More Troubling Questions And Mystery About Litebox Founder

The Star has a pair of stories in its Sunday edition that raise more doubts and mystery about the founder of Litebox, a company to which Gov. Mitch Daniels and Mayor Greg Ballard have promised state and local economic development incentives for relocating its headquarters and building a manufacturing plant on Indianapolis' northwest side that will mass produce mobile, drive-in movie theaters. The first story builds on earlier reports by the Star detailing the checkered past of the founder, Bob Yanagihira, who it found had been sued by several creditor and had hundreds of thousands of dollars in unpaid taxes and judgment liens. Yanagahira refused to answer the Star's questions according to the story.

In the days following that news conference, The Indianapolis Star revealed that Yanagihara had not fully repaid hundreds of thousands of dollars in liens, including several for unpaid state and federal taxes.

But further investigation by The Star has found a litany of angry creditors in California, including some who claim he misled them about his intentions with their money.

That is particularly so with the Westwind real estate development, in the mid-2000s.

The Star has attempted multiple times to get Yanagihara's response to the various allegations. At Yanagihara's request, The Star emailed him a list of questions about the Westwind development and other business dealings.

He initially did not reply. When The Star followed up a week later, he emailed a picture of a sign from the baggage claim at Indianapolis International Airport.

"Welcome to Indianapolis," the sign says. Yanagihara offered no other response.

According to the story, Yanagihira convinced his girlfriend to invest her life savings, $200,000, in the Westwind real estate project. She later learned that he was married and had a child with another woman. She never saw her money or him again. Charlene DeLuca won a $233,000 judgment against Yanagihira in 2007 and has never received a dime of her money back. Another investor had a similar experience with Yanagihira and lost $125,000. A prominent home builder associated with the real estate deal decided to stop doing business with Yanagihira after running a background check on him, determining "that he was more talk than reality." The problems don't end there though:

The Star found a number of other troubling instances in Yanigahara's past, including:

Etile Inc., a company with Yanagihara's name attached to it, is listed with the California secretary of state as under suspension and is barred from doing business there. State officials said the company never submitted a tax return and never filed a required statement of information.

The state of California suspended and then revoked, in 2003, the contractors license for Creative Environments Inc. -- listed at the same Los Angeles address as Etile and another company run by Yanagihara. According to state officials, Creative Environments never paid a $1,000 citation that was issued when the company asked a customer for a down payment larger than allowed under California law.

The California Contractors State License Board cited Yanagihara in 2008 for contracting without a license. State officials said the fine never has been paid back.

Beyond his troubles with the state, there is a list of people who told The Star that Yanigahara either bailed on projects after receiving money, bounced checks or had to be evicted for not paying rent.

The Star's findings of Yanagihira's background make the newspaper's skepticism of him well-founded. IBJ publisher Mickey Mauer, a prominent Indianapolis businessman and philanthropist, however, penned a column critical of the Star's reporting. Maurer based his criticism on what he said he had learned from Litebox's principal investor, Alexander Capello, of Capello Group, Inc., the only other person known to be involved with Litebox. As Maurer noted in his column, Capello's investment firm has been associated with many successful business projects, which only adds further mystery and intrigue to the proposed Litebox project. The second Litebox story in today's Star explores Capello's involvement.

Alexander L. Cappello, managing director of Cappello Group Inc., told The Star he has known Yanagihara for years and is a stockholder in Litebox. He also is a director of RAND Corp.'s Center for Middle East Public Policy and The Cheesecake Factory Inc. and formerly served on the University of Southern California's board of trustees.

He expressed confidence in Litebox, which envisions building a 125,000-square-foot factory on a vacant lot at 84th Street and Bearing Drive, and said there is no shortage of investors for the company nor demand for its product.

