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Why to state officials refuse to act claiming there is nothing illegal occurring?

We disagree and will address that below, but first let's examine how this works.

Step 1 The law establishing the program was created with little or no meaningful requirements, restrictions, oversight or accountability.

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State lawmakers having little if any knowledge and experience in the area of venture capital relied on lobbyist and special interest groups to help (write) the law. Lobbyist whose purpose is to look out for those who pay their salaries and fees naturally write the law to favor their clients and have no reason to look out for the public's interest.

This resulted in, for lack of a better term, a shell bill that lobbyist stuffed with the CAPCOs wish list of give them free and unlimited access to public funds, with no restrictions, requirements, oversight or accountability. Then keep this whole thing hidden from the public. To disguise this they bloated the bill with boiler plate phrases that sound impressvied, but meant nothing. No one responsible for protecting the public interest bothered to touch the bill.

For the casual reader the program sound reasonable. For any who has dealt with contracts and projects the program reeks with flaws and is void of the tools.

Step 2 Involves the "determination letter" which is kept hidden from the public.

CAPCOs file a letter with the Oklahoma Tax Commission describing how they plan to use the program. Any responsible person taking the time to evaluate these letters, would clearly see the wrong. But, the CAPCOs know this will not be properly evaluated and will be kept hidden from any other eyes.

It serves the purpose of legitimizing the plan and providing a defense later if caught.

OTC claiming it has no choice, and without regard for evaluating the content of the letter issue a "Letter Ruling" (determination letter), which is nothing more than a way to legitimize the plan, protect the CAPCOs from later charges of wrong doing and increase the schemes marketability.

It serves the purpose of legitimizing the plan and providing a defense later if caught.

A recent Wall Street Journal article "After the Oil Boom, a Gusher of Investment-Fraud Cases" discussing oil field fraud states:

"In some fraud cases, the promoters never drill at all; in others, they devote a disproportionate amount to sales commissions and other in-house expenses not related to production."

Then went on to say

"The common element, regulators say, is that promoters walk away with hefty profits while investors get little or no return on their money."


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