"> Analogy of tax credit abuse shell game used by Scissortail and 10 others.
Analogy of tax credit abuse shell game used by Scissortail and 10 others.
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Analogy of one shell game used by at least 11 CAPCOs in tax credit abuse.

We obtained documentation describing Scissortails tax credit investment plan. We also obtained documentation for 10 other CAPCOs describing the same scheme with the names and amounts redacted. View more

Note: There are different schemes. For those found, the fundamental concepts are the same, the mechanics vary. The fundamental concept is to use borrowed money to inflate or misrepresent the amount "invested at risk". In the Altus/Quartz Mountain case the amount was simply misrepresented by using a bogus loan. With Scissortail and the other 10 a shell game is used to diguise which party is at risk for the borrowed money.

Say you own a building worth $100,000 free and clear. You decide to start a business but need another $100,000 for start up.

Someone comes along offering to invest the $100,000 for one-half interest in your business. You agree and the investor only having $5,000 goes to the bank and mortgages your property to borrow the other $95,000. Then brings you the $100,000. The investor then goes to the state and claims they invested $100,000 at risk and receives 30% or $30,000 in tax credits, which they keep.

Within a few days the entire business is destroyed. The $100,000 was in inventory and in the safe that was destroyed. You lost everything, including the $5,000. The bank is left with the value of the land. The "so called investor" walked away with a $25,000 profit. There was no way for the investor to lose but was guaranteed a $25,000 in profit. Courtesy of being allowed to misrepresent the amount of their risk exposure and anyone gullible enough to take the deal.

You had to give away one half of your $100,000 in assets and in return received $5,000 and are left with a $95,000 loan. Technically you and your new partner, but you are the only one with your remaining assets at risk. The investor partner has already received their original $5,000 back and a $25,000 profit.

So how do state officials justify this is ok? Hang on, because you will love this.

Here is what those profiting are trying to pass off as risk and is not illegal, and state officials are accepting.

The new investor partner is now at risk of losing that 50% of your business that they wrangled out of you for a mere $5,000, which they have already received back the $5,000 plus a $25,000 profit.

Another analogy is someone robs a bank and hides out. Another robber hears about the robbery, finds the original robbers. Holds them up and steals their entire haul. The original robber calls the police demanding they catch the second robber and return their money.

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