Build us a 40,000-square-foot manufacturing facility, throw in some needed equipment -- all for around $5 million -- and we'll create up to 200 new jobs.
That was the pitch by a California businesswoman and her renewable energy company, Global Energy Solutions, to officials at the Indiana Economic Development Corp. and, ultimately, the city of Madison.
The company was searching for a site in Indiana -- and the purpose of the IEDC, which reports to the Indiana secretary of commerce, is to lure jobs to Indiana and often provide incentives.
IEDC officials did just that. They approved $1.5 million in tax credit and training incentives. They also began pressuring the city of Madison to act on the proposal -- and quickly.
"Secretary of Commerce Dan Hasler asked me to send the following message," an IEDC official emailed City Council President Laura Hodges. "If Madison is not going to take advantage of the job creation and investment opportunity being presented by Global Energy Solutions (and that's OK), don't further frustrate the company with delays. We do not want to lose this project for Indiana."
But if IEDC officials were concerned that Global Energy Solutions might move elsewhere, some in Madison had their own concerns.
And for good reason.
An Indianapolis Star investigation has uncovered numerous red flags regarding Global Energy Solutions and its president, Mynette Boykin -- red flags that experts say raise questions about the IEDC's due diligence on a project that would have cost local and regional taxpayers several million dollars:
Boykin claimed that another company of hers, Secured Capital Investment Group, would eventually commit $500,000 to the Indiana project, emails show. That company, however, forfeited its California business license in 2011 because it didn't pay more than $40,000 in taxes.
Boykin noted in her business plan that DC Solar Solutions would be "working in collaboration" with her on the project. When The Star contacted the owners of DC Solar Solutions, they said they never agreed to work with Boykin.
Boykin filed for bankruptcy in 2005 with $1 million in debts. In April of this year, a company filed suit against her for an unpaid $100,000 loan.
The Star shared Boykin's business plan with an industry expert, who called it "extremely amateurish" and questioned the validity and viability of the proposal.
The Star also determined that other parts of Boykin's plan are identical to a sample business plan posted on the website bplans.com. The sample plan was for a company that makes auto tools.
When presented with what The Star found, Boykin did not dispute the accuracy of the findings but said they portray her and her company unfairly.
She also said she and her fellow executives had changed their minds about Indiana. Certain people in Madison were "manipulating" the situation, she said, and her company didn't have time for it.
"We're not doing business in Indiana," Boykin said. "So you can print what you want."
The Star also shared its findings with the IEDC -- though Boykin said that wouldn't have been necessary.
Boykin told The Star she had given the IEDC her tax returns and information on her company's financials and business partners.
"They know everything about our business," Boykin said. "They've done their due diligence."
City Council members in Madison, however, said they were not aware of Boykin's issues in California until told by The Star.
The IEDC declined to discuss anything about Boykin or Global Energy Solutions.
"Out of respect for the companies we work with," IEDC spokeswoman Katelyn Hancock said in an emailed statement, "all of our discussions are confidential as to not jeopardize future negotiations or relationships with companies."
In general, however, the IEDC said it is the responsibility of local entities such as Madison to vet prospective businesses.
"Generally, it is a community's obligation to do their own due diligence," Hancock said. And until all local bodies are on board with a project, Hancock said, "there is nothing to do due diligence on."
Gov. Mitch Daniels' office praised the IEDC in an emailed statement. "The governor is extremely proud of the work IEDC has done to make Indiana one of the top states in the country for doing business," spokesman Jake Oakman said.
Boykin isn't the first California businessperson with financial baggage to come to Indiana with the promise of jobs, and with the IEDC's backing. Two weeks before the mayoral election in the fall, Bob Yanagihara stood next to Indianapolis Mayor Greg Ballard and Daniels at a news conference to pledge that his startup company would employ 1,100 Hoosiers. The Star found that Yanagihara had hundreds of thousands of dollars in unpaid tax liens, and several angry creditors back in California.
Julia Vaughn, policy director of Common Cause Indiana, said she found it "shocking" that the state again failed to ask some basic questions about the person proposing a new project.
"There seems to be this rush," Vaughn said, "to assume that everything out of these people's mouths is true."
IEDC officials' actions make them seem "like an agent for the company," Vaughn said.
In this case, IEDC officials' eagerness to grab a good headline may have gotten the better of them, said Morton Marcus, an economist who is the former head of Indiana University's Indiana Business Research Center.
You can see the incentives for the IEDC, Marcus said. Daniels has made a point of trying to lure California companies. Out-of-state businesspeople often want the state to act fast, and often speak to multiple states at once. Officials don't want to seem anti-business by turning companies away, so they don't have a lot of time for due diligence.
But that doesn't excuse the IEDC, he said, since it doesn't take too much time to look into a businessperson's past, or at least check references. "These are natural kinds of things that any bank would do."
