Federal Audit Finds Elevate Ventures Intentionally Misspent $500,000

The question we should be asking ourselves is why is it even legal for the government to take our tax dollars and dole it out to private businesses of its choosing, but that's the way business is now conducted in the Nazi-styled government known as the United States of America. The U.S. Treasury has a State Business Credit Initiative under which it passes out billions of dollars to the states to dole out to businesses. That's where this latest scandal comes into play.

In 2011, Indiana received $34.3 million from the Treasury for the program. The State, in turn, allocated $21 million to a Venture Capital Program administered by the Indiana Economic Development Corporation. IEDC, in turn, entered into a contract with a nonprofit company, Elevate Ventures, to handle the disbursement of $9.5 million through its Angel Network Fund.

That's where Howard Bates' software firm, Smarter Remarketer, comes into play. Bates was serving as chairman of Elevate Ventures when its chief executive officer, Stephen Hourigan, recommended that Smarter Remarketer receive $500,000 from the Angel Network Fund, even though Hourigan knew Bates owned more than a 10% interest in Smarter Remarketer. Elevate Ventures seemed to think that none of the rules that would apply to a government actor applied to it because they were a nonprofit company contracted by a state agency, and as such, was not a government agency. Hourigan also recommended for approval another $300,000 given to another company, MaxTradeIn, which was owned by Bates' son, Justin.

Bates earlier co-founded Haverstick Consulting, a Carmel software company that suddenly started getting a bunch of government contracts after Bates brought aboard Steve Hilbert of Conseco infamy as an investor and CEO after he got tossed out the company he founded. According to the Star, Haverstick Consulting has won about $30 million in state contracts since 2001. Hilbert later sold Haverstick Consulting to a San Diego-based company for $90 million in 2007. Hilbert, of course, was later sued by billionaire hardware store owner John Menard after he plundered nearly a half billion dollars in a very short period of time held by an investment equity firm Menard had hired him to manage. Menard accused Hilbert of charging exorbitant fees and investing money in companies he and his wife controlled in the process of losing most of the equity fund's money. Bates and Haverstick Consulting contributed $80,000 to various Republican campaign committees, including former Gov. Mitch Daniels' committee.

When the Star first raised questions about the propriety of the investments Elevate Ventures made in the companies owned by Bates and his son, Gov. Pence ordered a review of the transactions, which naturally concluded nothing wrong had been done. The Office of Inspector General for the Treasury Department has concluded otherwise. Its audit determined that Elevate had "intentionally misused" the money invested in Bates' Smarter Remarketer. The federal audit cleared the transaction with Bates' son since the father didn't own an interest in it, although it acknowledged the transaction raised an "appearance of partiality."  Pence told the IBJ that the "matter was closed" when asked if the state was planning to take any action against Elevate. Nothing to see here, folks, move along.