From
Malia Litman's blog:
This is First in a Series of posts dedicated to revealing the truth behind the Texas Emerging Technology Fund. The breadth of the corruption facilitated by Rick Perry is so extensive that multiple articles will be necessary.
I. INTRODUCTION
“The Emerging Technology Fund (TETF) was created by the Texas Legislature in 2005 at the urging of Gov. Perry to provide Texas with an unparalleled advantage in the research, development, and commercialization of emerging technologies.”
TETF grants are awarded in the following three areas:
• Research Superiority Acquisition — funds for Texas higher education institutions to recruit the best research talent in the world.
• Commercialization Awards — funds to help companies take ideas from concept to development to ready for the marketplace.
• Matching Awards — funds create public-private partnerships which leverage the unique strengths of universities, federal government grant programs, and industry.
In order to receive a TETF payment, the first step is to contact one of seven Regional Centers of Innovation and Commercialization (RCIC). RCICs receive applications for TETF awards each calendar quarter from companies within their regions and help guide companies through the application process.Applications are reviewed quarterly and TETF awards are granted throughout the year. Companies across the state have won TETF awards.
During the three fiscal years from Sept 1, 2007 through August 31, 2010 the TETF made 113 awards in the total amount of $259, 543,000.00. During the same time period, while Texas was giving away over $259,000,000 to companies employing supporters and donors of and to Rick Perry, Texas received $6.4 Billion Dollars in Federal Funds from the Recovery Act money allowing Texas to retain $9.1 Billion dollars in its Rainy Day fund. During this same time period Rick Perry advocated secession of Texas from the U.S. He also advocates less involvement of the federal government in state affairs, unless of course he is asking for money. Texas was the state that depended the most on the stimulus funds to plug nearly 97% of its shortfall for fiscal 2010, according to the National Conference of State Legislatures. On the very same day Governor Perry asked for the funds, he set up a petition titled “No Government Bailouts.”
During that same period, Texas was also unable to financially sustain many of its volunteer fire departments. During the same time frame Texas was ravaged by 21,000 deadly and devastating wild fires which have burned 3.6 million acres.
II. MAKE UP OF THE TETF
Section 490 of the Government Code of Texas establishes the method for appointment to the TETF Committee. Section 490.051 provides that a committee of 17 people will be appointed by the GOVERNOR. The Governor appoints the presiding member of the committee. (Sec. 490.053). The length of service for each member is at the “pleasure of the governor.” (Sec. 490.540). The Committee only makes recommendations ( 490.056). The final approval of any money to be paid from the fund is made by the Governor, the Lieutenant Governor, and the Speaker of the House of Representatives (Sec. 490.056)
III. EQUITY POSITION OF TEXAS
Texas Government Code Section 490.005 requires the Governor to provide “a brief description of the equity position that the Governor, on behalf of the state, may take in companies receiving awards…” It was obvious that each of the companies receiving the award of money from the TETF would not be successful. The majority of new businesses fail in the first four years. However the express provisions of Section 490.000 contemplate the sharing of profit if it should occur, and repayment of the monies awarded by the state, creating the relationship between the state and recipient, of an investor in a business enterprise. If other investors realize profit from the company, then the state of Texas should likewise be a beneficiary of the success of that company. The TETF was clearly formulated with the expectation that the fund would be used to support companies that had a very promising future, and would likely result in a return on investment to Texas. Section 490.203 expressly states:
“An entity receiving funding or another incentive under this subchapter shall guarantee by contract with the governor’s office that the entity will perform specific actions that are expected to provide benefits to this state.”
“If an entity fails to perform an action guaranteed by contract under Subsection (a) before a time specified by the contract, the entity shall return the funding received by the entity under this subchapter.’
No company in the history of the fund has ever returned the money given by the state, and the state has never demanded the refund of any funds.
IV. ONLY ONE COMPANY, CARDIOSPECTRA, INC. HAS RETURNED ANY MONEY TO TEXAS.
The January 2011 Annual Report to the Texas Legislature covers a period of three years. This report identifies 120 different companies that received millions of dollars from the TETF. The amount of money awarded to the 120 different companies varied between $500,000 to $ 50,000,000 which was awarded to TAMU. The average amount awarded was $1,000,000. The total amount of all awards was $259,543,000.00.
For each of the 120 companies identified in the Annual Report there is a reference to the “Intended Outcome,” and the “Actual Outcome.” Of all the companies listed that received money from the TETF only one company is reported to have paid any money back to the State of Texas. At pg 26 of the report, “CardioSpectra, Inc.” is reported to have been bought by another company for $25,000,000 in cash, and a promise to pay an additional $38 million upon the achievement of certain milestones. The state of Texas was paid $2,277,792 in cash upon the sale, and stock “valued at $1,984,749.” Thus the State of Texas received only 9% of the proceeds from the sale of CardioSpectra Inc. More importantly, less than 1%, or .008% of the companies funded by the State of Texas paid back ANY of the monies given to them. This would be an indication of, at best, gross incompetence on the part of Texas employees running the TETF, or more likely, corruption.
