Saturday, October 29, 2011

Does Endorsement Of Litebox Business Deal Equate To Investor Advice?

The Star takes an interesting perspective on the highly-criticized announcement this week by Gov. Mitch Daniels and Mayor Greg Ballard that state and local economic development agencies were giving their blessings to provide incentives to a little-known West Hollywood man promising to build a new untested and unproven product in Indianapolis that would bring more than 1,000 news jobs to Indianapolis. A story entitled, "Was their endorsement of businessman too much?", the Star considers whether the endorsement of the deal serves as investment advice to would-be investors. Ballard and Daniels have sought to allay concerns by noting that no public investment will be made unless Bob Yanagihira's Litebox, Inc. actually builds his manufacturing facility on the city's northwest side and hires Indiana workers. The endorsement, however, could give credibility to the project Yanagihira otherwise lacked to lure investors for his deal.
But Friday, concerns were raised that Daniels' and Ballard's public endorsement of Yanagihara at the news conference -- Daniels called him a "visionary" -- could put Hoosiers at risk in a different way.
"By standing next to this guy," said Julia Vaughn of Common Cause Indiana, "these political officials are lending to his credibility as he seeks investors." . . .
Spokesmen for Daniels and Ballard clarified in emails Friday that the governor's and mayor's promotion of Yanagihara was not investment advice.
"Investors rely on financial data in making their decisions and know that state and local incentives are performance-based and only apply once the company has fulfilled its obligations," wrote Marc Lotter, Ballard's communications director.
Daniels spokeswoman Jane Jankowski wrote that "the governor's comments weren't intended as investment advice, nor is it likely that an investor would construe them in such a way."
Kerwin Olson, executive director of the Citizens Action Coalition, said that doesn't mean public officials should tout the business without first ensuring that it merits their confidence.
"The consequences are that you're creating false confidence in the public and violating public trust," he said, "so I think that's a potential concern.
"You're standing there with the governor of the state of Indiana who's well-regarded in the Republican Party and the mayor of the 11th-biggest city. That's a lot for the two politicians to lay their reputations on, and it's a good photo op for this guy."
The questions raised here is a very legitimate one that has often been overlooked by the media in the coverage of past such events. Indeed, Mayor Ballard said in an interview with radio talk show host Amos Brown this week that the state and city have given their blessing to deals in the past that never panned out but that was the risk they were willing to make to bring new investment and jobs to the state and city. Nobody in the media raised any red flags when Gov. Daniels and Mayor Ballard held a joint press conference to announce $14 million in direct economic development incentives the state and city were making in locally-based Angie's List. A week following their announcement the company announced it was undertaking an initial public offering. The company, one of whose investors and key officers headed up Gov. Daniels former gubernatorial campaign, disclosed in its filings with the SEC that it had never made money in the 16 years of its existence and has accumulated $143 million in debt, $50 million of which had been racked up in the last two years. Other than this blog, nobody questioned the timing of the announcement and whether its purpose was to lend the government's credibility to a company with an otherwise shaky track record to would-be investors.

Nonetheless, the media is showing some willingness in this case to ask the questions that should be raised any time a government endorsement is being made of a private business undertaking. The Star's reporters are still grappling with getting answers from Yanagihira about his business.
Yanagihara has not responded to repeated messages left by The Star on his cellphone and hotel phone Thursday and Friday. Late Friday afternoon, Veronica Vargas, a media contact for Litebox, asked The Star to submit questions in writing.
"All very valid questions," Vargas replied in an email, "and we appreciate you giving us an opportunity to answer them."
But Vargas did not respond to multiple phone messages left late Friday night, after the questions had been submitted in writing.
Develop Indy spokeswoman Jennifer Todd tells the Star that Yanagihira has signed a purchase agreement for the property where the new manufacturing facility is to be built and has opened up a bank account. That contradicts a claim by Democratic mayoral candidate Melina Kennedy during her interview with Amos Brown this week in which she said the city got punked by Litebox that the company had not placed the land under contract. The Star's story does not address the concern raised by this blog that the company lacked an official business registration in the states of California or Minnesota where it claims to be currently doing business. Todd also told the Star that Yanagirhira had visited the City-County Building this week to transfer permits into his name for office space he intends to occupy at 146 E. Washington Street, and that he had also discussed hiring with locally-based CFA Staffing, who she claims will handle the company's recruiting and hiring. It's not clear what permits Litebox has filed, but a search of the city's online permit database returned no results when entering the company's name or Yanagihira's name. Litebox has not registered with the Indiana Secretary of State's office either according to its website.


guy77money said...

Maybe Yanagihara is just a phlegm flam man, give me your money and I will set up a dummy company and he wil find a legal way to enrich himself and quietly leave the state with a boat load of money. Just another reason Ballard needs to be voted out of office. I wonder if Daniels is pissed that he got pulled into this sham.

ABN2nds said...

I have e mails from this guy and he is CLUELESS!!!