Also troubling, Marcus said, is that a small town would likely expect the state to have checked out a business before promoting it to a community.
"No matter how sharp the local people are," Marcus said, "they're still going to believe the state is bringing them qualified candidates."
Vaughn agreed, though with a qualifier. She noted that it was actually a couple of people in Madison who raised the first questions -- not any of the development experts at the IEDC.
"Obviously," Vaughn said of the skeptical folks in Madison, "they were more sophisticated than some of the folks in Indianapolis."
Boykin first came to Madison in March, on a visit with an IEDC official, said Madison Mayor Damon Welch. He and a fellow Madison official showed her a PowerPoint about the city and took her to an industrial site. At the time, Welch was told she was visiting five or six cities in southeast Indiana.
"They wanted this company to be in Indiana," Welch said of the IEDC. "They made that clear from the beginning."
A few days later, Boykin came back and said she had settled on Madison. Welch was on board with the project.
Boykin promised that Global Energy Solutions would employ 35 people in its first year, 100 in its second and 200 in its fourth. She planned to do manufacturing, though, and she needed the city to build a manufacturing facility and maybe help her with some equipment. She estimated it would cost Madison $4 million or $5 million.
The IEDC helped out on that front. It asked the state's Office of Community and Rural Affairs to "invite" Madison to apply for a grant. OCRA said yes, offering $500,000 while deferring to the IEDC on due diligence, said David Terrell, OCRA's executive director.
Madison also asked for a $1 million grant from the city of Lawrenceburg, which disburses riverboat gambling revenues to 10 counties in southeastern Indiana. Lawrenceburg approved the grant -- also leaving the vetting up to the IEDC, said Grant Hughes, the city's redevelopment director.
Welch decided the rest of the money could come from a local tax-increment-financing fund. As for the 40,000-square-foot manufacturing facility, they settled on a six-acre piece of land at an empty industrial park north of downtown. The IEDC, meanwhile, had also approved $1.5 million in tax credit and training incentives for the project.
Still, the project needed approval from the Madison City Council. So Welch called for a series of "executive sessions" behind closed doors to discuss the project.
Several on the seven-member council were skittish about the project from the get-go. They also were uneasy with Boykin's presentation. The actual product she was planning to make seemed to change from session to session.
At first, it seemed as though she was simply going to be making parts of a generator. Then it appeared that was going to be one of several unspecified "other products." Then, at the last session, she talked about how her company was also going to make batteries.
So council members kept asking questions. And some thought the answers were inadequate.
By the last executive session May 21, it became clear the project lacked majority support on the council.
Regardless, IEDC official Wanda Heath was there, and she addressed the council for the first time. She sounded irritated. "You could tell she wasn't happy," said Councilman Darrell Henderson, a Democrat.
She also made it clear that she felt that Madison council members weren't doing their job properly.
"She said, 'You guys are moving way too slow; you're making Madison look bad; this process should never take this long; no business is ever going to come to Madison being treated like this,' " said Councilman Rick Berry, a Republican.
"I really thought that was out of order," another councilman, Republican Jim Lee, said.
Lee told The Star that in his 12-plus years as a councilman, he had never before seen a representative from the state at an executive session. He felt like he and the other council members were being talked down to.
Heath's comments to the council came on the same day that she sent council President Laura Hodges the email with the "message from Secretary of Commerce Dan Hasler."
Heath deferred comment on her role to Hancock, the IEDC spokeswoman. Hancock said the agency supports local communities "in whatever decisions they make" when a business project comes to town.
That's not the impression some council members got. "Absolutely they were vouching for her," Berry said.
Council members, though, didn't change their minds, and the next day, Boykin publicly announced she was backing out of Madison. But apparently not Indiana -- at least not yet. At that meeting, she said she had visited another community with Heath that day. "They're not so behind the times," Boykin said, "as this community is."
The IEDC would not comment on whether it continued talks with Boykin after she withdrew from Madison.
It was also by this time that others in Madison began to raise questions -- and contacted The Star.
Warren Auxier, a transparency advocate and head of the civic group Advance Madison Jefferson County, said that the day after Boykin pulled out of the city, he plugged her name into a federal court records database called Pacer. Up came a bankruptcy case from 2005, for which Boykin claimed $14,000 in assets and more than $1 million in debts. That's when Auxier emailed The Star.
Boykin told The Star that Global Energy Solutions was backed by a company in California that was expanding, and wanted to come to Indiana to establish a presence in the eastern part of the country.
She also said certain people in Madison were casting a bad light on her and her company, so she was looking elsewhere in the state.
Asked for greater detail about the product her company planned to make, and the number of employees it had, Boykin told The Star she didn't want to divulge that information because some of what the company made was confidential.
The next day, The Star obtained an email that Corey Murphy, the executive director of Madison's redevelopment commission, had sent City Council members. (Murphy declined to comment for this story.)