Los Angeles-based Cappello said he stepped out from his behind-the-scenes role after Yanagihara's actions prompted questions about the legitimacy of the Litebox project. He said there are several new developments with the project, including work on a prototype of the product -- 20-by-33-foot mobile screens mounted on semitrailer trucks -- and a pending order for 100 of the mobile screens.
"I think we kind of shot ourselves in the foot by how Bobby handled things in the beginning," Cappello said. "I'll do my best to try to improve the situation."
Cappello said that while Yanagihara has come to him with other projects in the past, this is his first formal involvement in one of Yanagihara's ventures. The two men are so far the only members of the Litebox board.
"I've known him to be an honest, decent guy," Cappello said of Yanagihara. "He's even told me he's had some things that have gotten him in trouble in the past, but I'm not aware of any criminal activity."

This is where the story takes an odd twist. One of the chief complaints has been the inability of anyone to confirm Litebox's existence through its registration with the states where it does business despite its claims that it already employs dozens of people in California and Minnesota. Capello vouches for Yanagihira's claims that the company employs more than 60 people, most of whom are working in Minnesota, but he refused to provide the Star with the name of the company under which it is doing business or the location of its Minnesota facilities. It did find, however, a company that has done business with the firm.

Minnesota officials say they have no records of Litebox having any employees in the state. If there were, the company would have to be registered with the state Department of Revenue -- which it isn't.

That said, Gary Stoks, owner of the Porter, Minn., company SMI & Hydraulics, confirmed that his company has done manufacturing work for Litebox, though he would not say what that work involved.

Stoks also confirmed Litebox is negotiating a bigger deal with his company. Nothing has been finalized, Stoks said, but "it looks good."

Capello also could not clear up questions about Litebox's supposed partnership with Bose and Panasonic. Bose officials deny any business relationship with Litebox and Panasonic officials did not return the Star's calls asking for comment. Capello insists the company has met with Panasonic and has its permission to use its name. The most intriguing item in the story is this claim by Capello:

"Bobby is negotiating a deal right now with all kinds of events and people who want to do their own broadcast, their own movies, fundraisers, for profit, nonprofit," he said. "One customer we have actually wants 100, and it's actually outside the United States, and the government of that country wants to acquire the 100 trucks."

He did not identify the country.

He said investors also have shown interest in the project and that he has seen documentation showing that investors have committed to "more than half" of the $21 million Yanagihara predicted would be invested in the project.

Did you catch that? The government of a foreign country is seeking to purchase 100 trucks equipped with Litebox's product. In one of my previous posts, I jokingly suggested the only potential large purchaser of the product would be the government seeking to purchase the product for use at concentration camps for re-education purposes like a scene straight out of the cold war movie from the 1980s, "Red Dawn." That thought came to mind, in part, because of Capello's association with the Young Presidents Organization, which was founded by the CIA back in the 1950s. Capello formerly served as the company's international president. The Star story also indicates Capello is a director of the RAND Corporation's Center for Middle East Public Policy. It just so happens that the RAND Corporation, a nonprofit global think tank which also has deep ties to the CIA, has been tied to the CIA's controversial interrogation techniques as part of the American government's war on terrorism. Check out this story from The Public Record entitled, "Who will investigate CIA/RAND/APA Torture Workshp?". The story by Jeffrey Kaye begins:

Back in May 2007, while researching the activities of the American Psychological Association (APA) in support of the U.S. government’s interrogation program, I came across evidence that the APA had engaged in a discussion of torture techniques during a workshop organized by APA and the RAND Corporation, “with generous funding from the Central Intelligence Agency (CIA).”

The workshop was held at the Arlington, Virginia, headquarters of the privately-held but long linked-to-the-government RAND think tank. APA Director of Science Geoff Mumford acted as liaison to the CIA for the meeting. Susan Brandon, a key APA “Senior Scientist”, and former member of the Bush White House’s Office of Science & Technology Policy, helped organize the affair, along with psychologist Kirk Hubbard, who was then Chief of the Research & Analysis Branch, Operational Assessment Division of the CIA.

