Convicted embezzler awarded $9.1 million Mich. tax break arrested on parole violation

Convicted embezzler given Mich. tax break arrested

LANSING, Mich. — A convicted embezzler who snagged a $9.1 million business tax credit from the state this week was arrested Wednesday on a parole violation.

Michigan Department of corrections spokesman Russ Marlan confirmed that RASCO CEO Richard A. Short was arrested Wednesday afternoon by department investigators and the Michigan State Police.

Short, 57, shared the stage Tuesday with Gov. Jennifer Granholm as she as she introduced the leaders of companies awarded $55 million in tax credits. She said RASCO — short for Renewable and Sustainable Companies LLC — planned to invest $18.4 million to establish a new headquarters in Flint.

The company filed articles of organization with the state last June. In it, Short said the company was formed “to engage in any activity within the purposes for which a limited liability company may be formed” under Michigan law. No more detailed purpose was given.

The Michigan Economic Development Corp. was reviewing the RASCO credit and planned to issue a statement later Wednesday. The company hadn’t begun receiving the credit.

Corrections Department and state police records show Short was convicted in 2002 of embezzling money from Harding Energy Inc., of Norton Shores. The company fired Short after discovering he had fraud convictions in Oakland and Genesee counties.

Until his arrest Wednesday, Short had been on parole because he had not repaid $96,000 in restitution from his earlier fraud convictions, Marlan said. The Corrections Department is investigating if Short may have violated his parole by not telling his parole officer he was working.

“The fact that he’s getting a MEGA award and portraying himself as the CEO of a company … was not something he’d shared with us,” Marlan said. “If he is in fact the CEO of a company and is being paid, that is something we would want to be aware of because we would want to make sure we get some of that money for restitution.”

Short’s trip through the corrections system began when he was given probation in 2002 after pleading guilty to a 1998 fraud charge in Oakland County. He went to prison April 26, 2002, for violating probation, Marlan said.

Short was paroled in April 2004, only to be returned to prison the following February for violating his parole with additional fraudulent activities, Marlan said.

He was released on parole again in January 2007. His parole was recently extended to January 2011 because he hadn’t repaid the money he owes, Marlan said.

Short spoke briefly but eloquently Tuesday about how RASCO would improve the lives of poor people overseas by using renewable energy to provide electricity, clean drinking water, sanitation and Internet service to developing countries.

He did not return calls before his arrest.

In a statement issued late Wednesday afternoon, Granholm spokeswoman Liz Boyd said the MEDC has been directed to review its procedures and processes to ensure that no other tax credits are given to someone like Short.

“She is disappointed,” Boyd said of the governor. “The MEGA tax incentives have proven to be a great incentive for creating jobs, and it would be unfortunate if the program was in any way diminished by this incident.”

The tax credits are awarded by the Michigan Economic Growth Authority Board, whose members are appointed by the governor. It awards the credits based on the recommendation of the MEDC, a public-private organization that is separate from state government even though it is largely funded with state tax dollars. The MEDC is in charge of vetting the MEGA applications.

The tax credits are awarded over a period of years and can be claimed only if a company hires or holds onto a certain number of workers over a certain period.

In its application for the seven-year tax credit, RASCO said it planned to hire up to 765 people for research and development, engineering and assembly. The city of Flint was considering offering a 15-year tax abatement in support of the project, according to the MEDC.

State Rep. Tom McMillin was upset after learning of Short’s past when private investigator Patrick Clawson brought it up during a hearing Wednesday while testifying against a bill that would ban employers from checking job applicants’ credit ratings.

Clawson said it was unlikely a man whose business address is a Flint trailer park would be starting a multimillion-dollar company. McMillin said more transparency and accountability is needed to make sure MEDC doesn’t make a similar mistake in the future.

“The idea of giving financial incentives to someone convicted of a financial crime is completely ludicrous and beyond the pale,” the Rochester Hills Republican said. “The tax credit must be repealed immediately, and nothing like this should be allowed to happen again.”