It contained a copy of Boykin's business plan, and in it he quotes from a Boykin email dated March 8 in which she details where her company will receive some of its funding. "Secured Capital Investment Group is committing to $500,000 in the year 2013," she says in the email.
Boykin also puts "Secured Capital Investment Group" in her email signature, and the email address on the cover of the business plan is tied to the company.
When The Star typed that company's name into the California secretary of state's "Business Search" website, it found that its business license had been forfeited.
Denise Azimi, spokeswoman for California's Franchise Tax Board, explained why: Secured Capital Investment Group had failed to pay more than $40,000 in taxes.
Boykin later declined to answer any questions about the company, other than to say, "I don't think they were even in California." The company was registered as a Nevada corporation, but Nevada revoked its business license, too. And Boykin is listed as the company's president on California secretary of state documents.
Global Energy Solutions' address, meanwhile, is listed on the business plan cover page as "4425C Treat Blvd., Suite 193," in Concord, Calif. That address is actually a UPS Store. A woman answering the phone at that store confirmed that there is no "Suite 193" or any other suites -- just mailboxes.
As for the business plan in general? The Star provided Sam Jaffe, a research manager at IDC Energy Insights, with a copy.
"If you were to take this business plan to a venture capitalist who knows the energy industry," Jaffe said, "you would be shown the door very quickly."
The business plan is "extremely amateurish," Jaffe said. "There are multiple spelling errors throughout it, and there's clearly no knowledge of the energy industry that shows up from that business plan, outside of the word energy in the title of their company."
Also, other parts -- whole paragraphs, in fact -- of Boykin's business plan are identical to those found on bplans.com, a website claiming to feature a library of more than 500 sample business plans.
For example, under "Mission," Boykin writes that her company will "provide the mid- to large-sized corporate market with new and exciting ways to cost effectively manage all external vendor and customer transactions, yielding continual savings for the users of our products and services." That matches the bplans.com company's "Mission" word for word.
Boykin said she had never heard of bplans.com, and didn't write the plan herself -- someone else in her company did, though she didn't know who. Her company uses business plan template software, she said, so maybe that's where the language in the plan came from.
Marcus, the economist, said the identical passages are "a sign that you're dealing with a person who is totally incompetent." He also said it's something the IEDC should have found.
"I'd take it as a sign of my own incompetence if I couldn't spot it."
But it was Boykin's mention of another renewable energy company "working in collaboration" with her that ultimately led to her company backing out of the state entirely.
In Boykin's March 8 email to Murphy, she writes that "DC Solar has committed to fund any costs associated with producing their product plus a small profit."
When contacted by The Star, Jeff Carpoff, president and CEO of DC Solar Solutions, said that according to his records, he met Boykin only two days before that. Over the following few days, they signed some nondisclosure agreements and kept talking.
"Basically," Carpoff said, "she wanted to contract-manufacture our solar generators there in Indiana."
But as he heard more, Carpoff said, Boykin's venture began to sound less plausible. The amount of money she was asking for didn't sound sustainable. "She had no idea what it was gonna cost to build our product," Carpoff said.
And yet Boykin wanted DC Solar to move quickly -- faster than Carpoff and his wife, Paulette, company owner and vice president, were willing to go. She also wanted them to come to Indiana for three days.
"I said, 'I need to do my due diligence before we do anything,' " Paulette Carpoff said. But with Boykin, she said, that proved difficult. "She couldn't provide me anything I asked for."
So, about two weeks after they first met, the Carpoffs told Boykin they weren't interested in working with her. Nonetheless, the Carpoffs said, Boykin came in soon after with a purchase order agreement and asked them to sign it -- so she could have something in hand to show to the state.
"Once again," Jeff Carpoff said, "we told her no."
On March 23, the Carpoffs told Boykin in writing that they were no longer interested in working with her. Save for a Boykin email in early April, they never heard from her again.
Two months later, the IEDC was still pressuring Madison to make a decision. It's unclear, however, whether IEDC officials knew about the DC Solar flap, or whether they did and didn't consider it consequential.
Within hours of The Star's call, the Carpoffs filed a cease-and-desist letter against Boykin.
The following day, Boykin called The Star. She said that when she sent out the initial business plan and March 8 email, she had been negotiating a contract with DC Solar. Negotiations fell through sometime in April, she said, and she told officials in Indiana that she had new business partners but had not updated her business plan.
Jeff Carpoff says talks never came close to any kind of contract negotiation. "I never committed to anything with her," he said.
The Carpoffs' cease-and-desist letter was the final straw for Boykin and her company in Indiana.
Boykin said she and the company's executives back in California held an emergency session. The letter was "causing a lot of drama," she said, and it was not worth the headache.
"In the next 12 months, we still need a location in the east coast," she said, "but it will not be in Indiana. . . .
"We will come to a different state. Probably right next to you guys."
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Information from: The Indianapolis Star, http://www.indystar.com
