BY KEITH BENMAN and PATRICK GUINANE, Times of Northwest Indiana Staff Writers
State and local officials are mostly professing ignorance of the criminal past of owners of a concrete block manufacturer that landed a hefty package of incentives and tax breaks to locate in Gary.
The city and state teamed up to offer IB&B LLC, owned by William Critser and Jean Critser, an incentives package of tax breaks, an $8.7 million low-interest loan and a $25,000 training grant.
At the time of the April groundbreaking at 2750 E. 5th Ave., Indiana Secretary of Commerce Michael Maurer praised IB&B's investment and said it reflected "growing confidence in the business climate in our state."
Nine years before, in June of 1997, William Critser had stood in federal court and pleaded guilty to using a phony billing scheme to bilk the operator of the Gary Sanitary Landfill with "ghost" shipments of clay.
He also admitted to failing to report business income on his 1991 tax returns. His ex-wife, Jean Critser, also pleaded guilty to failing to report income.
William Critser said last week he has put what happened a decade ago behind him, though it has been difficult.
"I've obviously been somewhat successful since then in dealing with contractors and customers," Critser said. "If they don't believe in your trustworthiness, they wouldn't do business with you."
When asked if his business partner, Jean Critser, wanted to comment, William Critser said his answers would suffice for both.
Today, Critser operates block and brick plants in South Bend and Michigan City.
Critser said no official involved with the incentives ever asked him directly about the felony issue. It only came up fairly late in the process in the form of a yes-or-no question on one application.
It is the application for an Indiana Economic Development Corp. training grant that contained that question. Four other applications Critser filled out for three other incentives contained no such question.
In fact, officials from the city of Gary and the Indiana Finance Authority, both of which provided incentives, said they were unaware of Critser's past when contacted by The Times.
The lack of background checks for IB&B's owners raises questions about efforts to revive Indiana's economy. IEDC alone has dished out $287 million in incentives since its formation 16 months ago.
"The question really gets down to ... in our society, more and more background checks are being done on everything from your credit to criminal history," said Jay Stewart, executive director of the Chicago-based Better Government Association. "And it would behoove the public sector to research those type of things, too."
A previous felony conviction shouldn't bar someone from government programs or employment, Stewart said. But if the past crimes involve defrauding the government, a red flag should go up.
"If you've committed a crime against the government, I don't know if you deserve a second bite of the apple," Stewart said.
When Indiana Finance Authority head Charles Schalliol was asked about the IB&B deal a week-and-half ago in Valparaiso, he said he knew nothing of the criminal past of the company's managers or owners.
Schalliol's agency issued $8.7 million in bonds so IB&B could obtain a low-interest bank loan. The application for the program contains no personal history questions.
The two applications William Critser filed with city of Gary departments to obtain the real property tax abatement also do not require any personal history statement from company owners.
That is something that should be required for future deals, even if it takes amending of the original legislation on tax abatements, according to the chairman of the city's economic development commission.
"We do not have access to that kind of information currently," commission chairman Bill Joiner said after being told Wednesday of the background of IB&B's owners. "Should we? Probably, with this information I know now, yes we should."
The IEDC offered IB&B the $25,000 training grant in January. But spokesman Weston Sedgwick said last week the agency has yet to receive IB&B's completed application.
Critser told the IEDC about his past convictions in March, after seeing the criminal history inquiry on the state application, Sedgwick said. Top agency officials, including Maurer and general counsel Nathan Feltman, reviewed the situation and decided the IEDC's offer would stand.
"They're creating jobs, they're investing in Northwest Indiana," Sedgwick said. "They've made mistakes, but they've made reparations for those mistakes."
The application for the $185,000 EDGE tax credit IB&B will get from IEDC contains no personal history questions.
William Critser's scheme to defraud the operator of the Gary Sanitary Landfill took place in the early 1990s. A bookkeeper for the landfill told the FBI that Critser's firm bilked the landfill operator for about $4,600 every two weeks by shorting clay deliveries.
The original indictment against Critser contained 16 counts and included racketeering charges. A dozen of those counts were also leveled against Jean Critser.
In 1997, William Critser was sentenced to one year in federal prison, fined $3,000 and ordered to pay the landfill operator $35,812. Jean Critser was sentenced to 6 months home detention and paid a $2,000 fine.
Gary's Department of Redevelopment, in response to a Times request, said it could not determine the dollar value of IB&B's abatement until the company improves the property and it is assessed.
But with IB&B planning millions of dollars in improvements, the abatement could be worth hundreds of thousands of dollars to the business over its 10-year life.
The IFA leaves due diligence on lending to banks that actually make the low-interest loans, according to Jennifer Alvey, IFA general counsel. The bank making the IB&B loan was aware of the felony history of William Critser and Jean Critser, Alvey said.
No taxpayer money is at risk in the deals, because it is the bank that is left holding the bag if the borrower defaults, Alvey said. The IFA bond issue is simply used to leverage that loan.
IB&B paid the IFA a fee for the work done on the bond issuance.
"They paid to do the job, and this creates 22 new jobs, which is what the deal is all about," Alvey said. "I'm not following what the concern is in issuing bonds on their behalf if they have past convictions."