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State officials on Thursday released results of a monthslong forensic audit of the Indiana Economic Development Corp. and some of its related entities.
The release comes just over a week after the IEDC board unanimously agreed to publicly share the audit—pending legal review—and roughly five months after it was ordered by Gov. Mike Braun and Commerce Secretary David Adams.
Braun and Adams announced they would seek an independent forensic audit in April, citing unspecified transparency concerns about the IEDC and its affiliates, which included the Indiana Economic Development Foundation, or IEDF, Elevate Ventures and the Applied Research Institute, among others.
At the same time, Adams announced the state would freeze all funds—federal and otherwise—related to Elevate Ventures, a nonprofit that invests state and federal money into startups on behalf of the state. The following month, the state announced it had hired Washington D.C.-based FTI Consulting Inc. to conduct the audit.
The Governor’s Office previously told IBJ that investigators did not find evidence of criminal wrongdoing.
In its executive summary, FTI said it identified “45 unique findings and observations related to (conflicts of interest), compliance, and financial oversight, including gaps in governance and inadequate policies and procedures.” The review period covered Jan. 1, 2022, through Dec. 31, 2024.
In an Oct. 1 memo to Braun regarding the audit report, Adams wrote: “The report underscores the importance of transparency and identifies areas where governance and oversight must be strengthened.”
What does the IEDC audit include?
In its 127-page report, FTI wrote that its areas of focus for the audit included evaluating sources and uses of state funds, assessments of governance and compliance practices, and understanding risks associated with conflicts of interest, related-party transactions and financial oversight.
The auditors’ report details findings related to five organizations: IEDC; IEDF; LEAP/IIP, LLC (associated with the creation of the LEAP Research and Innovation District in Lebanon—LEAP stands for Limitless Exploration/Advanced Pace); Elevate Ventures; and Applied Research Institute, or ARI.
The investigators conducted informational interviews with current and former staff of the entities in question, reviewed and analyzed financial data—including general ledger details, invoices and contracts—and policy and procedure documents such as conflict-of-interest and whistleblower policies.
“The presence of conflicts of interest, inadequate management, and insufficient controls raises concerns about the potential for favoritism and misuse of public funds,” FTI wrote. “As a result, reforms and process improvements are necessary to address these weaknesses and ensure that state funds are used in a transparent and accountable manner.”
What happens next?
In a written statement shared with IBJ, Braun said the report shows “a need for increased transparency and accountability for how taxpayer money is spent.”
“My focus is on solutions and we are implementing new internal policies and controls to ensure full transparency in the use of taxpayer dollars,” he said. “Indiana is a great place to do business and with these additional accountability and transparency measures in place, it is an even stronger place to live, work, and raise a family.”
The Governor’s Office did not specify what potential actions, if any, the administration plans to take to address the results of the investigation, beyond the steps detailed in a statement released following the Sept. 24 IEDC board meeting.
Braun’s office said some of the next steps included new IEDC board policies, new investment policies and a plan to wind down the Indiana Economic Development Foundation.
Moving forward, the Governor’s Office will also receive an appointment on Elevate Ventures’ board.
Commerce Secretary Adams reinforced these steps in his memo to Braun.
“These steps are not merely corrective,” Adams wrote. “They reflect a deliberate effort to protect taxpayer resources, restore confidence, and position Indiana’s economic development framework as a model of best practice. Our mission to attract investment, create opportunity, and grow prosperity is unwavering. By engaging fully with the recommendations of this review, we are ensuring that Indiana’s future economic development strategy is built on the highest standards of governance, accountability, and transparency.”
Timeline of major IEDC developments
Here are some major developments related to the IEDC and its affiliated entities this year:
- April 8: Gov. Braun signs an executive order calling out the Indiana Economic Development Foundation, or IEDF, for failing to file six years of required audited financial reports with the State Budget Committee. As part of the order, IEDF is required to produce its annual tax filings for the last 10 years, regardless of IRS exemptions.
- Approximately April 23: IEDF releases its annual tax forms.
- April 22: Following media reports regarding potential impropriety and transparency concerns at IEDC and related entities, Braun confirms to IBJ that he plans to arrange for an independent audit of the quasi-state agency.
- April 24: Braun and Commerce Secretary Adams formally announce their intent to seek an independent, forensic audit of the IEDC and its related entities following media reports of potential impropriety. At the same time, the state freezes funding related to Elevate Ventures.
- May 14: The state announces it has hired Washington, D.C.-based FTI Consulting to conduct the audit. \
- May 19: FTI begins audit process.
- June 23: Braun appoints nine members to the IEDC board, essentially dismantling and replacing its entire roster.
- Aug. 1: IEDC requests repayment of $17.2 million in loans to Elevate Ventures and its affiliates.
- Aug. 4: Elevate Ventures repays $12.9 million.
- Aug. 18: IEDC deems Elevate Ventures and its affiliates in breach of its active loans for failing to repay the full amount requested.
- Sept. 5: Jeff Blade, who had served as IEDC’s executive director for less than a year, departs the organization.
- Sept. 19: Applied Research Institute announces Andrew Kossack will succeed David Roberts as CEO. The nonprofit declines to provide a reason for Roberts’ departure.
- Sept. 24: The IEDC board votes to reinstate Elevate’s investment activities and to publicly release the results of the forensic audit, pending legal review. On the same day, the Governor’s Office announces it plans to “wind down” IEDF.
- Oct. 2: The audit is released.
The Indiana Capital Chronicle contributed.
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