Nearly $500,000 in Indiana venture capital funds wound up going to a startup business headed by the very man whose firm had been hired by Indiana to manage the venture capital fund.
Even worse: The money originally came from the federal government.
Indiana is now faced with having to repay the feds after an inspector general's audit found an "intentional misuse" of the money, according to the Indianapolis Star.
Elevate Ventures was hired by the state to manage millions of dollars in venture capital funds, which had come from federal dollars. The small business went on to give $500,000 to startup business Smarter Remarketer.
Smarter Remarketer's CEO was Howard Bates, a Republican campaign donor in the Hoosier State. He had previously been the head of Elevate Ventures and had remained as Elevate's chairman, according to the IG audit and the newspaper's report.
Elevate steered a total of $800,000 to businesses involving Bates and his son, an investigation by the Star said, sparking the audit.
The money was originally given through the federal State Small Business Credit Initiative, meant for "economic development," according to the article.
The U.S. Treasury plans on getting the cash back by withholding money from future payments to Indiana, according to the Star.
"The inspector general also recommended the U.S. Treasury's State Small Business Credit Initiative determine whether Indiana's funding should be reduced, suspended or terminated and that the Indiana Economic Development Corp. review every investment decision by Elevate Ventures going forward," the Indianapolis Star reported.
Also noted by the IG: Indiana and the initiative disagreed on whether the money was purposely misused.