Audit finds intentional misuse of economic development funds

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A new federal audit shows Indiana intentionally misused nearly a half-million dollars designed to grow Hoosier companies and jobs.

The audit, obtained by 13 Investigates could cost the state millions of dollars in federal money that is supposed to build local companies and create more Hoosier jobs.

The Indiana Economic Development Corporation created its own company in a building along North Meridian Street. It distributes taxpayer money to promising startup businesses. But now, federal investigators say the company broke the rules.

They say Elevate Ventures gave nearly a half-million dollars to another company run - and largely owned - by its own chairman. The inspector general says Elevate's officials knew that and still signed off on the investment.

The inspector general's report also found another investment that, while allowable, "created the appearance of potential nepotism."

As a result, the state must return the improperly-used $500,000. The company in question has already given that money back to the state. The federal government will determine whether to reduce, suspend or terminate the amount of money Indiana receives for small business development and the IEDC will be required to provide more oversight and review every similar investment decision.

When the problems first came to light last year, Governor Mike Pence commissioned his own audit, which found officials followed the rules, but recommended more state oversight.

The state firmly disagrees with the inspector general's finding that Elevate Ventures' actions were improper and say the federal regulations are unclear.

It is worth pointing out that the chairman of the IEDC wrote a letter to the inspector general, pleading for him not to find that there was any intentional misuse of funds. Despite that letter, the inspector general found the intentional misuse did occur.

As of Thursday evening, Elevated Ventures had not responded to 13 Investigates' calls seeking comment on the audit.