Stop ODOD Abuse

Leader settles lawsuit dispute with ODOD

Columbus (April 8, 2009) - Leader Technologies (Leader) and the Ohio Department of Development (ODOD) today reached a settlement of their long standing dispute regarding 2003 financing incentives and jobs. Leader wishes to thank its many supporters and shareholders whose emails, letters, faxes and telephone calls to ODOD and Governor Stickland for equitable treatment and fair resolution clearly made the difference. Leader also wishes to thank the new Interim Director of the ODOD, Mark Barbash, for breaking the logjams that had prevented earlier resolution. Mr. Barbash did not create these problems, but he certainly provided a steady hand in resolving them.

Staggering business interference revealed

During these negotiations, new revelations of substantial interference in Leader's business relationship with ODOD from 2005 to the present emerged from Leader's public records request. The extent of the interference is staggering; so much so that Leader shareholders' interests are best served by showing the extent of the interference. The interference was orchestrated by the former corporate legal counsel to the company, Benjamin S. Zacks, and carried out by a former consultant and shareholder, Edward B. Detwiler.

Mr. Zacks and Mr. Detwiler flagrantly abused the Ohio Public Records law to interfere in Leader's business under the ostensible guise of public records requests. Go to Edward B. Detwiler et al: A Case Study in Business Interference.

Thank you again to all those who cared enough to make a phone call, write a letter, send a fax or email on our behalf. You made the difference. (Our need for action continues with regard to Attorney Zacks and Mr. Detwiler as you will read in the blog linked above.)

Yours sincerely,

Michael T. McKibben
Chairman & Founder
Leader Technologies Incorporated
www.leader.com

ODOD abruptly responds to Leader public records request after earlier refusal; discloses destruction of Innovation Ohio records

COLUMBUS (February 18, 2009) - On December 9, 2008 Leader sent a public records request to ODOD Director Lee Fisher to determine if other Ohio small businesses were being similarly mistreated for having believed ODOD promises of Innovation Ohio Revolving Loan Fund ("Innovation Ohio") assistance. Former ODOD Director Bruce Johnson had promised Leader on March 24, 2003 a $5.2 million package of Innovation Ohio assistance which never materialized. ODOD has harassed and threatened Leader since 2005 to return a $250,000 412 Grant for failure to create the 159 Innovation Ohio jobs, without providing the promised Innovation Ohio funds to the company.

Within hours of Leader's submission of the public records request, ODOD Chief Legal Officer, Candace Jones, responded: "As we have responded previously to extensive record requests, it is unlikely that we have any additional information to provide to you." Leader has never submitted an "extensive record request."

In refusing Leader's records request pursuant to Ohio Sunshine Laws, ODOD was withholding potentially valuable information for Leader's defense against ODOD's unjust and unwarranted attacks, including a surprise ODOD garnishment attack in late January 2009 that included sending disruptive letters to nearly a dozen Leader customers, vendors and prospects; including Ohio secondary schools to whom Leader provides health and safety alerting services to parents in emergencies like lock downs, terror threats, violence and fires. ...

ODOD destroyed Innovation Ohio application files

Yesterday afternoon (February 17, 2008), Leader received a message from ODOD Deputy Chief Legal Officer, Robert Stempfer, the ODOD attorney at the center of this controversy, and Ms. Jones' subordinate. Interspersed in the legal jargon is a surprising revelation that Innovation Ohio records have been destroyed "...pursuant [sic] the department's records retention policies." Mr. Stempfer discloses that the "unapproved Innovation Ohio Loan application file" was destroyed.

Innovation Ohio has been the central subject of Leader's cries of foul for five years. Innovation Ohio was certainly the subject of ODOD's misapplication of 153 jobs to the 412 Grant, as well as misrepresentation of the jobs to the 2004 Ohio Legislature (p.24). Failed Innovation Ohio promises by ODOD have been a central complaint by Leader regarding ODOD's inequitable conduct, including its current garnishment lawsuit against Leader. We find it strange that ODOD would destroy evidence pertaining to legal efforts that it has both threatened and engaged in continuously since 2005.

