IBJ Exposes Self-Dealing By Angie's List CEO Bill Oesterle

This has to be one of the more unusual investigative pieces done by one of the Indianapolis Business Journal's excellent reporters. The latest edition of the IBJ features a front-page story by Chris O'Malley titled, "Oesterle sells land, reaping millions, Angie's List $6.3 million price exceeded assessed value." It's quite the case of self-dealing by a man the publication has followed throughout his business career and upon whom it has heaped plenty of glowing praise and adoration. Some critics would argue that the publication has been a bit too generous in its coverage of Oesterle and the business he co-founded with Angie Hicks because of his close relationship with its chairman and owner, Mickey Maurer, who also sits on the board of directors of Angie's List. That's why the scathing story in today's edition comes as such a surprise.

O'Malley explains how Oesterle formed a separate company, Henry Amalgamated, in which he owns a 70% stake, to acquire nearly 40 parcels of property on the city's near eastside. Karl Northern owns the minority interest. That company, in turn, leased their property at premium lease rates to Angie's List for its expanding headquarters and operations. The combined assessed value of the properties owned by Henry Amalgamated is just $2.625 million; however, Angie's List is acquiring the properties from their CEO's company for $6.25 million. Oesterle defends the sale, claiming that no cash is exchanging hands, at least cash that came from his hands. That's because Mayor Greg Ballard, who has received large campaign contributions from Oesterle, was very generous with your tax dollars and gave Oesterle's company $4.6 million in incentives from the downtown TIF district after the company pledged to keep its headquarters in downtown rather than relocating to the suburbs. Oesterle allowed the value of those incentives to go to Angie's List as part of the sale.

The parcels Henry Amalgamated bought with city incentives, mostly on the western edge of Angie's campus, were not sold to Angie's at a profit, Oesterle told the IBJ. he said those parcels were simply transferred to Angie's from Henry Amalgamated, with no money exchanged. Essentially, then, the value of city incentives went to the company itself.

"It was almost four blocks of real estate. I thing [Angie's] got a very good deal," said Oesterle, prefacing his comments by saying he was speaking on behalf of Henry Amalgamated and not Angie's List.

Just how good the deal was for Oesterle's Henry Amalgamated is hard to say.

No one involved in the transaction would say how much Henry paid for older parcels, those bought without city incentives. It's also unclear how much money Henry has invested in renovating buildings, ranging from old houses to old trucking firms in and around the campus.

I think the better response is that both Oesterle and Angie's List got a good deal. It was the taxpayers, as usual, who got left holding the bag. O'Malley cites SEC records as showing Angie's paid Henry about $1 million in rent, of which $735,590 was credited to Oesterle's stake in Henry. That contrasts with the CEO salary he earned that same year of $736,149.

O'Malley spoke to one Angie's List director, John Biddinger, who defended the transaction. Biddinger, who chairs the board's audit committee, told O'Malley that the company hired outside experts to appraise the properties, a process he described as "deliberative, taking about a year." O'Malley's story has no comment from Mickey Maurer and makes no mention of the fact that the IBJ's owner sits on Angie's List board of directors.

Incidentally, O'Malley's story mentions that Henry Amalgamated is named after Oesterle's best friend, Henry Hauser, with whom he co-owned an advertising agency that went by the name Young Isaac, Inc. in Columbus, Ohio. Hauser and Oesterle sold Young Isaac to People To My Site, Inc. in 2008 for an undisclosed price. Hauser formerly served on the board of directors of Angie's List. I would be curious to know if Angie's List contracted any of its marketing services to Young Isaac during the period of time that the company was racking up tens of millions of dollars in losses annually while spending a shit load of money on advertising. What am I talking about? Angie's List has never turned a profit in its 18 years of doing business. Tim Durham must be sitting in that federal prison cell down in Kentucky scratching his head wondering where he went so wrong with his Fair Finance compared to how well Oesterle has done with Angie's List despite not earning a single dollar of profit in its nearly two decades of existence.