Friday, October 28, 2011

It's Official, You've Been Punked

New questions about the acclaimed CEO of Litebox, Inc. leaves little doubt that Mayor Greg Ballard and Gov. Mitch Daniels were punked when they stood before TV cameras and a bevy of reporters on Wednesday to hear an unknown West Hollywood man claim he was building a factory in Indianapolis to build mobile, drive-in movie theaters that would employ more than 1,000 workers. Today's Star has information on Bob Yanagihira's tax problems, inflated resume' and unrealistic pipe dreams:

It had all the makings of a great day for Indianapolis and Indiana: Gov. Mitch Daniels and Mayor Greg Ballard flanking a California entrepreneur to announce that 1,100 jobs soon would be coming to the city.
In these tough economic times, it seemed to be just what the doctor ordered -- the largest job-creating business expansion to be announced in the city this year. And for Ballard, locked in a hotly contested re-election campaign in which his opponent has criticized the mayor for job losses, it was a timely feather in his cap, just two weeks before the election.
But things have taken a strange turn since Wednesday's splashy announcement, at which Bob Yanagihara detailed plans to renovate a local office building and construct a $20 million factory where his startup company, Litebox Inc., would make mobile video screens.
Now some wonder whether the project is serious, and there is growing criticism that state and city officials failed to adequately vet Yanagihara before offering his company millions in tax breaks if the project comes to fruition . . .

At Wednesday's announcement, Daniels hailed Yanagihara as a "visionary" and an "entrepreneur."

In California, public records suggest he might be something else.

Based on an Indianapolis Star review of public documents Thursday, it appears Yanagihara has failed to fully pay hundreds of thousands of dollars in state and federal tax liens in the past 10 years.
Those documents suggest he owes money to others, as well.

Colin McGrath, 52, Camarillo, Calif., said he invested $100,000 in a housing development project Yanagihara was leading with the promise of recouping $140,000 in 18 months. That was in 2002, and McGrath said he is still waiting for his money, even though he obtained a court judgment in 2007 against Yanagihara for $145,000.

"I would strongly advise anyone thinking of investing in his projects to think twice," McGrath said. "I would tell anyone, 'Don't do it.' "

Yanagihara did not return calls from The Star on Thursday.

The state of California has at least six outstanding tax liens against him, though specifics were unclear. One lien, filed in October 2007, was for $85,108, according to records confirmed with the Ventura County clerk and recorder. Another, filed that same month with Los Angeles County, was for $64,579.

In California, the state can file a tax lien after a resident does not respond to multiple payment notices, said Denise Azimi, spokeswoman for the California Franchise Tax Board.

Yanagihara also has not fully paid off thousands in federal tax liens, including a $70,130 lien filed in February 2008.

The most recent tax lien against Yanagihara that The Star's review found was for $15,088. It was filed in Los Angeles County in January.
Further questions about Yanagihira's resume casts doubts on his claimed four-year education at the University of San Diego. As I pointed out yesterday, there isn't even a business registration for Litebox, Inc. in the states of California and Minnesota where he claims to be currently doing business with 69 employees. Further, the name of the company is a registered trademark of another company. Economic development officials tell the Star they vetted this guy and confirmed he has financial backing for the deal, but of course, that information is deemed confidential under state law because it involves taxpayer-financed incentives, which is a complete abomination when you think about it because of this very problem.

Unbelievably, state and economic development officials still won't admit they got punked. Jennifer Todd of Develop Indy admits officials there didn't know about the tax liens, but she says that's not a problem because they only look at the business' financial information, which begs the question of what information that was since it isn't a registered business. State officials aren't concerned by the tax liabilities either. "That's not an uncommon thing," he said. Besides, [Indiana's Secretary of Commerce Daniel] Hasler added, "I don't know that it would have mattered. The Star's reporters were easily able to speak to a person who is actually in this business who says Yanagihira's plans are simply unrealistic.

The $20 million that Yanagihara plans to spend to build an assembly factory for truck-mounted media screens in Indianapolis is enough money, Isenberg said, "to buy all of the competitors in the industry."
Isenberg also said he doesn't believe Yanagihara will need anywhere near the 900 workers he plans to hire to run the factory. Isenberg's company employs a total of 20 people and uses 12 trucks that hold JumboTron-sized video screens.
"We built these things," Isenberg said, "with less than six people in 90 to 120 days."
Okay, it's time for the politicians and government officials to stop trying to BS their way out of this fiasco. Just own up to the fact that you got punked and apologize for taking up our time with false promises from a charlatan who you obviously never bothered to vet before using him as a campaign re-election prop.

