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Wednesday, July 20, 2022
ERS Hides $96.75M of So-Called ‘Tech’ Investments--Losses Begin to Mount
By Andrew Walden @ 9:30 PM :: 3825 Views :: Ethics, Labor, Tax Credits

VLTA stock crashing....

by Andrew Walden

How many millions of public employee retirement dollars has the Hawaii Employee Retirement System lost to Hawaii high tech scams?

“The Hawaii innovation ecosystem has benefited greatly from these foundational investments made on behalf of the ERS,” Executive Director Thom Williams said in a 2020 news release.


But what has been the cost to Hawaii public employees' retirement funds?


Are ‘tech’ investments chosen due to political influence?

ERS refuses to provide answers to a June, 2022, Hawai’i Free Press UIPA request for a list of all ERS stock transactions via the ‘Hawaii Targeted Investment Program’ and record of any ERS purchases of stock ‘VLTA’ which crashed just months after its IPO and may be heading for bankruptcy.

Their justification? 

Refusing the UIPA request, ERS explains: “The Hawaii Targeted Investment Program (HiTIP) is an alternative investment vehicle for which the requested documents are exempt from disclosure by HRS 88-103.5(c), particularly subsection (c)(5).”    

HRS 88-103.5(c)(c)(5) comes from HB930, passed by Legislators and signed into law as Act 71 of 2021, by Governor Ige, ‘effective upon its approval,’ June 24, 2021.

Just over two months later--August 29, 2021--Hawaii high tech darling electric car charging company ‘Volta’ went public on the NY Stock Exchange under the symbol ‘VLTA’.  The stock soon peaked at $14.34 in early September, thus giving any hypothetical pump-n-dump frontrunners a chance to cash out their stock holdings before ERS’ VLTA shares crashed to $1.30 on June 30, 2022.

And the worst may be yet to come.

Motley Fool, May 18, 2022 reports:

Last week when Volta announced its quarterly numbers, it also said something shocking in a separate regulatory filing: Having prepared its financial statements as of March 31, management concluded "that there is substantial doubt about the company's ability to continue as a going concern in the next 12 months" given its financial standing. 

Que bono?

“The Hawaii innovation ecosystem has benefited greatly from these foundational investments made on behalf of the ERS,” Executive Director Thom Williams said in a 2020 news release.

Yes.  But at what cost to retirees?

Pacific Business News, September 2, 2021:

“Blue Startups originally invested $70,000 in Volta in 2013 and members of the Hawaii Angels invested over $700,000 between 2012 and 2016. ‘At current stock prices, these investments have increased in value by more than 10x,’ Farnsworth said….  Volta was trading at $8.94 per share at end-of-day (September 2, 2021).”

That would give them a $7M profit if they cashed out that day, but it was not the peak.  Were they riding a wave created by a politically-motivated investment of your retirement dollars?

Legislators were warned. 

In three pages of fact-packed testimony against HB930, UNITE HERE Local 5, April 5, 2021, pointed out, “Private equity general partners (GPs)…have manipulated the value of companies in their fund’s portfolio ... (and) inappropriately overvalued holdings.”

Did the ERS lose money helping Hawaii’s devilish ‘Angels’ make a buck?

According to Hawaii Business, January, 2011:

“Kamehameha Schools is an investor in Startup Capital (and) ERS is investing up to $25 million in VC funds that may include exposure to local portfolio companies through its Hawaii Targeted Investment Program (HiTIP).”

The Star-Advertiser, May 23, 2022, reveals:

“Hawaii received and invested $13.2 million in that first go-round entirely focused on venture capital investments. Among companies that received funding was the free electric vehicle charging station developer Volta Inc., which in August got listed on the New York Stock Exchange in a transaction that raised about $400 million for the company, in which the state owns some equity.”

Volta may not be ERS’ only bad HiTIP investment. 

As of September 30, 2021, the most recent date available, ERS ERS HiTIP Funds I, II, and III had commitments of $96.75M of ERS funds. All of these funds may be hidden from disclosure thanks to Act 71. 

Since 2013, ERS HiTIP Fund I has been carrying a $1.5M ‘paid in’ investment in something called ‘PHX Mack LLC.’  It was valued at only $241K June 30, 2014.  By December 31, 2014, its value was blanked out.  It remained blanked out until March 31, 2019 when it simply disappeared from the list of ERS HiTIP Fund I investments.  Then it reappears, immediately after the passage of Act 71, on the September 30, 2021 HiTIP Fund I list still valued at zero and with a notation: “PHX Mack LLC was written off as of 12/31/2018.” 

Is PHX Mack LLC now exempt from UIPA disclosure under Act 71--in spite of the fact that it was ‘written off’ before Act 71 came into effect?

Where will the next ERS ‘tech’ disaster come from?

Remember Act 215/221? HokuSopogyCode RebelMBloom?

Investments in HiTIP Fund II include local politically connected operations such as Blue Venture III ($500K committed) and Mana Up Capital Partners I ($2M committed). 

Local, politically connected, phony ‘tech entrepreneurs’ have been running the same scam over and over again for nearly two decades.  Taxpayer losses are in the billions.

Now they are grabbing for public employees’ retirement fund.

How much will retirees lose?


ACT 071 of 2021 / HB930: Text, Status

ERS HiTIP Investments 2014-2021

June 9, 2022: Volta Securities Fraud: Did Latest Hawaii High Tech Fail Take a Bite out of ERS?

2020: ERS Risks $75M of Your Retirement Fund on Hawaii High Tech Startups

2015: Auditor: DoTax allows $2B in Tax Credits Without Checking

2012: Audit: State Gave Away $1B Act 221 Tax Credits Without Verification of Eligibility


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