An independent forensic audit of the Indiana Economic Development Corp. (IEDC) and affiliated organizations, conducted by FTI Consulting, has uncovered significant governance deficiencies, potential conflicts of interest, and questionable spending practices between 2022 and 2024. The review, commissioned by Governor Mike Braun’s administration, identified systemic issues including noncompliance with conflict-of-interest protocols, lack of transparency in financial oversight, and the use of no-bid contracts.
The audit scrutinized not only the IEDC but also related entities such as the Indiana Economic Development Foundation (IEDF), Elevate Ventures Inc., the LEAP project, and the Applied Research Institute (ARI). FTI’s $800,000 engagement spanned five months and was initiated following media reports questioning Elevate Ventures’ management of public funds. During the audit, the IEDC temporarily froze Elevate’s funding, though the board recently voted to restore its investment authority.
One major concern involved undisclosed conflicts among board members and employees. The report found 30 instances where IEDC personnel had potential conflicts with funded entities, yet only four were documented in meeting minutes and just one reported to the State Ethics Commission. A total of 52 agreements were made with these entities during the review period.
Particular scrutiny fell on Dave Roberts, former IEDC chief innovation officer and later CEO of ARI. Roberts did not obtain a required post-employment waiver after transitioning to ARI, and the audit noted that approximately 82% of his 2023 salary at ARI was tied to an IEDC contract awarded during his prior tenure. This raises concerns about compliance with state ethics rules. Additionally, ARI received $18.8 million from the IEDC across ten projects but spent only $11.7 million, leaving $7.1 million unaccounted for in project expenditures.
The IEDF, the IEDC’s private fundraising arm, drew criticism for its international travel spending. It spent $6.7 million on overseas trips, including a 2022 journey to Egypt’s COP27 summit where actual airfare costs exceeded the budget by over $110,000. Other expenses included $86,000 on luxury racing events, VIP airport services, stays at high-end hotels like the Four Seasons, and $167,000 for family members of state officials. One chartered flight to Saudi Arabia cost $75,000, with $36,000 reimbursed by the IEDC.
The LEAP project, aimed at developing an industrial district in Lebanon, Indiana, involved the creation of a shell company, IIP LLC, to anonymously acquire over 6,000 acres of land for $475 million. The IEDC also paid $191 million to external vendors, including $77 million to Pure, a firm appointed as owner’s representative without a competitive bidding process. The audit warned that sole-sourcing such large contracts undermines accountability and compliance standards.
Elevate Ventures, which managed $55 million in investments across 227 companies during the review period, faced criticism for insufficient reporting and transparency. Despite contractual obligations, it failed to provide regular financial statements for the 21 Fund. While Elevate maintains it acted lawfully and views the audit as exonerating, auditors found gaps in tracking investment returns and communication with the IEDC.
In response, Commerce Secretary David Adams emphasized the need for stronger governance and stated that conflict-of-interest checks are now standard procedure. ARI has since appointed new leadership and engaged outside counsel to revise its ethics policies.
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Undisclosed conflicts, contracts with donors, lavish travel: What the IEDC audit found
The audit of the Indiana Economic Development Corp. and related entities conducted by FTI Consulting found “the potential for favoritism and misuse of public funds.” n nKey issues included noncompliance with IEDC ‘s confidentiality and conflict of interest policies, no-bid contracts and more. n nThe audit observed that the Indiana Economic Development Foundation incurred frequent and high costs associated with international business travel. n n(This story has been updated to add information.) n nGov. Mike Braun ‘s administration unveiled the results of an audit into the Indiana Economic Development Corp., the quasi-governmental organization that drives economic strategy for Indiana, finding a “lack of transparency and accountability in the management of state funds” by third parties and raising concerns about “the potential for favoritism and misuse of public funds.” n nThe independent forensic review covered the period between 2022 and 2024 under Gov. Eric Holcomb ‘s administration and found dozens of potential conflicts of interest, compliance and financial oversight issues, and “gaps in governance and inadequate policies and procedures.” n nAs part of its $800,000 contract spanning five months of work, FTI Consulting looked at not only IEDC operations, but those of related entities such as the Indiana Economic Development Foundation, the LEAP project, Elevate Ventures Inc. and the Applied Research Institute. n nBraun ordered the independent forensic in audit in April, shortly after signing an executive order requiring financial disclosures from the IEDC ‘s private fundraising arm. The probe stemmed from concerns raised by Hannah News over the practices of a particular contractor of the IEDC, Elevate Ventures. The Braun administration froze this organization ‘s funds during the audit, but last week the IEDC board voted to allow Elevate to resume its investment activity. n nSome areas of concern outlined in the audit overlap with the findings in an IndyStar investigation in late September, which unveiled that a top executive at the