July 2, 2010
Evidence suggests BOK Financial, BOKF: engaged in illegal tax credit and evasion activities. (cont)
1. How and what allows this scheme to operate
Note: A key element is "How hidden tax credit programs, prevent discovery"
This fraud involved BOK misrepresenting standard interest bearing, secured bank loans as "Venture Capital(G)" investments, to obtain $91 million in unearned for tax credits. The $91 million in tax credits were then sold to insiders for $19 million. BOK only recorded the $19 million as revenue, to avoid paying federal taxes on $72 million in revenue.
In summary, insiders misused bank financial transactions to reap $72 million in unearned gain; while the bank continued to earn interest, without exceeding standard acceptable bank loan risk.
The fact these were loans and not investments are evidenced in multiple ways:
1.1 BOK's list of investments(C)
Includes entities that obviously do not qualify as venture capital investments(G), do not sell ownership interest, and could only be considered for loans. Examples:
- private individuals
- Roman Catholic Diocese
- Indian Tribal Nations
- Oklahoma State Fair
1.2 BOK claimed venture capital investments for ineligible for businesses(C)
BOK claimed venture capital investments for businesses in industries(G) prohibited from qualifying for tax credits, e.g., real estate.
1.3 Additional evidence. Examinations also revealed for 2006-2009.
- For tax credits(C) BOK claimed venture capital investments of $456 million.
- For SEC filings(D)(D1) BOK claimed venture capital investments of $125 million.
- BOK's tax credit(C) claims investing $16.4 million in the Tulsa Community Foundation.
- BOK's SEC filing(D)(D1) reports only a loan commitment for up to $25 million to the Tulsa Community Foundation.
While obtaining an ownership interest in investments is a requirement for tax credits; BOK did not disclose an ownership interest in the entities as is required on SEC filings(D)(D1) as required to reveal to shareholders and investors the true financial condition and risks, associated with ownership interest. Suggesting BOK treated these as ordinary bank interest bearing, secured loans.
The sole benefactors were BOK and insiders that gained $91 million in unearned public funds without returning any value to the public. As most know, the definition of government fraud is presenting a false claim to be paid by the government for an invalid reason; and evidenced by failing to return value equal to public funds received.
(C) BOK or Cottonwood Valley Venture state tax credit investment claims
(D) U.S. Securities and Exchange Commission filings
(D1) U.S. Securities and Exchange Commission filings
(G) The fact that fraud is occurring under different but similar programs has attributed to considerable confusion. This particular case involves the following, commonly referred to as "Venture Capital" tax credits: Oklahoma Statute 68 § 2357.7 - Credit Against Tax for Investments in Qualified Venture Capital Companies - Pass-Through Entities;
Unearned gains, BOK and insiders
Next >> Source of evidence 2006 - 2009