,171. December 18, 2009, the $20,364,324 reappears, raising the total back to $165,514,495.
Uncovered evidence included:
- Several boxes containing more than 1,500 tax credit for tax refund claims surfaced at OTC soon after QMA failed. Claims were dating back to early 2007, for the $60+ million in unearned 2006 tax credits. (4)
- OTC employees were instructed to ignore verifying refund claims and pay refunds claims ASAP. Employees, unaware documentation was missing, were told they could verify the claims after paying. This shifted the burden to employees to prove claims were not valid, without the benefit of documentation. Never happen!
- Several boxes containing more than 1,500 tax credit for tax refund claims surfaced at OTC soon after QMA failed.
- Failure to collect and maintain documentation required by law to justify tax credit investment claims.
- No system for processing or record keeping would required claims processors eight months to issue refund payments, without auditing.
- Crediting the same $30 million counterfeit tax credits (2)(3), to two different accounts, increasing the original $135 million to $165 million.
- It was also learned there not been any audits since the 2006 tax credits or Mastin took over as head of OTC, in early 2007. Prior to then, there had never been a field audit and only six desk-audits for these programs going all the way back to the late 1980s.
The audit staff was grossly undermanned.
- Auditors contacting those responsible for providing the missing documentation were restricted to only requesting documentation missing for 2007 claims.
- When auditors received and examined 2007 documentation, their findings that tax credits were allowed for unqualified 2007 investment claims, were ignored. See the auditor's findings.
- Auditors ignored, after finding - unqualified investment claims received tax credits for 2007. See the auditor's findings.
- Only weeks later, in January 2010. The same auditor was ignored again when questioning the eligibility of an $800 million claim filed by a BOK subsidiary, more than one year after the program expired.
- Note: auditors had already been restricted from known questionable claims.
- March 2009. The additional evidence of false 2006 claims to go with the information I had provided OTC previously.
Bits and pieces
Evidence of fraud in Oklahoma's similar, but different, "Venture Capital" economic development program can be seen here.
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.
With tax credits, OTC policy goes far beyond confidential required and found elsewhere. This examination required extensive cross-referencing.
(1) An examination of more than 1,200 OTC emails related to Oklahoma's Small Business and Rural Small Business Capital/Venture economic development programs(4); crossed referenced with evidence uncovered during four years investigating fraud involving two of Oklahoma's, more than 40 economic development programs.
(2) Ate least $30 million overpayments can be found and confirmed in two ways. A. the Capco reports, and B. Chaparral Energy SEC filings.
(3) It would appear both the $30 million overpayment and missing documentation going unnoticed, were a result of a missing or flawed tracking system.