THE FRAUD, FALSE REPORTING AND COVER-UP CONTINUE

Nick Baker - The Prowling Owl
keeps a watchful eye on
Oklahoma state government.

THE PROWLING OWL: THE FRAUD, FALSE REPORTING AND
COVER-UP CONTINUE

By Nick Bake

NORMAN, Okla. -- Evidence OTC has been under reporting tax credit program cost by reporting amounts less than 20% and one as little as 2% of information found on other OTC documents. OTC reported two programs as receiving no money yet other OTC documents reveal $281 million.

This is a prelude for a follow up graphic depictions of the extent of false reporting used to hide fraud inflicting the current financial disaster on Oklahoma taxpayers by state legislators.’ Fraud ridden tax credit programs funded using the state’s untracked and unaccounted Tax Expenditure program.

With Oklahoma, experiencing tax revenue short falls ranging in the 25 to 30% of the state’s current, $7 Billion appropriations budget. Oklahoma taxpayers will be facing tax increases to make up what could amount to a $1.5 Billion shortfall; then fund expected future shortfalls that can’t be absorbed in spending cutbacks. The economy, which we have little control, is only partly to blame for the shortfalls, and the least responsible. The more insidious cause is the result of rapidly increasing use of funding tax credit programs using “off the books” Tax Expenditures. State officials have never treated Tax Expenditures the same as appropriations spending. Leaving Tax Expenditures free of budgeting restraints, oversight, tracking and accountability.

When this new fangled thing called tax credits was discovered by government officials in the early 1980s, the tax credit programs were put under Tax Expenditures. Soon creative uses like allowing tax credits to be sold for cash opened the door allowing funding with the illusion there was no increase in budget spending. Tax credits are a way to allow beneficiaries to skim off incoming tax revenue before it reaches the state’s coffers and accountability. This spending does not appear as appropriations spending but is reflected in tax revenue shortfalls.

The only information provided the Oklahoma public about Tax Expenditures is in a biannual Tax Expenditure report (TER) prepared by the Oklahoma Tax Commission (OTC). While OTC reported $5.4 Billion in Tax Expenditures for 2007-2008 the $5.4 Billion only accounts for 150 of the 500 Tax Expenditure programs. The remaining 350 are reported as “Zero” or N/A. Only 38 of the state’s 80 plus tax credit programs show values which total $68 million.

Examining other state reports that could be obtained, including other OTC reports’ reveals those 38 tax credit programs cost $370 million, a 545% under reporting. Two of the 4 fraud ridden programs where reported as costing $4.8 million and the examination revealed $98 million, under reported by 2,040%. OTC has been reporting $0 cost for the other two of the 4 fraud ridden programs going back to 2005. Examination reveals OTC authorized $281 million in tax credits for those two programs.

These two unreported programs are the Small Business Ventures (SBV) and Rural Small Business Ventures (RSBV), not to be confused with the Small Business Capital Company (SBC) and Rural Small Business Capital Company (RSBC) tax credit programs. The close similarity of terms confuses most into believing the SBC and RSBC are the same or include the numbers for SBV and RSBV. SBV and RSBV are the two programs structured to allow secret involvement in a public funded program paying out $100s million in unearned public funds. Nowhere could we find were OTC reported either the amounts or identities of those receiving tax credits under these two programs.

Given the fact Oklahoma has no law preventing public officials from benefiting from public funded programs these two programs, I submit, were created and operated to reward state official for allowing and protecting the fraud.

The only sign of these two programs is an entry on OTC’s Incentive Review Capco report labeled, not with the proper names, but with the vague term “in conjunction.” There we find some very large numbers, including the largest single entry found on any tax credit report, $133 million attributed to one of the Altus Ventures group of LLCs. The connection to SBV or RSBV can only be found buried in the boring details of the law creating the program. Nowhere else can one find OTC labeling any tax credit amounts authorized or used by the proper terms Small Business Ventures (SBV) and Rural Small Business Ventures (RSBV).

The only accountability state officials provide for reportedly nearly $3 Billion of public spending is so riddled with discrepancies and falsehoods the public is being purposely prevented from learning how one-third of its taxes are used. Mislead and deceived about where the money is going, how the money is used and what if any benefits.