The workshop was titled the "Science of Deception: Integration of Practice and Theory", and it discussed new ways to utilize drugs and sensory bombardment techniques to break down interrogatees. Those are signal techniques of psychological torture long utilized by the CIA and other intelligence agencies and military around the world.

Wow, let your imagination run wild on this one. Incidentally, Litebox has still not registered to do business with the Indiana Secretary of State according to the business services division's website despite Yanagihira's claim that the company has already leased space at a downtown Indianapolis office building and has taken out permits to remodel the space into its company's new headquarters. Litebox's Facebook site claims Indiana-based Cummins' power generators will be used to power its Litebox product.

Maurer Vouches For Litebox And Its CEO

Michael "Mickey" Maurer

Mickey Maurer, publisher/owner of the Indianapolis Business Journal and former economic development head for Gov. Mitch Daniels uses the editorial page of his weekly business paper to vouch for the credibility of Litebox and its unlikely business visionary, Bob Yanagihira, and to criticize those who have questioned Yanagihira's credibility. Maurer begins his column entitled, "Ideas worth testing when risk is nil," by quoting Ira Gershwin: "They all laughed at Christopher Columbus when he said the world was round . . . It's the same old cry." Maurer seems to forget or ignore that it was one of his own distinguished business reporters, Cory Schouten, who first questioned the Litebox deal, in taking to task those who questioned the project. Maurer says of the critics:

The Indianapolis Star and some pundits decried the event as either politically motivated or evidence that our leaders were duped. The reasoning goes that the announcement was ill-timed just before the mayoral election and if Litebox had been vetted by state and local authorities, they would not have promised incentives upon learning that Yanagihira left a trail of tax liens, at least one disgrunted investor and other evidence of failed business ventures. I disagree on both premises.

Despite probing by Indianapolis media, Yanagihira refused to say who was providing the financial backing for his ambitious plans to roll out the mobile, high tech, drive-in movie theater he envisions. At first he told reporters at the press conference called by Gov. Daniels and Mayor Ballard to announce plans to build a manufacturing facility on the city's northwest side that would employ more than 1,000 workers that he had several "well-heeled investors," but he later told reporters at the same press conference that it was just him financing the project. While Daniels called Yanagihira's plan "visionary" in defending the state's endorsement of his project, the Star learned that several other companies were already making a nearly identical product, all of which could be purchased for less than the investment Yanagihira was promising to make in Litebox.

Maurer first argues that there is "no measurable downside to offering state and local incentives to Litebox . . . no jobs, no money." Apparently, Maurer hasn't been keeping tabs on the excellent investigative series undertaken by WTHR's Bob Segal that found a high percentage of the job announcements made by the agency he formerly ran never produced a job and, contrary to his claim, public monies have been lost on at least some of these failed job announcements.

Maurer has also apparently been made privy to  information about Yanagihira's financial backers, something the quixotic entrepreneur refused to give up to probing reporters.

Alexander L. Cappello, chairman of the board at investment bank Cappello Corp., believes Yanagihira is a good bet--a best his company has made. Capello makes a lot of good bets. He heads a global merchant bank whose principals have conducted more than $100 billion in transactions, including California Republic Bank, Geothermal Resources International and the Cheesecake Factory. He is a former member of the board of trustees of University of Southern California and is an active member of the World Presidents Organization.

Actually, Maurer got the name of that last organization wrong. It's the Young Presidents Organization and Cappello formerly served as its international chairman. It's the same organization for which former President George W. Bush recently helped raise money at a private reception hosted at the Carmel mansion of Lucas Oil founder and CEO, Forrest Lucas. The organization was created with the backing of the CIA back in the 1950s to introduce young leaders in foreign countries for the purpose of opening export-import talks and franchising discussions.