IEDC was part of decisions to award millions in grant money to entities he or two of his business associates were involved in. n nIndyStar ‘s reporting pointed to a number of overlapping entities connected to those three men, known by some as the “Three Kings”: Dave Roberts, a former IEDC chief innovation officer who recently departed from the Applied Research Institute; Chad Pittman, president of the Purdue Research Foundation; and Paul Mitchell, leader of the Indy Autonomous Challenge. n nRoberts, though unnamed in the audit report, features heavily in it over concerns about unreported conflicts of interest. n nEntities examined in IndyStar’s recent investigation, including NineTwelve, Indy Innovation Challenge and Battery Innovation Center were among the top outside entities receiving money, according to the audit. n nCommerce Secretary David Adams said in a memo that the report “underscores the importance of transparency and identifies areas where governance and oversight must be strengthened.” n n“Conflict of interest checks with board members are now part of standard procedure, reinforcing both transparency and ethical safeguards,” Adams said. “We will continue to fully implement the recommendations from the report.” n nConflicts of interest n nThe audit found many potential conflicts of interest but little public disclosure of those conflicts. n nFor instance, it identified 30 entities in which an IEDC board member or employee had a potential conflict of interest and the entity received funding from the IEDC between 2022 and 2024, but only four of those conflicts were discussed in board or committee meeting minutes and only one was disclosed to the State Ethics Commission. n nThere were 52 agreements between the IEDC and these entities during the review period. n nThe audit specifically noted Roberts ‘ transition to ARI as one that “raises concerns.” n nIt noted, as did IndyStar, that Roberts did not obtain a post-employment waiver after leaving his position at the IEDC, and that a large contract was awarded to ARI during Roberts’ tenure at the IEDC. n n“Our review of information provided by ARI suggests that approximately 82% of the former IEDC CIO’s salary at ARI in 2023 is directly related to this specific IEDC contract, indicating a potential violation of post-employment restrictions,” according to the audit. n nThe audit found that the IEDC doesn’t perform active conflict checks on its commitments, and that its policies provided limited guidance on when conflicts should be elevated to the board. n nThere was also a “potential failure to report certain (conflicts) to the state ethics commission as required by state laws.” n nThe audit also noted potential conflicts of interest related to Elevate Ventures, finding five entities that received IEDC-sourced funds from Elevate ventures that presented a conflict with one or more of its employees. n nFoundation donations and spending n nThe audit found that it wasn’t uncommon for donors to the Indiana Economic Development Foundation to also be recipients of state and IEDC funding. n nOf the 107 entities making donations to the foundation, 46 received payments or tax credits from the IEDC during the review period worth more than $238 million, according to the audit. Meanwhile, donations to the IEDF during the period totaled about $6 million. n nThe foundation spent most of its money ― $6.7 million ― on international travel. The audit noted many of the international trips didn’t have budgets, but for those that did, there were wide variations between budgeted costs and actual costs. n nFor a 2022 trip to Egypt for the COP27 conference, the budget accounted for $90,000 in airfare costs, but actual credit card expenses were at least $200,000. n nThe audit noted expenses that appeared to be “excessive in nature.” The foundation paid more than $86,000 for international car race tickets and events in 2022, for example. n nIt also incurred expenses for VIP airport services and payments to luxury hotels such as the Four Seasons. About $167,000 was spent on international travel for family members of state officials. n nOne $75,000 chartered flight from Indiana to Saudi Arabia in 2024 was partially reimbursed by the IEDC to the tune of $36,000. n nAuditors observed a general pattern of international flight costs that were upwards of $5,000 or $10,000 per ticket, which it said indicated they were not booked within the recommended coach class. n nLEAP project n nThe audit delves into the genesis of the LEAP district in Lebanon and its creation of a single-member limited liability company, IIP LLC, which was wholly owned by the IEDC. n nThe company was formed, according to the audit, as a “cutout” to allow the state to purchase plots of land without disclosing to sellers or the public that the IEDC was the buyer. n nThe IEDC through IIP LLC bought more than 6,000 acres of land, costing $475 million, or about $75,000 per acre on average. n nThe audit found that the IEDC paid $191 million to outside vendors in connection with the LEAP project, including $77 million to Pure, which was IEDC’s owner’s representative to help the IEDC with due diligence. Most of those funds went to subcontractors, but more than $18 million went directly to Pure for their work. n nThe IEDC did not go through a competitive bidding process when they selected the company. n n“By sole sourcing large contracts like Pure, the IEDC doesn’t have the ability to ensure that vendors providing services directly to the IEDC are held to the organization’s compliance and ethical standards,” according to the audit. n nElevate Ventures n nQuestions raised about how Elevate Ventures was managing state money were partly what kicked off this audit, and auditors found that there wasn ‘t enough