UPDATE: Check out this interview of Mayor Greg Ballard and Melina Kennedy by Amos Brown concerning the Litebox announcement fiasco. Kennedy says the Mayor and Governor were punked because someone didn't do the proper due diligence. Ballard says it's no skin off the taxpayers' back if it turns out to be entirely made up because no money will be laid out by taxpayers unless ground is broken on the facility and people are employed. He says it wouldn't be the first time this is happened. When Brown asked Ballard why the company wasn't registered to do business in California and he couldn't get a response from Develop Indy on this point, this was the exchange that ensued: "Well, you sure are curious about all this, aren't you?," Ballard sarcastically snapped back at Brown. "I want to make sure these folks are coming to town and give folks the jobs," Brown shot back. "C'mon, Amos. This is an entrepreneur who wants to do the right thing," Ballard replied. "We think he has that potential to do great work in the city of Indianapolis. We're going to be there along side him as long as these jobs come to fruition."

UPDATE II: In her interview with Amos Brown, Democratic mayoral candidate Melina Kennedy stated that she does not believe Yanagihira has the land under contract where he has proposed building Litebox, Inc.'s new manufacturing facility that he says will employ more than 1,000 workers. Economic development officials have divulged nothing about such details for the proposed project. Fox 59 News this evening quoted Yanagihira as saying he plans to break ground at the more than 50-acre site near Georgetown Road and 86th Street on the city's northwest side within 60 days and renovate downtown office space for a new company headquarters at 146 E. Washington Street. He told Fox 59 News that he doesn't understand the skepticism that has surfaced following Wednesday's announcement. "I am amazed at the skepticism for my LiTEBOX," Yanagihira said. "People should be glad I am moving here and not the other states that courted me."

Breaking ground on a new factory would seem to be a practical impossibility if he doesn't have the land under contract as Kennedy claims. How does Kennedy know that detail? I've got a good hunch. Kostas Poulakidas, a fellow Greek-American, is a close Kennedy friend and supporter. Kennedy hopes that Poulakidas, a fellow big firm attorney whose practice includes economic development work for local governments, is successful in his bid to unseat Christine Scales for the City-County Council so he can become her eyes and ears on the council should she become mayor. Poulakidas' wife has worked as a business development manager for Develop Indy for at least a couple of years until recently and may have inside information about this deal, which has likely been in the works for a number of months. Since reporters don't seem to know whether Yanagihira has the land for the proposed project under contract, maybe they should ask Kennedy how she knows that detail.  


varangianguard said...

OK. So who paid the bills while the "entrepeneur" was in town? Develop Indy?

More hilarity from the Ballard bumpkins. And bonus! They dragged the governor down that path with them.

Downtown Indy said...

It took nearly 4 years but now the mayor has reaped what he had sown -- Learning firsthand that backing someone who isn't what they purported to be is embarassing.

Had Enough Indy? said...

I think we must fully air the process by which Develop Indy (aka Chamber of Commerce now) and IEDC put their muscle and our tax dollars behind certain businesses. If it really is a policy of 'just ask and ye shall receive', as it appears to be, then why do we need to pay their hefty salaries?

varangianguard said...

Can't spell today, can I?

Downtown Indy said...

I would hope the city council members would tackle the process HEI brings up. I, for one, want to know if Litebox is an anomaly or the norm. Has Indy become the target of snake oil salesman who see easy pickings because people here are clamoring for job-creation numbers regardless of facts?

I have listened to (most of) Greg Garrison's program this morning and (shock) not one mention of Litebox.

Paul K. Ogden said...


Garrison doesn't talk about the biggest story in the city the last few days and Shella just posted his list of topics on IWIR and the Litebox fiasco doesn't make the lsit.

Gary R. Welsh said...

Typical Jim Shallow. The largest vote fraud indictment in Indiana political history by Democrats just came down this past week and it's not a topic of discussion. He, like the Star, hasn't had a single report on it. How these reporters keep their jobs is anyone's guess. Criticize Illinois all you want, but at least they have reporters who know how to report on politics over there, even if it doesn't save the voters from making the same stupid mistakes election after election.

Gary R. Welsh said...

Anyone else see shades of the undercover FBI sting against Lincoln Plowman at play here?

Citizen Kane said...


"If it really is a policy of 'just ask and ye shall receive', as it appears to be,...."

That is all it is! You should hear some of the pitches from this guys that don't come to fruition - they are just as hilarious as this one (like the one where Marion County (Franklin Twp) would get the package sewer plant and Shelby County would get the actual manufacturing plant or the 100-acre temporary solar farms - the solar mercenaries).

Everyone keeps talking about vetting - no vetting is needed. Common sense is needed. Once upon a time in business school, I was told my a classmate that I did not have business sense - maybe not - but I know "nonsense" when I see it - 1,000 + jobs for a niche market item that very, very likely does not need additional capacity screams nonsense. See, but these economic development guys don't care whether it is a viable business or whether we waste resources courting and supporting worthless enterprises. It all comes down to generating numbers for headlines so that lies can be told to the masses. Again, the only question you need to ask when a government official opens their mouth is, "how big is the lie." This one is a whopper.

Gary R. Welsh said...

It does seem like these economic development agencies are populated with a bunch of aging frat boys playing games of beer pong in between donning their suits and ties for these dog and pony shows. The fact that the media seldom catches on to their phony salesmanship reflects just how bad the mainstream media has become in this country.

Had Enough Indy? said...

Citizen - I remember that one. The City opposed it.