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| How Venture Capital fraud works | ||||
| Using Bank of Oklahoma as an example | ||||
| Step | According to law | What is occuring | ||
| 1 | Investor(A) invest in fund(B) | Investor(A) invest in fund(B) | ||
| 2 | Fund invest in investments meeting qualifying criteria | Few, if any, investments are made. | ||
| 3 | Fund submits a list of qualified investments, and how much money was invested in each business. | Fund submited a list of business loans made during the year, claiming these loans as investments. | ||
| Notes: | ||||
| Investments are high risk, provide an ownership interest, are not secured by assets, and do not pay interest. Tax credits are incentives for taking these risks |
Loans are low risk, secured by assests, pay interest and provide no ownership interest.
False claims, resulting in unearned tax credits |
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| 4 | State oversight agency is required to examine claimed investments to insure the investment meet eligibility requirements, before authorizing. | A private individual signs off stating both BOK loans, and his own investments qualify for tax credits. | ||
| 5 | Although state lawmakers failed to include this requirement, investment claims should be recorded, tracked and later evaluated to determine if program is working, needs improvement, etc. | There is no tracking or accountability. All records are withheld from the public to insure no one learns what is occuring. | ||
Notes:
- (A) CVV Partnership
- (B) Cottonwood Valley Ventures.
Notes:
(1) As used, here BOK collectively refers to BOK Financial Corp, subsidiaries and affiliates; most notably, a banking subsidiary BOK Oklahoma; and BOK Oklahoma subsidiaries' Cottonwood Valley Ventures and CVV Partnership.
(2) As used, here Cimarron refers to Cimarron Business Capital Company.