Manager of state tax credit program got 99% of tax credits going to one fund!
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Internal tax commission emails reveal, Robert G. Heard received 99% of the "Venture Capital" tax credits going to Cimarron Business Capital Company. Under an outsourcing contract, Heard provides oversight of the "Venture Capital" tax credits, he is personally benefitting. The program has no other tracking or accountability, and OTC refuses to release information on these tax credits.

Note: There are 3 different tax credits involved.

1. Initially $100 million in tax credits were made available to OCIB to fund it's operation.

2. OCIB was authorized an additional $20 million per year.

3. OCIB has sole authority to approve investments to receive tax credits equal to 20% of qualified investments.

No provisions were provided for oversight, tracking, or record keeping. This prevented leaving records or allowing anyone to learn how much was used.

What happened?

Oklahoma Capital Investment Board (OCIB) a public trust was originally setup to provide oversight of the state's "Venture Capital" tax credit program. Later OCIB management and oversight was outsourced to Institutional Equity Associates (IEA or Edge) under Robert G. Heard's management. View outsource contract.

Oklahoma's secret fund operated by private individuals

Heard also manages, Cimarron Business Capital Company, one of two funds allowed to participate. The funds receives tax credits amounting to 20% of the funds they invest, to reward their investors. The tax credits, which can be sold for cash, go back to the investors. In this case Heard

Heard invested of 99% of the money Cimarron Business Capital Company had to invest. 99% of the tax credits went back to Heard.

The other fund allowed to participate is Cottonwood Valley Ventures a BOK subsidiary, which receives 100% of its funds from another BOK subsidiary, CVV Partnership.

The chart below lists "Venture Capital" tax credit program investments and tax credits for 2006, 2007 and 2008; the only years information is available for Cimarron, and 2009 for Cottonwood1.

Investor   Invested   Fund   Fund invested
in businesses
  Tax credits   Received
tax credits
Origen, Inc2   $152,436   Cimarron Business   $152,436   $30,487   Origen, Inc
Robert G. Heard   $16,922,097   Cimarron Business   $10,073,3431   $3,384,4191   Robert G. Heard
CVV Partnership   $1,090,000,000   Cottonwood Valley   $455,509,850   $91,101,970   CVV Partnership

More >>>

Notes

(1) As was previously reported here, this program was supposed to end December 31 2009. However, Cottonwood Valley Ventures, filed a 2009 claim, claiming the program is still open, for getting tax credits for investing. The claim was challenged by an OTC auditor, which OTC tax credit mangers neglected. It was in this challenge where the only reports available were found.

This is where CVV shifted its interpretation of the law and started taking tax credits based the year money was invested, according to the law. Before the program closed in 2008 CVV disregarded the law and claimed tax credits the year CVV Partnership invested the money. CVV was doing it one way before to serve its own agenda. Then switched in an effort to justify claiming it had omitted an $800 investment. Then saying we can keep going.

"Venture Capital" tax credit program was supposedly terminated December 31, 2008. An alert OTC auditor questioned Cottonwood Valley Ventures' recent January 2010, tax claim amendment it had omitted reporting receiving $800 million of the $840 million investments it received in 2008.

The 1% comes from OG&E affiliate, Origen, Inc. is an OG&E affiliate, that provides 1% of the investments. This allows Cimarron Business Capital to promote itself as an Oklahoma economic development entity, capitalized in partnership with OG&E!

Background.

The "Venture Capital" tax credit program was created to incentivize venture capital investing in Oklahoma, by offering investor tax credits amounting to 20% of their "qualified investments".

Oklahoma Capital Investment Board (OCIB) a public trust was originally setup to grow the private risk capital industry in Oklahoma, and given authority to qualify both investment funds (Capcos) and investments.

In 2000 OCIB management was outsourced to another firm under Heard's control. In that role Heard has control of which Capcos and investments qualify to participate and receive tax credits.

Both OCIB and the "Venture Capital" tax credit program were setup to receive funding through tax credits as opposed to appropriations. Thus escaping the state's budget limits and financial accountability. The complexities are beyond the space available here. Suffice it to say, the tax credits are provided in a fashion the tax credits can be converted directly to cash.

Finally, this was all wrapped in secrecy.

Essentially a private entity has sole control over a program with unfettered self-serve access to Oklahoma's incoming tax revenue. This allows tapping incoming tax revenue before the revenue is counted and entered on the state books.

No one is watching and the entire operation is held in secrecy.

Although confusingly similar "Venture Capital" is separate from the more widely known and controversial venture capital tax credit programs, Small Business and Rural Small Business

.

Notes:

Whited-out areas of the original email were filled best effort based on information found in accompanying documents, all of which links are provided. The original PDF file can be found here. Benefiting the state no more than any of all the other banks not receiving this exclusive bonus.


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