What is tax credit fraud?

The tax credits were intended to incentivize economic growth for unlawful personal gain. These private groups (known as Capital Companies or Capcos) are free to help themselves in a self-serve fashion, without any regards to limits. State officials allow these programs to operate without oversight and accountability; yet refuse to allow the public access to information showing who received how much in tax credits for what purpose.

The so called investors received $2 for each $1 invested, immediately, upon investing. The investors keep the 200% profit regardless if the business investment fails or succeeds.

State Tax Commission officials' role

An examination of over 100 "leter rulings" issued by the tax commission over a 3 year period, and more than 1,000 internal OTC emails discussing tax credits reveals the following.

Two key tax commission officials Tony Mastin, Tax Commission Administrator; and Dawn Cash, Director Tax Policy and Research Division, have sole control of all tax credit programs. With one administrative assistant to help. While Cash signs off on letter rulings, Mastin gives verbal approval.

Mastin and Cash issue "letter rulings" (or "determination letters") request from certain Capcos with no examination or consideration for the essential requirements, other than to insure wording adequately disguises the scheme.

Then when investments inevitablly fail, Mastin and Cash issue "letter rulings" to allow keeping the tax credits.

These letter rulings and emails clearly reveal Mastin and Cash are misusing their authority to facilitate and protect those defrauding the public; with a blatant disregard for the public interest.

How does this scheme work?

The tax credits under abuse are to be used to encourage investors to take the risks inherent in investing in Oklahoma business ventures. We all know that business investment risks are the same as buying stock in a company. You give the company money for a share of the business. If the company goes down you lose your investment.

The fraud works by misrepresenting how much comes from different sources and where that money goes; a financial shell game. To see that requires performing financial scenarios and exercises that map out the money trail.

Following these money trails, reveals that seldom does an investor turn lose of their money. The schemes are designed to obtain the tax credits and give the tax credit to buyers or give the so called investors $2 in tax credits. In practice $1 goes to the buyer and the other $1 to the so called investor who never need to hand over any money.

This all occurs before the business venture actually receives the investment and could possible lose any investment. In other words, the venture never receives an investment of more than 7% or 10% if that much. It is all a scam, disguised inside shell games.

Note: 7% gets 200% profit from the 30% tax credit program. 10% gets 200% profit from the 20% tax credit program.

When business fail, which most do before lasting the required 5 years, the Capco request the tax commission rule the investment "market liquidity event" which allows keeping the tax credits. The tax commission automatically rules the failure a "market liquidity event" without evaluating the facts.

From beginning to end every step fails to meet the eligibility requirements. Every step the tax commission rubber stamps without any evaluation.

The only concerns found expressed by the tax commission are to insure the ruling requests are worded vaguely enough to provide enough legal wiggle room to cover the two managers.

Other state officials reaction?

State officials are rejecting years of mounting evidence that reveals tax credits were allowed for investments in business that never existed except on paper; and those that did exist soon failed due to insufficent funding.

All state officials including lawmakers summarily dismiss all the evidence without examining. Examinations that merely consist of comparing different state documents.

To put this in prespective, lawmakers refuse to consider the evidence, by claiming the program is too complicated to understand. A law they were responsible for creating and correcting if found to be misused.

To add insult to injury lawmakers created the program to operate in secrecy, without oversight or accountability; and now claim they have to rely on the tax commission to tell them if the law is working and if there are issues with the law. The same tax commission that issues false reports that lawmakers refuse to review or have audited.

FYI - state law allows any state official to own an interest in and profit from enntities that receives state funding, including these tax credit programs. Surprised? Maybe that is because these are the issues seldom mentioned.

Evidence reveals

1. Tax credits are used to pay so called investors a $2 for each $1 invested. Profits received immediately after investing and a guarantee they keep the profits regardless whether the investments fails or succeeds.

2. A financial miracle beyond bibical proportions, yet state officials claim these programs create jobs and there is nothing illegal occuring.

3. It is this financial miracle beyond bibical proportions, that warrants demanded accountability and insuring sunlight. Many of the so called businesses claimed to have been invested in never existed except on paper. While others the others fail within a short period of time from lack of funding.

4. Many of the so called businesses claimed to have been invested in never existed except on paper. While others the others fail within a short period of time from lack of funding.

5. In 2007 the Taxpayer Transparency Act required all tax credit information be reported on OpenBooks. To avoid exposing its involvement the tax commission resorted to issuing false reports. Officials are now ignoring false reporting while the fraud flourishes.

Continued on blogs
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More about
The financial shell game schemes used   View
Capcos filing investment claims for tax credits   View
Claimed investments   View
Who is getting tax credits?   View
False reporting hiding public losses   View

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