Tax fraud, unpaid bills, and false claims: What Billings needs to know about the proposed oil refinery

Whoa whoa whoa.

I think our Yellowstone County Commissioners have gotten a little ahead of themselves with this proposed “clean energy” oil refinery. Today, Commissioners Ostlund, Reno and Kennedy rolled out the welcome mat to the executives from Quantum Energy.

“This clean technology has really got me excited,” Commissioner Ostlund said to the Billings Gazette this week. Then, today at the Commission meeting he asked the company what he could do to help. Well, I’d like to ask Commissioner Ostlund to help the public, instead of a practically defunct energy company, and do some research before he starts handing out tax breaks like we hand out candy at Halloween.

For now, I’m going to ignore the complete and utter disregard for the english language by Commissioner Ostlund and the Executives from Quantum Energy. But I’d like to invite them to look up the word “clean” in the dictionary. I’m going to ignore the fact that this company has done nothing substantial in the past and that they are currently not filing any company information with the Securities and Exchange Commission. I’m also going to ignore the fact that none of them seem to have ever been involved with the actual building or operation of an oil refinery. They are touting the new Dickinson refinery as if they are involved in it and they aren’t.  All of these issues deserve their own separate analysis.

What I’m not going to ignore is the lack of due diligence by our County Commissioners and folks over at Big Sky Economic Development. I do think the public would appreciate it if Commissioner Ostlund would stop tripping all over himself to roll out the red carpet and take a moment to research the company and the people that are proposing this development. He does get paid $86,000/year.

Who is Andrew J. Kacic, CEO of Quantum Energy?

It didn’t take me long (maybe an hour or two) to find that Mr. Andrew J. Kacic, formerly of Arizona, has a fairly extensive history of shady business dealings. You don’t have to take it directly from me or from jilted business partners. You can take it directly from court documents I found from Arizona from his divorce proceedings. He has numerous other civil cases listed in which he was the defendant, mostly it seems for not paying his bills, but the divorce proceedings cover a complex web of business dealings that you can read about below. If you want to know the details of how I found out he was the same person, the information is at the end of this blog.

I think it is important to emphasize that the divorce is irrelevant. In fact, Andrew J. Kacic is irrelevant. What is relevant is the lack of due diligence by our Yellowstone County Commissioners John Ostlund,  Jim Reno, Bill Kennedy and Steve Arveschoug, executive director of Big Sky Economic Development. From my research, it seems as if Mr. Kacic starts businesses, tries to find investors and then uses the company and a private non-profit “foundation” for his own personal piggy bank while actively trying to avoid taxes and creditors. But don’t take it from me, you can read all about for yourself. It reads like a real life version of Arrested Development. 

Here is one short excerpt from page 20:

“Husband operates his business interests through a maze of interrelated business entities, which appear to have business and tax avoidance purposes.” (Page 20 – Superior Court of Arizona, Maricopa County FN 2006-003798)

What I learned

If you don’t have time to go through the 39 pages yourself, I’ve put together a very quick summary of the court findings that I believe the Yellowstone County Commission should take into consideration. If you would like to read the entire document (and I encourage you to do so), you can download the document here: Andrew J. Kacic Divorce Proceeding FN 2006-003798. You can also find other court proceedings here.

The Court found that Mr. Kacic was not a credible witness to the proceeding and found him difficult and untrustworthy.

Tax Fraud, avoidance of creditors, willingness to lie and making false claims

The court found that Mr. Kacic was involved in apparent tax fraud in his personal income filings for the business entities operated by him. And that he ran substantial expenses through his businesses “falsely claiming them as business expenses.” (Page 3)

In addition, the Court also noted that Mr. Kacic “appears to hold personal assets in entities, for the purpose of creating confusion and creating the appearance of a right to deduct expenses.” He also  “engages in inter-entity accounting entries (many of which do not appear to be consistent) apparently to deprive taxing authorities of revenue due.” (Page 3)

The Court states in no uncertain terms that Kacic operates a web of businesses “designed to create barriers to creditors from pursuing Husband for claims.” (Page 20)

Mr. Kacic also formed a “charitable foundation” called the Sterling Foundation. It used to be registered in Arizona but the most recent address I could find is in Big Fork, Montana. The court found that “the evidence indicates Husband uses [Sterling Foundation], at will, as a source of personal funds for payment of his personal obligations whenever he deems it necessary to do so. In fact, Husband testified that Sterling Foundation had made only $2,000.00 worth of charitable contributions since its creation, but had been used to purchase vehicles and to make Husband’s payment of temporary attorneys’ fees to Wife.” (Page 31)

Although in the articles of incorporation for the non-profit status, the “Sterling Foundation “shall be operated exclusively for charitable, literary and educational purposes within the meaning of Section 501(c)(3) of the United States Internal Revenue Code of 1986.”

He also has a business called Kandy Limited Partnership. The Court found that Kacic uses Kandy Limited Partnership for “his personal purposes at will, without specific regard for the rights of other purported partners.” (Page 20)

Throughout the document, the Court states numerous times that Kacic was dishonest and showed a “willingness to lie” and make false claims. (Page 13, 14)