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Pence orders review of contractor's investments

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Indiana Gov. Mike Pence has ordered an independent review of a state development agency contractor that has invested taxpayer money with companies run by its own chairman and his son.

Pence's action follows a newpaper investigation of Elevate Ventures, which the Indiana Economic Development Corp. first hired in 2011 to invest money into promising startup companies. The Indianapolis Star found that Elevate Ventures has directed $800,000 to a pair of companies connected to Elevate chairman Howard Bates and his son.

The governor wants a broad review of Elevate's investment decisions and business practices, Pence spokeswoman Christy Denault told the Star. She said Pence expected the highest ethical standards from the development agency and its contractors.

Elevate Ventures runs the Indiana Angel Network Fund, which uses federal money to spur small business development.

Bates remains chairman of Elevate and is also CEO of a startup, Smarter Remarketer. In November, Smarter Remarketer received nearly $500,000 from the Elevate-run Indiana Angel Network Fund. MaxTradeIn, a company run by Bates' son Justin, received $300,000 from the same fund a few months later.

Howard and Justin Bates said that the investments followed the federal guidelines governing the public money.

"No person connected with Smarter Remarketer or MaxTradeIn failed to satisfy the objective conflicts of interest thresholds for investment and controls established by these regulations," they said.

The governor's office didn't immediately say who would conduct the review of Elevate Ventures.

"The IEDC will present the findings of the independent review to the governor and the IEDC Directors in the near future," Denault said.

The U.S. Treasury Department has notified the state agency that it would perform an audit of Indiana's handling of the federal program that Elevate used to make the investments.

Stephen Hourigan, Elevate's CEO, said he believed the company's decisions would be cleared.

"We are confident that nothing related to these particular investment transactions violated any portion" of the federal guidelines, Hourigan said.

Elevate's contract with the state began in 2011, during Gov. Mitch Daniels' tenure. Under the contract, Elevate is paid a base fee of $125,000 per month. According to invoices, the state has paid Elevate more than $4.3 million.

The state distributed more than $29.3 million to companies during the two-year period ending June 30, 2011, according to annual reports. Under Elevate, which took over in April 2011, the state has steered around $19.9 million toward various companies to date, according to David Clark, a venture partner at Elevate.

Clark said Elevate followed its own internal conflict-of-interest policies by ensuring that Bates wasn't involved in the investment decisions involving Smarter Remarketer and MaxTradeIn.

"As we went through the process, he was not allowed to talk to anyone at Elevate about the deal," Clark said.

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  • Not the whole store
    Elevate requires companies to raise matching funds from private equity investors before it invests any of the state's money. Therefore both Smarter Remarketer and MaxTradeIn were also vetted by local business savvy investors. This was not a case of Elevate giving money away. It was a case of Elevate joining other investors in funding local startups - both of which are growing rapidly. These will both return many times the original investment to the state.
  • Clear Conflict
    This was started long before Pence. This need to be cleaned up. This is a clear conflict of interest. Furthermore, Bates should not have another job other than Elevate. That is also a problem. The FEDs will also want to see how the money was used at Smarter Remarketer and MaxTradeIn.
  • Oh, Really?
    Didn't we recently have some type of review of another egregious situation (Eric Turner, are you and your children reading this?) and everything was found to be just fine. Nothing will change here, either. I can't help but wonder how much money ended up in Mike Pence's campaign chest...

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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