ODOD agrees to settlement discussions; perhaps the 6th time is the charm

COLUMBUS (February 13, 2009) - Following a concerted campaign of public pressure from media interest, advocacy groups, mediation by Ohio Representative Kevin Bacon and Leader shareholders across the country to Ohio's elected officials, ODOD has finally agreed to meet Leader officials on Thursday, February 19, 2009. ODOD will be represented by newly-appointed Chief Development Officer, Mark Barbash, and Candace Jones, Chief Legal and Ethics Officer. Ohio Rep. Kevin Bacon has been graciously working to facilitate a round table business discussion between Leader officials and Mr. Barbash to find a resolution, but with this settlement discussion now set, he will not attend.

[For the record, we began requesting a meeting with ODOD Director Lee Fisher on December 1, 2008 under the assumption that he could be an honest broker, having not been Director for most of the period in question. However, all our requests for meetings with ODOD business officials to find an amicable resolution have been ignored, until now.]

[Saturday, January 14, 2009: It has come to our attention that ODOD officials are claiming that certain Leader facts are not correct, although they are not being specific. Our commitment to you is that if any of our facts are incorrect, we will admit it and disclose that information to you in subsequent posts. We will continue to post the actual documents, and have chosen not to post, yet, ODOD's convoluted legal agreements (i.e., 412 Grant, OITP, JCTC) upon which ODOD seems to be justifying its attacks. One in particular, a coerced, invalid Cognovit Note is being referenced. Their documents are as full of irreconcilable contradictions (Read 2nd Comment in The American Thinker post below) as everything else about this story of public-private business development "partnership". The facts can speak for themselves.]

This will be the sixth (yes 6th) attempt to settle, perhaps the sixth time will be a charm. Here is a chronology of settlement discussions and their results:

Settlement #1-2005 - ODOD and Leader agreed to let the whole issue drop. Result: ODOD and Leader agreed not to pursue 412 Grant claims against one another. Participating in that April 1, 2005 (see notes linked) agreement were then Chief Legal Counsel John Barron, and Deputy Chief Legal Counsel, Robert Stempfer. For 18 months Leader did not pursue claims and ODOD stopped any attempts to collect. We had a contractual agreement. The matter was resolved.

Settlement #2-2007 - ODOD hired the Ohio Attorney General to collect, breaching Settlement #1. Leader protested, but met with Robert Stempfer, ODOD Bureaucrat-in-Chief, and the Attorney General's representative to discuss settlement. Although Leader protested the liablity, we were asked to propose a modest amount in settlement. We proposed $20,000. The Attorney General's attorney seemed satisfied. Result: ODOD never provided the agreement to sign.

Settlement #3-2007 - ODOD hired a different attorney from the Ohio Attorney General's office to collect, breaching Settlements #1 and #2. Leader protested any liability, yet under pressure from disgraced former Attorney General Marc Dann's attorneys, agreed to start paying $100 per month against a reduced amount. Result: ODOD never provided the agreement to sign.

Settlement #4-2008 - ODOD Attorney Candace Jones is assigned to collect, breaching Settlements #1, #2 and #3. Leader again protested any liability, but pragmatically agreed to allow ODOD to review Leader's financials every six months to ascertain ability to pay, essentially deferring the action until Leader's cash flow was more conducive to a payback. Result: ODOD never provided the agreement to sign.

Settlement #5-2008 - ODOD hired outside counsel to collect, breaching Settlements #1, #2, #3 and #4. ODOD filed a garnishment action, locking up Leader's bank accounts, but more egregiously, sent disruptive garnishment letters to a dozen Leader school and commercial customers; disturbing vendors as well in the process. ODOD even sent letters to prospective customers (e.g., Delaware City Schools). All attempts to settle this action fall on deaf ODOD ears, including multiple communications with Robert Stempfer, who assured Leader it would get resolved. ODOD's next action after the lull waiting for Mr. Stempfer to act on his promise was garnishment. Leader asked ODOD to dismiss the legal action and to send comfort letters to its customers, vendors and prospects that ODOD was not in the business of disrupting Ohio entrepreneurial companies or their services, including school health and safety alerting, and Port Columbus emergency alerting services. ODOD refused. Result: Failed settlement. ODOD pursues collection action and Leader decides ODOD is disingenuous and is forced to appeal to the court of public opinion.

