A convicted embezzler who snagged a $9.1 million business tax credit from the state of Michigan was arrested Wednesday on a parole violation, a day after he appeared on stage with Gov. Jennifer Granholm as she announced the credits.
RASCO CEO Richard A. Short, 57, was arrested by Department of Corrections officers and state police, Corrections Department spokesman Russ Marlan said.
Authorities say they arrested Short after realizing the company CEO he may have violated his parole by not informing the Corrections Department he had a job. Short owes $96,000 in restitution from fraud convictions, money he should be paying if he's working, Marlan said.
Short shared the stage Tuesday with Gov. Jennifer Granholm 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 company hasn't begun receiving the credit.
The Michigan Economic Development Corp. said in a statement Wednesday that it was "embarrassed" by the slip-up and would perform a background check of all company officers before handing out any future tax credits.
The state's economic development arm requires applicants to disclose current, pending or expected legal action that may affect a company's ability to meet its obligations under the tax credit agreement. It said it will now will ask specifically for applicants to disclose any prior felony convictions by senior company executives.
Short was convicted in 2002 of embezzling money from Harding Energy Inc., of Norton Shores and was sentenced to at least two years in prison. He also pleaded guilty in 2002 to an earlier fraud charge in Oakland County, according to Corrections Department and state police records.
Short was paroled in April 2004, but was 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.
"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," Marlan said.
Short did not respond to phone messages left Wednesday before his arrest.
He 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.
In a statement issued late Wednesday afternoon, Granholm spokeswoman Liz Boyd said the MEDC has been directed to review its procedures so that future tax credits aren't 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.
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, but has dropped that idea.