V. LACK OF TRANSPARENCY FROM THE TETF FUND
The TETF identifies itself as having 7 employees. They are:
1. Jonathan W. Taylor, Director
2. Yvette Sanchez-Ramirez, Executive Assistant
3. Patrick Boswell, Investments Manager
4. Bryan Poe, Investment Analyst
5. Ashley Randall, Investment Analyst
6. Emily Vorlant, Investment Analyst
7. Laurie Rich, Special Advisor
On Oct. 6th, 2011 I called each of these people. The purpose of the call was to simply confirm that Cardio Spectra Inc., is the ONLY company that received money from the TETF to ever pay any money back to the State of Texas. I spoke with Jonathan Taylor and he said he didn’t know the answer. I asked him as the Director of the fund, who would be in a better position to know. He responded by defiantly saying that any such information would have to come from the press office. When I asked him if that wasn’t part of his job description, he hung up the phone on me. I have spoken to two different people in the press office for the Governor’s officem “ Lucy”, and “Veronica”, and each explained that they didn’t know the information and would get back to me. I then followed up with Ms. Ramirez, Mr. Boswell, and Mr. Poe to ask the same question, and each were unwilling to discuss the matter with me. I left voice mail messages for Ms. Randall, Ms. Vorlant, and Ms. Rich, none of which have been returned three days later. I have sent an e-mail to each of the people listed above, setting out my request for confirmation that CardioSpectra Inc. is the only company in the history of the TETF to return any money to the state. The only response I have received to those simple e-mail requests http://www.blogger.com/img/blank.gifis to advise me to talk with the Governor’s press office.
The inevitable conclusion is that there is only one company in the history of the TETF to pay any money back to the state in the history of the fund, In the span of over 5 years only one company returning money on the state’s investment is pathetic. In articles that will follow, there is clear lack of accountability of the TETF for over $200,000,000.00 of tax payer money that has been given away. It is criminal that at a time when the State of Texas is in desperate need of funds for public education and basic services, like fire fighting, that the state of Texas, under the guidance of Rick Perry is GIVING away money. Later posts will also establish that the TETF has been used to give money to companies associated with donations to Rick Perry. The obvious conflict of interest and corruption is transparent, blatant, and inexcusable.
Wait! There's moreThis is the second in the series of articles on the Texas Emerging Technology Fund. The background of this fund is set out in this article. The entirety of the following post is based on the report from John Keel, CPA, of the State of Texas State Auditor’s Office. It was completed April 2011, and is know as “An Audit Report on The Emerging Technology Fund” Report No. 11-029. This report was compiled by a Certified Public Accountant from the State Auditor’s Office. It was not the result of a political adversary of Rick Perry, but an official state audit of a fund promoted and “overseen” by Rick Perry. The following are the Overall Conclusions of the Auditor:
“The Emerging Technology Fund (ETF) should make significant improvements to promote greater transparency and accountability.
Issues in a number of areas impair the ability to administer the ETF in the best interests of the State. It is important to hold recipients of funds accountable. Auditors identified the following weaknesses:
Decision making related to the ETF and recipients of funds is not open to the public.
The ETF conducts limited monitoring of recipient’s performance and expenditures of funds.
The Office of the Governor does not report the value of the State’s investments through the ETF on its financial statements.
The ETF does not administer its contracts with the seven Regional Centers for Innovation Commercialization (RCICS) and the Texas Life Science Center for Innovation and Commercialization…”
As of Aug. 31, 2010 a total of 153 grants and awards totaling $342,336,567 had been awarded to recipients.
The ETF application is considered confidential while an application for an award or grant. Ten other states with similar programs that auditors surveyed allowed significantly more public access to meetings and documents related to the award of public funds. (pg. ii)
The code of ethics policy for the Advisory Committee does not prohibit Advisory Committee members from accepting compensation from or investing in ETF recipients. (pg iii) ( This means that a person on the Advisory committee who recommends a company receive millions of dollars from the EMT could be the CEO of the company.)
The majority of annual reports required in 2007, 2008, and 2009 were NOT submitted.(pg iii)
The office of the Governor did not report the value of all investments held by the ETF on its annual financial report or on its annual report to the Legislature; the only investment that was reported was from the single award from which the ETF has profited. (pg. iii)
The ETF has not developed substantive criteria for the RCICs and the Texas Life Science Center to use when receiving and evaluating applications. (pg 3)(This means there are no standards to determine which companies receive grants, or any guidelines to determine how much money will be awarded.)
