Friday, October 28, 2011

Litebox Fiasco Deepens; Were State and Local Officials Duped By "Visionary"

The Indianapolis Star still has plenty of talented writers.  I'm convinced that the problem is the Star editors who won't allow those writers to pen critical articles about Indianapolis officials. But the Litebox story is simply too big even for the Star.  Here is a portion of that lengthy article:
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.
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.

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.

In addition, the Star talked to industry experts who raise doubts about whether Litebox's business plan is workable:
...Stephen Isenberg, president of Impact Audio Visual Inc. of Las Vegas, which has supplied mobile video screens for high-profile events, including the Academy Awards, said he finds Yanagihara's plans 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."
Readers should read the article in its entirety, in particular how state and local officials try to justify their lack of vetting of this project.

Advance Indiana has a good take on the Star article. AI's blogger Gary Welsh was the first to report that Litebox does not appear to be licensed to do business in California or Minnesota.  Do we even know Mr. Yanagihara has a company that employs 69 employees?

There needs to be a thorough investigation of state and local economic development officials (especially those of DevelopIndy) involved in this deal to find out why they didn't properly look into the company and Mr. Yanagihara's background. What information did they look at? Why didn't they look at other publicly available information such as the Star uncovered? Did the election play a part in their rushing this decision forward?  I think at best they can will have to admit to negligence.


varangianguard said...

Hey, it got that Develop Indy guy, Scott Miller, promoted to the Chamber of Commerce. More vetting of candidates at its best.

Ben said...

this is nothing more than a political photo pop for the Mayor. One would think that his crack team on the 25th would have done their home work.

Im pretty sure that Ballard promised Keystone Construction the contract to build this smoke and mirrors building.

Josh said...

I will be very surprised in Litebox turns out to be anything but a sham. I think the Governor and the Mayor heard the word "jobs" and ran right out to make the announcement as fast as they could to help out the Ballard campaign. If they had chaosen instead to take the time to look into this guy and his company like they should have, they would have stayed mum on it until they had prook this was legitimate.
What's sad is it's very obvious it doen't take much looking at all to find out it's probably a sham. Every blogger and news source in the area apparently did it in a matter of hours.

Nicolas Martin said...

If talented writers work for a publication where they can't get published, then they are wasting their time. It's not as though there aren't other options.

M Theory said...

Gary Welsh did the work of the Dept of Development execs and didn't charge the state or city a penny for it.

Why do the taxpayers pay these guys a salary again?

skyshrouder said...

Who wouldn't be duped by plans as big as $20 million dollars. I bet the officials were blinded by the cash.

irs tax attorney

Anonymous said...

20$ is big cash for many people and I'm sure they'll get blinded for this amount. It's possible that many officials would get interested about it.

Criminal Defense Attorney Los Angeles

Suzy Thompson said...

This a huge job openings and would be very helpful to the economy. It could bring more investments and become a fast growing economy to the said city.

Bankruptcy Attorney Las Vegas