FOX19 NOW Investigates: Lawrenceburg gave away $100 million in g - Cincinnati News, FOX19-WXIX TV

FOX19 NOW Investigates: Lawrenceburg gave away $100 million in gambling grants

A FOX19 review of a decade's worth of gambling tax grants given out by the city of Lawrenceburg shows the southeastern Indiana town handed out $98 million taken from the casino there. (Photo: FOX19 NOW/Jody Barr) A FOX19 review of a decade's worth of gambling tax grants given out by the city of Lawrenceburg shows the southeastern Indiana town handed out $98 million taken from the casino there. (Photo: FOX19 NOW/Jody Barr)
LAWRENCEBURG, IN (FOX19) - A FOX19 review of a decade's worth of gambling tax grants given out by the city of Lawrenceburg shows the southeastern Indiana town handed out $98 million taken from the casino there. The money was aimed at economic development projects.

See the entire history of every grant applied for and awarded by clinking this link: http://bit.ly/1EUP3qB

The grant program started in 2006, but was stopped in 2013 after federal agents served multiple subpoenas on Lawrenceburg's city hall. Agents from the Federal Bureau of Investigation, the Internal Revenue Service and the state of Indiana asked for specific loans and grant applications and the records attached to them.

The subpoenas were served on the city on Dec. 20, 2012. Lawrenceburg's records show the feds wanted information on $23 million in loans and $76 million in grants. You can view the subpoena spreadsheet by clicking this link: http://bit.ly/1PbH7kg

As of this report, the federal investigation as not produced any indictments and FBI Special Agent Wendy Osborne told FOX19 by phone this week, “The FBI does not provide updates to any investigation ever. We have nothing to report at this time.”

WHERE THE GRANT PROGRAM'S STRUGGLING

Lawrenceburg leaders said from the beginning, the casino taxes would revolutionize the economy in southeastern Indiana. Our analysis of the grant records and results show payoffs on some projects, failures in others.

The major failures of the grant program center on green energy projects, like the $7 million lost to Carbon Motors'—William Santana Li's energy efficient, specialty-built police car project in Connersville. The spending was supposed to land 1300 jobs and create billions of dollars in economic impact to the Connersville area.

Connersville's mayor told FOX19, Carbon Motors never produced a single vehicle. The company is in bankruptcy court today.

Other failures deal with smaller amounts of money. Fox example:

Dobell House Project—Greendale:

In 2010, Lawrenceburg approved a $400,000 grant award to Greendale's Redevelopment Commission to fund a renovation of a historic home that belongs to Greendale Mayor Doug Hedrick and Greendale town attorney Richard Butler. The grant application was filled out by Tim Denning, a Lawrenceburg man.

The $400,000 went to turn the historic home into a restaurant. The home sits in an area targeted by the city for future development. The grant drastically increased the property value on the home.

After years of delays in opening the restaurant, named the Dobell House, it finally opened in 2013. The Dobell House was open for a few months before closing for business. It remains closed today and was sold last September at a tax sale after property taxes were not paid.

The Landing at River's Bend—Aurora:

Also in 2010, Lawrenceburg gave the city of Aurora a $350,000 grant to demolish a building on a property in town so a private developer could build condominiums at the intersection of Judiciary and Second Street.

This Google map image from 2008 shows the property two years before the grant:

This Google map image from 2009 shows the property one year before the grant:

This is a photograph we took of the site a few weeks ago. It took $350,000 to change the property from this image to this. The property is now in foreclosure.

Sears store relocation—Lawrenceburg:

In 2010, Lawrenceburg gave $100,000 to move a Sears store from Aurora to a strip mall in Lawrenceburg. The money went to renovate multiple storefronts in the mall to house the store. Sears stayed in that location for “about a year,” according to an employee before moving back to Aurora.

City records show the $200,000 was paid to then-Sears owner Chris Pruitt and John Anevski, but Lawrenceburg's economic development office only had two pages of records in the Sears file when we inspected the files in early March. Those records only show a part of the original grant application, which is handwritten and unsigned.

FOX19 places two separate calls to Pruitt and Anevski where both men denied ever cashing any of the grant checks from Lawrenceburg. Both also denied receiving any of the $200,000, although a visit to the Lawrenceburg strip mall shows renovations and signs on the door show it was once a Sears store.

A follow up visit to city hall on April 29 showed three separate payments to Anevski, not Pruitt. The file—in our follow up visit—also contained more invoices to support the work paid for through the grant.

Lawrenceburg Mayor Dennis Carr did not have any explanation as to why the city did not have complete records on the project, telling FOX19, “Maybe they didn't keep the records like they (previous administration) should have, but we've changed all that.”

D & S Machine—Aurora:

In 2010 and again in 2011, Lawrenceburg records show Dan Fugate's D & S Machine Products, Incorporated got $525,000 from the city's gambling grants. The 2010 $425,000 grant went to purchase machine tooling, mills, drills and machining equipment for the privately owned business.

In 2011, the company went back to Lawrenceburg and got another $100,000

On April 21, FOX19 visited the business and man who identified himself as “Eric” told us D & S Machine had gone out of business, Dan Fugate no longer owned the business and that it had been sold. The business is now known as “Legacy Machine Works” and a state business record search shows the new name was established as a limited liability company in 2012. The registered agent is listed as Kris Fugate.