Because there is a lack of consistent documentation of votes and recusals, it can’t be determined whether board members appropriately addressed conflicts of interest. (pg. 3) (This means that there is no way to determine if the very people considering an application had a financial interest in the approval of the grant.)
RCICS and Texas Life Science Center do not follow consistent processes for evaluating and receiving applications. (pg 5)(This means that there is no uniformity in how an application is evaluated.)
Meetings of the Advisory Committee of the ETF are not open to the public, and the Advisory Committee does not even document its decisions in meeting minutes.
The Advisory Committee has been inconsistent in terms of which applications it will accept for review. (pg 7)
There is no documentation of how members voted, which members recused themselves, or any disclosures made. (pg 8)(This means that there can be no accountability for any action taken.)
The advisory committee has no written policies and procedures for how it receives, reviews, or recommends funding. (pg9)
While others may nominate people to serve on the Advisory Committee, it is the Governor who make the final determination regarding all appointments to the Advisory Committee.(pg 11)
There are no policies for the ETF application process. This has led to uncertainty in various areas. (pg 13)
The ETF doesn’t perform a credit check on award recipients, or a criminal background check. (pg 13)
Auditors were unable to determine from the documents available for the 21 applications tested whether the ETF Office performed any due diligence or independently verified the information provided by the applicant, such as intellectual property or financial information. (pg 15)
The ETF has not ensured that ETF recipients comply with requirements to submit reports. (pg 18) (This means there is no accountability by the recipients of the millions of dollare given by Texas.)
Three recipients declared bankruptcy or ceased operations in 2010 but failed to submit even one annual report. (Pg. 18)
In 2007 60% of recipients didn’t submit reports due.
In 2008 67% of recipients didn’t submit reports due.
In 2009 59% of recipients didn’t submit reports due.(pg 18)
The ETF does not require recipients to submit (1) financial information in their annual reports or (2) supporting documentation for expenditure of funds. Thus the ETF can’t verify whether recipients make expenditures only for authorized purposes. (pg 20)
The Office of the Governor is not reporting the value of the ETF investments as assets, and it is not reporting the net increase or decrease in the value of these investments on its annual financial reports.
One RCIC reported to the ETF that it spent $59,731 on “Meals and Entertainment” in fiscal year 2010. RCIC is not required to separate funds for the ETF and its operating funds. (pg 28).
Several conclusions are evident from this audit:
1. There is no criteria for the award of money from the ETF, and therefore Rick Perry is able to give state money to any company he chooses.
2. There is no documentation of any value received by Texas for any of the companies who received state money through the ETF, with the exception of a single company.
3. There is no attempt to independently assess the financial viability of a company receiving an award from the ETF, and thus a shell company could receive a gift of money from the ETF and immediately declare bankruptcy after the funds from the state are disbursed. Supporters of Rick Perry could be in a position to receive payment directly from the award of money by the state to their company through the ETF with the only benefit to the individual and/or Rick Perry, and the State of Texas might not realize any benefit!
4. There is no accounting required of a recipient of ETF funds, and thus any misuse of state money would likely never be reported.
5. Members of the Advisory Committee which recommend approval of an award may be financially connected to the applicant company and they are not required to disclose or report the conflict.
6. Rick Perry has ultimate control over any and all funds awarded by the ETF.
7. There is no expectation by the ETF that any funds will ever be paid back to the State of Texas.
8. Because Rick Perry is given the power to appoint every member of the Advisory Committee, “at his pleasure” Rick Perry controls the recommendations of the Advisory Committee “at his pleasure.”
9. There is a complete lack of accounting to the citizens of Texas, and the country, for the monies given to companies.
10. While Texans are deprived of basic services of Government, including education and fire fighting services, the State of Texas is giving away millions of dollars to Rick Perry supporters. This year alone Texas cut funding for public schools in Texas by 2 Billion Dollars. Dallas alone will suffer cuts to its education budget of 87 Million Dollars, which is less than half of the funds given away to Rick Perry supporters through the ETF.
http://www.blogger.com/img/blank.gif
It is no wonder that Rick Perry is serving in his tenth year as governor and is the longest-serving chief executive in Texas history. Given the financial backing Perry has achieved using taxpayer money, he will likely continue to be re-elected for as long as he desires. Now the entire country is saddled with the effects of Rick Perry’s corruption.
He is among the top political fund-raisers in the country through his “vast network of wealthy supporters eager to bankroll his presidential ambitions.” In three campaigns for governor, Mr. Perry has raised $102 million, including more than $39 million during his successful 2010 bid for re-election. The Republican Governors Association, of which Mr. Perry is chairman, raised a record $22.1 million during the first half of this year. If allowed to occupy the White House, imagine the wealth he could transfer to his supporters at the expense of U.S. taxpayers.
