Missouri official on paid leave during tax credit investigation

Thursday, December 4, 2003

JEFFERSON CITY, Mo. (AP) -- An official in the state Economic Development Department has been placed on paid administrative leave while the state investigates his role in overseeing a tax credit program.

Sean Burge, the agency's business incentives coordinator, has been on leave since Nov. 25, the day after a legislative committee heard testimony on alleged misuse of the program Burge ran for two years, the St. Louis Post-Dispatch reported Thursday.

Department spokesman Jim Grebing described the leave as "standard procedure."

"It's by no means meant to single him out as a fall guy or to say that any conclusion has been made that he alone is responsible," Grebing said. "That's still to be determined."

The program, Rebuilding Communities, is intended to attract high-tech companies to poor areas. The state offers tax credits equal to 40 percent of a company's costs for equipment such as computers or medical laboratory devices. The program applies to businesses with fewer than 100 employees that locate in "distressed communities" -- a fairly broad distinction that includes the entire city of St. Louis, 179 other Missouri towns and certain neighborhoods in scores of other cities.

The Post-Dispatch reported last month that a dozen companies got $2 million worth of tax credits in the last three years by claiming to have bought millions of dollars worth of equipment, much of it from a used computer store in St. Louis. Most of the businesses are closed and never provided any jobs.

Rick Russell, of Steelville, has said the owner of the used computer store, Electronics & More, offered to help him fake a computer purchase to claim tax credits.

Russell said under the plan, he would have written the store a check for at least $187,000, even though he had only $50 in his account. The store would have held the check. Russell would have submitted a copy of it to the state, which would have given him $75,000 in tax credits.

Instead, Russell reported the incident to Burge last May. He contacted the Post-Dispatch this fall and testified before the Joint Committee on Tax Policy last week.

Russell said Burge suggested that he buy his equipment from Electronics & More. That allegation played a role in the decision to place Burge on leave, Grebing said Wednesday.

"There were some inferences in the testimony that some wrongdoing might have occurred, as well as some mistakes," Grebing said.

Burge said in an interview last month that he never recommended particular computer vendors.

Burge was fresh out of Westminster College in Fulton when he got the state job, which included handling about eight incentive programs. They ranged from tax credits for filmmakers to tax breaks for mutual fund companies.

In September, he got a raise and switched jobs. In his new role, he was working with tax credits for historic buildings and environmentally damaged property.

Joe Driskill, the department's director, assured legislators in a letter dated Tuesday the department aggressively pursued the fraud allegations made by Russell. The agency referred the matter to the attorney general, who is investigating.

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