transparency and communication between the IEDC and Elevate to determine whether this money was used as intended. n nElevate Ventures, a venture capital firm and nonprofit, first partnered with the IEDC in 2011 to manage the 21 Fund, an investment fund meant to stimulate the high-tech economy in Indiana. Elevate was to encourage the development of investor groups and emerging companies to support Indiana’s economy. n nDuring the review period, Elevate invested $55 million in 227 companies. n nThe IEDC then decided to take $25 million of the investment returns from the 21 Fund and invest in a new fund that Elevate would also manage. The expectation, the audit notes, was that in addition to the state’s $25 million, Elevate would also find up to $200 million from private investors. This fundraising is currently on hold. n nAuditors found that there was limited communication between the IEDC and Elevate and not enough transparency into Elevate’s investments to ensure that state money was being used the way it was intended. For example, Elevate hasn’t provided the IEDC with the regular financial statements for the 21 Fund that their agreements require. The auditors also say that Elevate hasn’t adequately tracked the returns from their investments – though in response to this audit, Elevate has nearly completed a project reconciling all these returns. n nAdditionally in 2023 and 2024, two “Rally” conferences that IEDC helped fund ended up with cost overruns. n nElevate considers this audit as having “cleared” the company of wrongdoing, as it found no illegal activity. n n“We appreciate the thoroughness of this review and welcome its conclusions,” CEO Christopher Day said in a statement. “Our team has remained focused on building Indiana’s innovation economy, and we’re proud of the impact we’ve made. We look forward to continuing our work with entrepreneurs and communities across the state.” n nARI and Dave Roberts n nThe relationship between ARI and IEDC began in earnest with a $2.5 million grant signed at the end of 2022, which grew to $17.5 million in 2023. After that, ARI got eight additional IEDC grants during the audit’s review period, totaling $16.5 million. n nThe auditors couldn’t access the full scope of ARI’s financials due to “security requirements,” auditors note, since ARI works in the national defense space. n nOf the $7 million ARI spent on subcontractors and consultants on these projects, 40% went to Purdue Research Foundation and NineTwelve, both led by Chad Pittman. n nOverall, through its ten projects with the IEDC, ARI took in $18.8 million from the IEDC. However, ARI only spent about $11.7 million on these projects, leaving a difference of $7.1 million of seemingly unused funds. n n“ARI indicated that these are not considered ‘profits’ but are used to further ARI’s nonprofit mission,” the auditors noted. n nSpecifically on the $17.5 million grant, the auditors noted that the monthly progress reports did not shed much light on how the money was being used. n n“The agreement was drafted in broad terms and lacked detail regarding specific activities, subcontractors, or expenses attributable to the project.” n nIt also noted concern over the fixed-fee nature of the contract, rather than a reimbursement-based agreement, which it said could lead to “unclear costs and efforts.” n nARI did not have a specific process or system for submitting or organizing conflict-of-interest disclosures, the auditors found. The first time Roberts disclosed any of his conflicts of interest to ARI was in an “informal email” in September 2024, nearly two years after he became CEO, and he only mentioned the Battery Innovation Center. Meanwhile, auditors found that ARI made payments to two other entities Roberts was involved in, totaling $165,000: SportsTech HQ and Indy Innovation Challenge. n nIn response to these findings, ARI hired outside counsel to review its conflict-of-interest policies and promoted former General Counsel Andrew Kossack to be CEO. The auditors don’t explicitly say that the departure of Roberts as CEO was also a result of these findings, but simply that Kossack’s promotion “followed” Roberts’ departure. n nAfter the IEDC audit was released, Roberts told IndyStar he submitted all IEDC-required conflict of interest forms, and wasn ‘t involved in the drafting or approval of the contract between the IEDC and ARI. n n”I was assigned to each uncompensated nonprofit board by IEDC leadership, which were all predated and were open and conspicuous positions during my employment at ARI as well,” he said in the statement. n nThe IEDC has for years been the subject of scrutiny over how it conducts business, most notably in the public eye over its quietly buying up land in Boone County for the LEAP District, a large industrial park that then appeared to need a pipeline to ship in water from Tippecanoe County. State lawmakers often grill the IEDC on how it spends state dollars, which the agency can often obscure behind the sensitivity of competitive economic development deals. n nThis became a significant campaign issue during the Republican gubernatorial primary race in 2024, where Braun competed against a former IEDC head, Brad Chambers. n nBeyond the transparency concerns, the Braun administration also marks a significant shift in economic development strategy from that of Holcomb. Whereas Holcomb ‘s IEDC focused heavily on drawing large-company investments to Indiana, like data centers and battery plants, Braun wants to focus more on home-grown entrepreneurs. n nThis story may be updated. n nContact state government and politics reporter Kayla Dwyer at kdwyer@indystar.com or follow her on X @kayla_dwyer17. n nContact senior government accountability reporter Hayleigh Colombo at hcolombo@indystar.com.