Last but not leastThis article is Part III of the discussion of the Texas Emerging Technology Fund(TETF). The previous articles are here. In these articles the unequivocal facts indicate that Rick Perry, through the Texas Technology Fund has diverted tax payer money to his supporters. The State has produced virtually no accounting, and state auditors have cited over 20 infractions of common accounting practices regarding the fund. The Governor’s office hung up on me when I tried to get basic information relating to any revenue paid to the state by recipients of millions of dollars in state funds. E-mails were not returned. It has been one week since I made phone calls and placed e-mail inquiries to the Office of the Governor, the Emerging Technology Fund, and to the Governor’s press office. No information has been provided, no return calls have been placed, no return e-mails have been forthcoming.
This final article documents just a few of the outrageous payments of money to specific donors of Rick Perry. Undoubtedly there are many more examples, but it is difficult to connect the donors and recipients of the money, as the recipients are companies, and it is difficult or impossible to determine the identity of all the people associated with the recipients of the millions of dollars given out by the Texas Emerging Technology fund.
1. Charles Tate has donated a total of $424,000 to Perry. Tate had investments in ThromboVision, which was awarded $1.5 million from ETF on 4/20/07. ThromboVision declared bankruptcy on 9/2/10. Shortly before the declaration of bankruptcy, Charles Tate donated $100,000 to Perry’s campaign on 5-25-10. ETF did not know about bankruptcy filing until it was reported in the news. .
Tate also had investments in OrthoAccel Technologies, which was awarded $750,000 on 2/2008 from the ETF.
Mr. Tate also started the Texas Life Sciences Center for Innovation and Commercialization which vets applicants for ETF. Hence Mr. Tate himself, has become an integral part of the process of approving companies who are awarded millions of dollars of tax payer monies. Perhaps Governor Perry thought it would be convenient to consolidate the process of applying for state money and the awarding of state money in the same person to limit the expense associated with reviewing an application. After all, who better to know whether Mr. Tate’s companies should be awarded tax dollars, than Mr. Tate himself?
2. Charles Miller has donated $125,000 to Perry and also had investments in ThromboVision.
3. Phil Adams has donated $315,000 to Perry. Adams also went to Texas A&M with Perry. Adams had investments in Terrabon, which was awarded $2.75 million from ETF on 7/30/10.
Adams has also employed Perry’s children, given Perry Big 12 tickets, and provided transportation and lodging for games.
4. James Leininger has donated $265,000 to Perry and is investor in Gradalis, which was awarded $1.75 million from ETF on 2/2009.
Leininger has also taken Perry on hunting trips, paid for Perry’s airfare, room and board and given Perry tickets to Spurs game.
5. John McHale has donated $50,000 to Perry and is an investor in Gradalis.
6. Joe Aragona, general partner at Austin Ventures, donated $80,000 to Perry. His donations included the $25,000.00 award of 6/29/2006.
Austin Ventures was invested in, and had board members on, NanoCoolers, which received $3 million on 3/2009 from ETF. The company closed 8 months later on 11/2009.
7. William McMinn has donated $152,000 to Rick Perry. McMinn had investments in Carbon Nanotechnologies, which was awarded $975,000 from ETF.
8. David Nance has donated $80,000 to Rick Perry. Mr. Nance had only $1,000 of his own money invested in Convergen, it received $4.5 million from ETF in 2009.
The regional panel that reviewed Convergen’s application turned down the company’s $4.5 million request when it presented its proposal on Oct. 7, 2009. But Mr. Nance appealed that decision directly to a statewide advisory committee (of which Mr. Nance was once a member) appointed by Mr. Perry. Just eight days later, on Oct. 15, a subcommittee unanimously recommended approval by the full statewide committee. On Oct. 29, the full advisory committee unanimously recommended the approval of Convergen’s application. When asked why the advisory committee felt comfortable recommending Convergen’s grant, Lucy Nashed, a spokesperson for Mr. Perry, said that the committee “thoroughly vetted the company.” “Lucy” was one of the people in Governor Perry’s office that did not return my calls or e-mails, even though the Director of the ETF sent me an e-mail confirming that she would be calling me back.
9. Charles Amato has donated $32,000 to Perry. He had investments in Seno Medical Instruments, which received $2 million in ETF money.
10. Young Turks cites others.
This detailed analysis demonstrates a pattern or routine of Rick Perry and the Texas Emerging Technology Fund of giving away taxpayer money to supporters of Rick Perry. Thus Rick Perry used tax payer money to support his campaign for Governor, and now President. No wonder Rick Perry has so much money for his campaign. No wonder Rick Perry has been elected Governor of Texas for three terms. In Texas we have the best government that money can buy, and that’s a pathetic government.
As applicants to the Texas Emerging Technology Fund present their applications to Rick Perry, they likely feel like they are watching an excerpt of Jerry McGuire.
