A pink While You Were Out slip is on your keyboard when you return from lunch, Jen’s oddly masculine handwriting, Ray Sears and Ray’s cell number, no elaboration. In your business people rarely leave voicemails. Ray is calling to let you know he contributed $7,500 to the Midwestern governor’s presidential campaign per your arrangement. The governor has just announced, so from this point on campaign contributions are a matter of public record.
Four years prior, the Midwestern governor established a state-run economic development corporation to provide loans and tax credits to small businesses, appointing himself chairman. Under the charter, in exchange for financial assistance, these businesses must provide payroll records as evidence of job creation for any tax credits or loans they receive. Any going concern could get bank financing, so the businesses coming hat-in-hand to the governor’s economic development corporation tended to be sketchy. The tax credits issued would be a pittance compared to the economic development corporation’s loan portfolio, the risk management side of the portfolio.
Ray Sears Construction had been on the verge of bankruptcy. It was easy to get him to agree to everything. Ray Sears Construction received a back-channeled $200,000 infusion from the Lease On America Superpac backing one of the Midwestern governor’s rivals. Seed money that enabled Ray Sears Construction to procure a $2.5 million loan from the Midwestern governor’s economic development corporation. To get this money, Ray Sears signed an agreement to do the following, failure to do so resulting in revocation of the $200,000 infusion: a) neglect to pay the origination fee to the economic development corporation, which would be discovered in a Legislative Audit Bureau audit of the economic development corporation, b) neglect to provide payroll records so the economic development corporation could demonstrate that the money it lent created jobs, and c) contribute $7,500 (the max allowable) to the Midwestern governor’s campaign after the governor formally announced his intention to run for president. You were confident the economic development corporation would not press for the origination fee, or bother Ray Sears Construction for their payroll records. The previous year’s audit cited several instances where the economic development corporation neglected to charge an origination fee or obtain payroll records.
Ray wanted to celebrate when he was approved for the loan from the economic development corporation. You remember his almost desperate gratitude, insisting on paying for drinks. If he knew he was a pawn in high-stakes political subterfuge he didn’t care.
When the Ray Sears card is played there will be documented evidence that a) Ray Sears Construction never paid a loan origination fee, b) Ray Sears Construction never provided payroll records, and c) Ray Sears contributed $7,500 to the governor’s presidential campaign. So the Midwestern governor’s job-creating economic development corporation looks like a slush fund, using taxpayer money to forward the governor’s political ambitions while failing to comply with its charter.