In reality, we should need no proof of the actual acts of wrong doing to see the irresponsible way state officials are operating. Handing out keys to an unguarded state treasury is begging for fraud.

Tulsa World reporter, Randy Krehbiel, and others, inside and outside Oklahoma, have been have been warning of the dangers of Tax Expenditures for several years. Those warnings have been ignored.

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THIRTY PERCENT OF OKLAHOMA'S ANNUAL EXPENDITURES HAS NO TRACKING OR ACCOUNTABILITY

Nick Baker - The Prowling Owl
keeps a watchful eye on
Oklahoma state government.

THIRTY PERCENT OF OKLAHOMA'S
ANNUAL EXPENDITURES HAS
NO TRACKING OR ACCOUNTABILITY

By Nick Baker
The Prowling Owl
Posted: December 10, 2009

NORMAN, Okla. -- State officials’ use a hidden $3 Billion slush fund to repay favors and insure elections. That is our elected officials’ corruption kitty. This crony club’s corruption kitty has been operating in the closet so long elected officials view it as a necessary tool to hold their office. Break the code of silence and they are political history. Keep their mouths shut and they benefit handsomely. This has been operating so long they feel untouchable.

$3 Billion over and above our $7 Billion appropriations budget, which, unlike other states and the federal government is the only budget most Oklahoman’s are aware. Put another way Oklahoma taxpayers are funding $10 Billion per year in expenditures. $7 Billion we are aware and debate. The $3 Billion slush fund we never hear a peep about.

How many Oklahoma taxpayers have ever seen or heard of our $3 billion per year Tax Expenditures budget? While there are some legitimate programs found in Tax Expenditures, that is the cover for the rest of the more than 500 programs found there that are used as a political slush fund to hand our financial favors. That is where they hide more than 80 tax credit programs, and several other tax avoidance goodies. Programs that hand out credits that the recipient can sell for cash the minute they receive the tax credits. That little $3 billion slush fund off: the books and off the record. Off the screen and when it comes to cuts, off the table.

While other states and the federal government have Tax Expenditures budgets and use the same federal or state financial system to track and account for Tax Expenditures, Oklahoma does neither. Biannually the Oklahoma Tax Commission issues a Tax Expenditures report replete with missing and grossly under reported amounts; to prevent the public from learning how much we are being gouged. A report, few even know exists. Those that do ignore because it is totally meaningless, cryptic and intended to both hide and mislead. Only about 150 of the 500 line items even list amounts. The 350 without estimates: only showing zero, N/A, state “minimal amount” or show nothing. Estimates that have been found to be under reported from 400 to 1,400%. Example:

For the 32 tax credit programs OTC reported on Open Books; OTC’s Tax Expenditures report list $90 million for the years 2007 and 2008 combined. So far we have uncovered from various state documents those same programs cost at least $370 million, or more than four times the amount reported.

Even worse are the 4 fraud ridden rural and small business venture capital programs where the Tax Expenditures report shows $4.8 million for the same two year period. Those same state documents mentioned above show $69.5 million. That is under reported by nearly 15 times.

That is still way to low, the Incentive Review CAPCO report, another OTC report, which is only generated for these 4 programs shows $197 million was allowed for the same period. A closer examination peeling back the slew of discrepancies inserted to disguise the truth reveals that number is at least $251 million. Peeling back the layer of false reporting reveals evidence that suggest those numbers should be even higher. That will be clarified and reported later.

As a reminder the $643 million in fake First State Bank Altus loans, used by Altus Ventures and Affinity Ventures to falsely claim and receive $192 million in unearned tax credits has not appeared on any OTC reports.

Note: By no means is anyone to assume what has been reported here is anymore than the tip of a huge iceberg. It will take a full team of forensic investigators to get to the bottom. The information is intended to show reason for an outside investigation. Outside Oklahoma officials who are responsible for allowing this to occur

For any who have unfamiliar with these issue, Google “Tax Expenditures” where you will find lots of information describing the subject and how the feds and other states treat “Tax Expenditures” the same as all other public spending. Budgets and accountability! The way our constitutions requires all public funds be treated.

Then go find Oklahoma Tax Expenditures report and take a good look at that mess. If you like I can provide copies of other documents..