According to Maurer, Cappello claims he has known Yanagihira for 15 years and describes him as a "brilliant, creative and lovable entrepreneur--a real nice guy." Cappello claims Litebox's technology is new, and there is a big demand for the product: "trucks outfitted with giant video screens that workers will manufacture as fast as they can." It's not new technology, and unless the federal government is planning to purchase a whole bunch of them to use to reprogram the minds of Americans to be imprisoned at future concentration camps in a scene straight out "Red Dawn," there's not going to be any big rush to purchase this existing technology.

I will give Maurer credit for his honesty. "Would I invest any money in his company?," Maurer asks. "Hell, no--not a farthing." I'm betting his National Bank of Indianapolis wouldn't lend a dime to Yanagihira either. If it's your money, however, Maurer could seem to care less. "If the government had to make a bet on the success or failure of every entrepreneur who has an idea and wants to create jobs in Indiana, we wouldn't have nearly the triumphs of job creation that we've enjoyed in Indiana the last few years," Maurer claims. Sorry, Mickey, you've got it all wrong. Or perhaps you've just given up on the free enterprise system and believe it's now the job of government to pick winners and losers in the business world. It's a pretty sad state of affairs when someone who has enjoyed the kind of business success Maurer has enjoyed without help from the government now believes government plays a necessary role in creating jobs by picking and choosing whose business ideas get the stamp of approval from big brother government.

Litebox CEO Says He's Making Good On Job Promises

Litebox CEO Bob Yanagihira

According to a post on Litebox, Inc.'s Facebook site, the company has begun the process of remodeling office space in downtown Indianapolis at 146 E. Washington Street for its new corporate headquarters. A post today reads:

"LiTEBOX has hired the contractors to renovate our 1st office in Indianapolis. Construction will begin on Thursday Nov.3rd, 2011. 7 days after the I told them I would be creating JOBS. I am humble, aware and on a mission !"

The company's CEO, Bob Yanagihira, posted this picture in front of the downtown building where the company plans to relocate its corporate headquarters. Yanagihira has promised to build a production facility on the city's northwest side where it will manufacture what has been described as mobile drive-in movie theaters.  

Litebox Nightmare

Star editorial cartoonist Gary Varvel depicts what he calls the "Litebox Baggage" in today's newspaper, while an editorial describes last week's announcement by Gov. Mitch Daniels and Mayor Greg Ballard of a West Hollywood's plans to build a factory in Indianapolis that will create more than 1,000 jobs as a potential "nightmare." Here's some of what the editorial has to say:

Judging by the flock of red flags that have unfurled since last week's grand announcement, the governor and mayor may have been more valuable to Yanagihara than he will be to the Hoosier workforce . . .

The problem here is that respected leaders have attached their names to a highly questionable venture, encouraging confidence -- on the part of voters and potential investors -- that may well prove to be misspent.

Litebox would join a long line of state-backed jobs bonanzas that have failed to deliver. The burden should be on Yanagihara to show it's different this time. The mayor and governor should have held their applause until he did so. Now, the mayor should ask the same restraint from his audience. A city can't be run on dreams, and neither should an election.

As skepticism over the Litebox announcement grows, it looks like a high-vaulted economic development project for a company that produces electric batteries is turning sour. Enerdel has lost its Nasdaq listing due to it stock price trading too low. The U.S. Department of Energy put $118 million in the company, while the state offered the company more than $21 million in tax credits and job training for 1,400 new jobs in Indiana.

Does Endorsement Of Litebox Business Deal Equate To Investor Advice?

The Star takes an interesting perspective on the highly-criticized announcement this week by Gov. Mitch Daniels and Mayor Greg Ballard that state and local economic development agencies were giving their blessings to provide incentives to a little-known West Hollywood man promising to build a new untested and unproven product in Indianapolis that would bring more than 1,000 news jobs to Indianapolis. A story entitled, "Was their endorsement of businessman too much?", the Star considers whether the endorsement of the deal serves as investment advice to would-be investors. Ballard and Daniels have sought to allay concerns by noting that no public investment will be made unless Bob Yanagihira's Litebox, Inc. actually builds his manufacturing facility on the city's northwest side and hires Indiana workers. The endorsement, however, could give credibility to the project Yanagihira otherwise lacked to lure investors for his deal.

