A BLADE INVESTIGATION – FIRST OF THREE PARTS MILLIONS OF DOLLARS LOST IN OHIO’S PURSUIT OF JOBS - State often unaware of loan, grant recipients’ failings A stillness fills the air at Buckeye Silicon’s headquarters. The machinery in the company’s nearly empty South Toledo warehouse is dormant. The offices that line the back of the building are vacant, and a calendar strewn across a desk is dated November, 2011. The firm’s two employees rarely can be found at the facility, and a for-sale sign is planted in the front lawn. There are few signs of life in the 33,000-square-foot building other than ratty bird nests that poke through the warehouse ceiling and droppings that have fallen onto a piece of equipment. Three years after it received almost $3 million from the state of Ohio, Buckeye Silicon has failed to launch. The company never produced the 50 metric tons of polysilicon a year it touted while courting the state and has not created the nine jobs it promised. Although state officials said they vetted Buckeye Silicon and its executives, they failed to find that the firm’s parent company is registered to a mailbox in Las Vegas — something a Blade reporter uncovered with a 15-minute Internet search and a phone call. Today, Buckeye Silicon’s parent company is nothing more than an empty warehouse in California. A Blade investigation of Ohio’s taxpayer-funded job-creation efforts discovered that businesses did not create thousands of jobs that state documents said they did. The probe also revealed that Ohio development officials awarded tens of millions of dollars to companies they knew little about. Much of that money is now lost. A review of loans and grants awarded from July, 2007, to June, 2012, shows multiple instances in which state officials were unaware of problems at companies or with their executives. The issues span the administrations of former Gov. Ted Strickland, a Democrat, and Gov. John Kasich, a Republican. Among the findings of the investigation: ■ Buckeye Silicon is one of more than a dozen examples of a breakdown in the vetting, oversight, and management of loans and grants awarded to companies. ■ The state routinely invests in businesses that have financial problems and legal troubles. It also awarded loans and grants to companies whose executives were hefty political donors or were connected to top politicians in Columbus. ■ About 50 percent of the companies that received grants to create jobs failed to live up to their state job commitments. Those businesses were paid $45.5 million, which is half the grant funding the state awarded to spark job growth. ■ Many state records detailing job creation related to grant funding contained inaccuracies, which skewed the total number of jobs created by 25,000. ■ In total, 25 percent of the firms that received loans issued during the five-year period needed more time to complete projects, couldn’t make payments on time, or closed. Those 51 loans represent $79.2 million, or about one-third, of the $235.8 million that was paid to companies. The Blade obtained public records and internal financial documents of state-funded companies, spoke with current and former employees at those firms, and pulled court documents to report this series. A spokesman for Mr. Strickland said he was not available for comment, and Mr. Kasich did not comment. David Goodman, director of the Ohio Development Services Agency — the state entity responsible for monitoring Ohio’s loans, grants, and tax credits — said his office overhauled how it awards and tracks taxpayer funding in fall, 2012. But The Blade found that many of the procedures that caused the state to overlook the financial problems of businesses remain in place. “We’ve made significant strides,” said Mr. Goodman, who added that the state is more aggressive in recouping investments that sour. “I would say we’re never going to be completely there, but I definitely think we make better investments than we ever have.” IN THE SHADOWS Today, many of the procedures that resulted in governmental lapses are now being performed out of the public’s view. At the behest of Governor Kasich, the Ohio Department of Development was eliminated and morphed into the downsized Ohio Development Services Agency in September, 2012. Criticism of the Department of Development was a staple of Mr. Kasich’s gubernatorial campaign in 2010. The new agency — per the Republican-backed legislation that created it — contracts some of its services from JobsOhio, a nonprofit that was created by the state, seeded with taxpayer money, and shielded by law from public scrutiny. JobsOhio now vets and collects information about companies that request state assistance. The information JobsOhio amasses is reviewed by the Development Services Agency. Neither entity would comment on whether that information is a public record. Unlike the Development Services Agency, JobsOhio is not required to disclose the details of its activities to the state auditor or the General Assembly. JobsOhio, whose work is largely conducted behind a veil, provided The Blade with a statement about its practices but would not go into detail about its procedures. “For state programs, JobsOhio works together with [the Development Services Agency] throughout the project; this includes project vetting by JobsOhio’s managing directors and project managers and project reviews with [the agency’s] leadership,” part of the statement read. When deals go bad, the state has a difficult time collecting the taxpayer funding that was given to companies, Ohio Attorney General Mike DeWine said. Severely troubled firms typically have no money or assets to pursue. Since fiscal 2009, state development officials have asked the attorney general’s office to collect $47.5 million in bad loans and grants. The attorney general’s office collected $2.6 million during that period as of Oct. 16. The collections, which include accounts sent to the attorney general before 2009, can go on for years. “Sometimes, these deals are cut and they shouldn’t have been cut,” Mr. DeWine, a Republican, told The Blade....m.toledoblade/state/2013/10/27/Millions-of-dollars-lost-in-Ohio-s-pursuit-of-jobs
Posted on: Tue, 29 Oct 2013 13:09:59 +0000
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