In communications with ODOD's Candace Jones over the last two days, it is quite apparent that she has never run a business and has no sense of how disruptive her actions are to Leader business and customers (Finance/Economics 101: markets do not like uncertainty). She indicated that she believed Leader bank accounts were not locked up. When we told her they were, despite her statutory theories, she sloughed it off as Leader posturing. She downplayed the impact of the disruptive garnishment letters being sent to customers and prospects. We believe she really doesn't understand the disruptive impact of heavy-handed ODOD actions on a company's market of prospects and customers. Be that as it may, we are supposed to have a meeting next week.

Which Department of Development will show up? The one that serves the companies, shareholders and employees it solicits to assist in job creation? Or, an unelected, unaccountable group of bureaucrats who work only for themselves? We'll keep you posted.

-- Mike McKibben

P.S. Waiting in the wings during this meeting will be the man who has caused all these problems, we believe, Robert Stempfer, Deputy Chief Legal Counsel. Mr. Stempfer has been Deputy Chief Legal Counsel at the ODOD in multiple administrations. Whatever agreement we reach most surely will have to be blessed by Mr. Stempfer.

While Leader supports America's safety and security, ODOD officials change Leader's project numbers

We believe Mr. Stempfer oversaw the preparation of then ODOD Director Bruce Johnson's April 30, 2004 ODOD Report to the Ohio Legislature (page 27) which reported erroneously that Leader would create 153 jobs on the strength of one small $250,000 equipment grant* ... April 30, 2004, the same day he also oversaw the issuance of a letter to Leader declining to provide the full $5.2 million in assistance promised by Bruce Johnson on March 24, 2003, the raison d'etre for Leader's interest in ODOD assistance to begin with, and the source of funds required to create the 153 jobs (the Leader number was 159 in its application (page 4). Bottom line: ODOD padded its report to the Ohio Legislature with Leader jobs projections the same day that it denied the funding that it had previously approved that would create those jobs.

Indeed, Bruce Johnson's 2004 report was manipulating Leader's numbers and ODOD's promises, both to Leader and to the 2004 Ohio Legislature. And ever since, totally unbeknownst to Leader, ODOD has been trying to orchestrate circumstances so that Leader, an Ohio small high technology business, while supporting America's safety and security with vital communications services (read about some of these efforts that we can talk about publicly at www.leader.com), is left holding the bag for ODOD's misrepresentations, mistakes and missteps. Read more on this below.

- Candace Jones bio.
- Ohio Department of Development contact sheet.
- Robert Stempfer link at the Ohio Bar Association

* More to come on the collateral impact of this erroneous reporting to the Ohio Legislature in 2004.

National Internet Publication The American Thinker Picks Up ODOD Abuse Story

A short piece featuring Leader's harassment by the ODOD appeared today in The American Thinker, under the title "Back to Mercantilism." We would like to thank the author, J. R. Dunn, for his thoughtful examination of the issues involved when a private business ("designed to act quickly for the purpose of making a profit" ) is "partnered" with a bureaucracy like the ODOD ("designed to stretch things out as long as possible while generating large amounts of paper.") We should also point out that while The American Thinker is a conservative internet publication, the problem with the ODOD transcends party affiliation: it began under a Republican administration and continues under a Democratic one. The entrenched bureaucrats in the ODOD do not change with the administration, and their chief loyalty seems to be to the bureaucracy. In that sense, the ODOD provides equal-opportunity harassment without regard to party affiliation.

