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March 19, 2010

Tax credit recipient faces charges

LANSING (AP) -- The Michigan Senate will begin holding hearings next week to investigate past state tax credits after a convicted embezzler out on parole snagged one for his business.

State police arrested RASCO CEO Richard A. Short on Wednesday, a day after the 57-year-old shared the stage with Gov. Jennifer Granholm as she announced RASCO would get $9.1 million in tax credits for setting up its headquarters in Flint.

Short is being held in the Genesee County Jail. He was to be charged Thursday or today with violating the conditions of his parole, state Corrections spokesman Russ Marlan said Thursday.

"We did find some additional things of concern to us when we searched his home yesterday. So there may be some additional charges that come from that," Marlan added. He declined to say what was found.

If the parole board finds Short in violation, he could be returned to prison to complete the year remaining on his sentence or be placed back on parole, possibly with additional conditions such as a tether.

Short was convicted in 2002 of embezzling money from Harding Energy Inc. of Muskegon County's Norton Shores and sentenced to at least two years in prison. He also pleaded guilty in 2002 to earlier fraud charges in Oakland and Genesee counties, according to Corrections Department and state police records.

He was paroled in April 2004, but was returned to prison the following February for violating his parole with additional fraudulent activities, Marlan said. He has been out on parole since January 2007. His parole recently was extended to January 2011 because he hasn't repaid $96,000 he owes in restitution, Marlan said.

Short's ability to get a business tax credit for a company he apparently was running out of his home in a trailer park deeply embarrassed the state's economic development officials. His prison record and the fact that he's on parole easily is accessible on the Internet in the state's searchable offender tracking database.

Michigan Economic Development Corp. CEO Greg Main said economic development officials never conducted a background check on Short. They plan to do that on all company officers before handing out any future tax credits.

RASCO got the grant after saying it planned to improve the lives of poor people overseas by using renewable energy to provide electricity, clean drinking water, sanitation and telephone and Internet service. It hasn't begun receiving the tax credit.

Senate Majority Leader Mike Bishop said Thursday it's the Legislature's duty to look into what went wrong with the MEDC's screening process and how it can be fixed.

Although the MEDC now plans to ask applicants if they have a felony conviction, Bishop said it also should require the application document be an affidavit that requires a sworn statement. He supports doing background checks if the applicants are startup companies rather than established corporations such as General Motors Co. and Dow Chemical Co.

"With these huge tax credits, I don't know how it's possible that we weren't doing this," he said.

The Rochester Republican appointed two committees Thursday to look into the matter. The Senate Commerce and Tourism Committee will begin hearings next Wednesday, said Chairman Jason Allen, R-Traverse City. He plans to ask Main to give an overview of safeguards that are in place to make sure no one like Short slips through again.

Democratic Sen. John Gleason, of Flushing, said the hearings should focus on fixing what went wrong, not on blaming the Granholm administration.

"In this troubling time, let's stand for Michigan," he said. "Let's not stand against any particular administration or any particular person, but let's make sure we do better in the future."

A House committee next week will hear testimony on legislation that would require background checks for those receiving tax credits or other contracts with the state.

"I don't know how you get that far down without having done this basic blocking and tackling," Democratic House Speaker Andy Dillon of Wayne County's Redford Township said of the RASCO case.

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