Eric told FOX19 Fugate ran into financial troubles after receiving the grants because machining jobs with General Motors went unpaid. When asked where the equipment purchased with the tax dollars was, Eric pointed to a dark corner of the shop and said it was all still there.

When FOX19 asked to inspect and photograph the equipment, the man denied our request. We left a message to have Dan Fugate contact us regarding this report. As of this posting, we have not heard from Mr. Fugate or any representative of D & S Machine Products, Inc.

Jackson Hardware—Lawrenceburg:

In 2009, Lawrenceburg gave $50,000 in tax dollars to Jeff Bittner, the then-owner of Jackson Hardware, according to the grant records we obtained from the city. The store was struggling to stay in business when city leaders approved the grant in 2009, according to Lawrenceburg Economic Development Director Grant Hughes.

The Jackson Hardware file contained handwritten notes on former city manager Thomas Steidel's letterhead showing a $50,000 grant with a note indicating the purpose of the grant, “…to save Jackson Hardware.”

City records also show a taxpayer-backed loan of $350,000 to Jeff Bittner and Jackson Hardware. The records show the loan was approved on May 14, 2009 with $243,484.61 owed in repayment as of February.

I-74 Industrial Park—West Harrison:

In 2009, Lawrenceburg and Dearborn County's Redevelopment Commission decided to purchase 80 acres off Interstate 74 to build an industrial park. The project cost taxpayers $3 million.

Lawrenceburg and the county split the cost at $1.5 million each and started purchasing the property soon after agreeing to the deal in 2009. In the grant application, the county estimated the tax revenue from an operating park would produce up to $300 million dollars and has the potential to produce 3,000 jobs.

FOX19 visited the site on April 22 and only one of the parcels of the 80 acres had a business operating on it. That business is Whitewater Mill, LLC. The mill opened April 18.

One of the other parcels is posted for sale through a realty company and the other two are empty fields and not posted for sale.

Old Firehouse—Lawrenceburg:

When we visited Lawrenceburg city hall in March, we were denied access to the Old Firehouse file. In a subsequent request, the city made the entire file and spending records open to inspection. We are currently investigating that spending and preparing a future report on what we found in this grant.

GRANTEES STILL DOING BUSINESS

Most of the grants issued through the Lawrenceburg gambling tax fund were given to businesses still operating today. Some of those grantees include the following:

Hardintown Towing—Greendale:

In 2011, the city of Lawrenceburg granted a Greendale towing company $150,000 to purchase three two trucks. The city purchased the trucks to replace an aging two fleet at Hardintown Towing—a privately owned business.

The city purchased the following trucks:

-2006 Ford F650 Extended Cab Rollback: $48,438.92

-1994 GMC Top Kick Wrecker with Wheel Lift: $48,953.92

-2005 Chevrolet Chevron 408 Wrecker: $49,959.58

The purpose of the grant, according to the company's manager Melissa Leek, was to help the company get rid of a fleet that was taking profits in maintenance.

“I don't believe that we could have survived without the grant,” Leek told FOX19.

The Hardintown Towing grant was the only grant we could find in Lawrenceburg's records that went to any private towing business. A business search of towing companies in Greendale and Lawrenceburg shows 24 different companies offering towing services for the greater Lawrenceburg area.

“Other tow companies, they also had the ability to apply for the grant just like we did,” Leek said. “We had no special favors. We just did what we were allowed to do.”

Honda—Greensburg:

Connersville records show Lawrenceburg handed over $10 million in gambling tax grants to lure the Honda plant to Greensburg, Indiana. The plant started production in the fall of 2008 and despite a production cut one year later, the plant continues operating today.

Proximo/MGP Distillers—Greensburg:

Lawrenceburg granted more than a million dollars to both companies to distill and bottle whiskey on both sides of Highway 50 in Lawrenceburg. Today, both sites are still operating and generating a tax base for the city.

WHO'S GETTING THIS MONEY BACK

“We looked into some of it, probably not.”

That's how Lawrenceburg Mayor Dennis Carr answered a question about how the city can recover tax dollars spent on grant projects that did not succeed. The city handed out millions in tax grants to businesses and projects that did not perform as the original agreements dictated.

“We researched some of it. Some of it just may be bad business,” Carr said. The money, the mayor argued, is lost.

After the federal investigation started, Carr said his administration changed the rules governing how grants are awarded and who can get one. Instead of dealing with restaurants and small businesses, Carr said he's instead focusing on industrial grantees so the payoff would benefit a broader section of taxpayers.

As of this report, Carr said the Lawrenceburg grant program is out of business. “It's starting to wind down right now,” Carr told FOX19, “The boat's down—I mean—it's down almost 50 percent and our income's not coming in like it used to.”

“This program is probably going to go to the wayside,” Carr said. Carr also told FOX19 his administration went through every grant and found no fraud, waste or abuse. Discrepancies, Carr explained, we the result of “sloppy record keeping in the past.

WHERE WE GO NEXT

The City of Lawrenceburg was also active in handing out business loans to private businesses and citizens. We have obtained an accounting for part of those loans. We're currently investigating that lending and preparing a future report.

Related:

FOX19 NOW Investigates: Former IN governor on Carbon Motors failure ‘major disappointment' of governorship

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