-- Mike McKibben

Breaking News: ODOD presented false jobs report to 2004 Ohio Legislature - touted Leader jobs for which it had rejected funding the same day

By Michael T. McKibben, Chairman & Founder, Leader Technologies

COLUMBUS (February 10, 2009) - An important revelation has just surfaced that likely explains ODOD's legal attacks on Leader Technologies, a high technology company it once courted. ODOD essentially practiced a "bait and switch" when in 2003 it encouraged Leader to apply for $5.2 million in "Innovation Ohio" financing, elicited job creation projections (esp. see pages 4 and 5 of this link), puffed their 2004 jobs report to the Ohio Legislature with those numbers, then declined to provide the funds, aborted three separate good faith settlement agreements, and are now trying to sue Leader out of business to hide their misrepresentation to the Ohio legislature and their many lies to Leader.

On April 30, 2004, Bruce Johnson, then Director of the Ohio Department of Development, presented a 107-page job creation/retention report for 2003 to the Ohio Legislature. Page 27 of his report touted state assistance for Leader Technologies to create "153" jobs.*

Bruce Johnson's ODOD legislative report (likely prepared by the same bureaucrats who are attacking Leader now) included the three minor elements of the State-approved Leader application (May 23, 2003 - see ODOD Columbus Dispatch & Business First press announcements in the footnotes), but not the fourth major Innovation Ohio element - the raison d'etre for the whole effort. Two of the elements reported were non-cash credits on prospective future activities associated with new jobs, namely JCTC at $1,572,151 and OITP at $80,000. "JCTC" stands for "Job Creation Tax Credit" and "OITP" stands for "Ohio Investment in Training program". The third element in the report was a "412 Business Development Grant" for $250,000 which are the only actual funds Leader ever received. Glaringly absent from the report is the "Innovation Ohio Revolving Loan Fund" which was the basis for the 153 jobs in Leader's application. The proverbial rug was pulled out from under the feet of the Leader application. What happened to Innovation Ohio? Keep reading.

The Day ODOD misrepresented Leader's job projections to the Ohio Legislature

In response to a press inquiry today, Leader pulled the Innovation Ohio rejection letter from its files, and found what is believed to be the smoking gun: ODOD rejected Leader's application for Innovation Ohio funds on April 30, 2003, the same day Bruce Johnson told the Legislature that Leader would create these jobs regardless.

Innocent mistake? Typo? Or, misrepresentation? Judging from ODOD's relentless legal attacks since then, we believe they have had one goal: shut Leader up or shut us down by burying us in legal fees. Nobody can fight a state government in court. The irony here is that until this discovery of the smoking gun today, we had no idea why we had fallen out of favor, or why ODOD was acting so illogically.

What Leader could never understand was why ODOD did not just simply reset the number of jobs proportional to the funds actually provided. However, what they have done is unconscionable. They attacked Leader - a business that they courted with their programs. They circulated a story that Leader had promised to create 153 jobs with just the $250,000 grant, which is erroneous. Our application was for $5.2 million. These accusations have circulated since 2004, but we could never determine their source.

Now the clouds part and the picture is clear. ODOD misrepresented to the 2004 Ohio Legislature the nature of its financing commitment to Leader. ODOD included jobs figures in its report that it had no intention of funding.

When petty bureaucrats are not held accountable, we lose.

Please stand with us. Otherwise, these arbitrary actions by unelected, unaccountable bureaucrats could be directed at you next. Leader's shareholders, personnel and customers have been greatly harmed by an ODOD agency purportedly dedicated to "business development".

* * *

* Leader's $5.2 million Innovation Ohio application projected 159 jobs, not 153. However, somewhere along the way the number "153" started getting used by state officials inexplicably. However, the difference is not material to this matter. It is still a lot of jobs and certainly more than can be created with a meager $250,000 equipment grant.

Read here how ODOD touted Leader's 153 jobs in May 2003. The politicians got all the political mileage they wanted without ever providing the funds they promised. These articles were the result of the ODOD public relations machine:

Columbus Business First, May 23, 2003. Leader Technologies wins tax credit, plans 153 jobs

The Columbus Dispatch, May 23, 2003. Software maker Leader gets tax credit