But Friday, concerns were raised that Daniels' and Ballard's public endorsement of Yanagihara at the news conference -- Daniels called him a "visionary" -- could put Hoosiers at risk in a different way.

"By standing next to this guy," said Julia Vaughn of Common Cause Indiana, "these political officials are lending to his credibility as he seeks investors." . . .

Spokesmen for Daniels and Ballard clarified in emails Friday that the governor's and mayor's promotion of Yanagihara was not investment advice.

"Investors rely on financial data in making their decisions and know that state and local incentives are performance-based and only apply once the company has fulfilled its obligations," wrote Marc Lotter, Ballard's communications director.

Daniels spokeswoman Jane Jankowski wrote that "the governor's comments weren't intended as investment advice, nor is it likely that an investor would construe them in such a way."

Kerwin Olson, executive director of the Citizens Action Coalition, said that doesn't mean public officials should tout the business without first ensuring that it merits their confidence.

"The consequences are that you're creating false confidence in the public and violating public trust," he said, "so I think that's a potential concern.

"You're standing there with the governor of the state of Indiana who's well-regarded in the Republican Party and the mayor of the 11th-biggest city. That's a lot for the two politicians to lay their reputations on, and it's a good photo op for this guy."

The questions raised here is a very legitimate one that has often been overlooked by the media in the coverage of past such events. Indeed, Mayor Ballard said in an interview with radio talk show host Amos Brown this week that the state and city have given their blessing to deals in the past that never panned out but that was the risk they were willing to make to bring new investment and jobs to the state and city. Nobody in the media raised any red flags when Gov. Daniels and Mayor Ballard held a joint press conference to announce $14 million in direct economic development incentives the state and city were making in locally-based Angie's List. A week following their announcement the company announced it was undertaking an initial public offering. The company, one of whose investors and key officers headed up Gov. Daniels former gubernatorial campaign, disclosed in its filings with the SEC that it had never made money in the 16 years of its existence and has accumulated $143 million in debt, $50 million of which had been racked up in the last two years. Other than this blog, nobody questioned the timing of the announcement and whether its purpose was to lend the government's credibility to a company with an otherwise shaky track record to would-be investors.

Nonetheless, the media is showing some willingness in this case to ask the questions that should be raised any time a government endorsement is being made of a private business undertaking. The Star's reporters are still grappling with getting answers from Yanagihira about his business.

Yanagihara has not responded to repeated messages left by The Star on his cellphone and hotel phone Thursday and Friday. Late Friday afternoon, Veronica Vargas, a media contact for Litebox, asked The Star to submit questions in writing.

"All very valid questions," Vargas replied in an email, "and we appreciate you giving us an opportunity to answer them."

But Vargas did not respond to multiple phone messages left late Friday night, after the questions had been submitted in writing.

Develop Indy spokeswoman Jennifer Todd tells the Star that Yanagihira has signed a purchase agreement for the property where the new manufacturing facility is to be built and has opened up a bank account. That contradicts a claim by Democratic mayoral candidate Melina Kennedy during her interview with Amos Brown this week in which she said the city got punked by Litebox that the company had not placed the land under contract. The Star's story does not address the concern raised by this blog that the company lacked an official business registration in the states of California or Minnesota where it claims to be currently doing business. Todd also told the Star that Yanagirhira had visited the City-County Building this week to transfer permits into his name for office space he intends to occupy at 146 E. Washington Street, and that he had also discussed hiring with locally-based CFA Staffing, who she claims will handle the company's recruiting and hiring. It's not clear what permits Litebox has filed, but a search of the city's online permit database returned no results when entering the company's name or Yanagihira's name. Litebox has not registered with the Indiana Secretary of State's office either according to its website.

It's Official, You've Been Punked

New questions about the acclaimed CEO of Litebox, Inc. leaves little doubt that Mayor Greg Ballard and Gov. Mitch Daniels were punked when they stood before TV cameras and a bevy of reporters on Wednesday to hear an unknown West Hollywood man claim he was building a factory in Indianapolis to build mobile, drive-in movie theaters that would employ more than 1,000 workers. Today's Star has information on Bob Yanagihira's tax problems, inflated resume' and unrealistic pipe dreams:

It had all the makings of a great day for Indianapolis and Indiana: Gov. Mitch Daniels and Mayor Greg Ballard flanking a California entrepreneur to announce that 1,100 jobs soon would be coming to the city.

In these tough economic times, it seemed to be just what the doctor ordered -- the largest job-creating business expansion to be announced in the city this year. And for Ballard, locked in a hotly contested re-election campaign in which his opponent has criticized the mayor for job losses, it was a timely feather in his cap, just two weeks before the election.

But things have taken a strange turn since Wednesday's splashy announcement, at which Bob Yanagihara detailed plans to renovate a local office building and construct a $20 million factory where his startup company, Litebox Inc., would make mobile video screens.

Now some wonder whether the project is serious, and there is growing criticism that state and city officials failed to adequately vet Yanagihara before offering his company millions in tax breaks if the project comes to fruition . . .

At Wednesday's announcement, Daniels hailed Yanagihara as a "visionary" and an "entrepreneur."

In California, public records suggest he might be something else.

Based on an Indianapolis Star review of public documents Thursday, it appears Yanagihara has failed to fully pay hundreds of thousands of dollars in state and federal tax liens in the past 10 years.

Those documents suggest he owes money to others, as well.

Colin McGrath, 52, Camarillo, Calif., said he invested $100,000 in a housing development project Yanagihara was leading with the promise of recouping $140,000 in 18 months. That was in 2002, and McGrath said he is still waiting for his money, even though he obtained a court judgment in 2007 against Yanagihara for $145,000.

"I would strongly advise anyone thinking of investing in his projects to think twice," McGrath said. "I would tell anyone, 'Don't do it.' "

Yanagihara did not return calls from The Star on Thursday.

The state of California has at least six outstanding tax liens against him, though specifics were unclear. One lien, filed in October 2007, was for $85,108, according to records confirmed with the Ventura County clerk and recorder. Another, filed that same month with Los Angeles County, was for $64,579.

In California, the state can file a tax lien after a resident does not respond to multiple payment notices, said Denise Azimi, spokeswoman for the California Franchise Tax Board.

Yanagihara also has not fully paid off thousands in federal tax liens, including a $70,130 lien filed in February 2008.

The most recent tax lien against Yanagihara that The Star's review found was for $15,088. It was filed in Los Angeles County in January.

Further questions about Yanagihira's resume casts doubts on his claimed four-year education at the University of San Diego. As I pointed out yesterday, there isn't even a business registration for Litebox, Inc. in the states of California and Minnesota where he claims to be currently doing business with 69 employees. Further, the name of the company is a registered trademark of another company. Economic development officials tell the Star they vetted this guy and confirmed he has financial backing for the deal, but of course, that information is deemed confidential under state law because it involves taxpayer-financed incentives, which is a complete abomination when you think about it because of this very problem.

Unbelievably, state and economic development officials still won't admit they got punked. Jennifer Todd of Develop Indy admits officials there didn't know about the tax liens, but she says that's not a problem because they only look at the business' financial information, which begs the question of what information that was since it isn't a registered business. State officials aren't concerned by the tax liabilities either. "That's not an uncommon thing," he said. Besides, [Indiana's Secretary of Commerce Daniel] Hasler added, "I don't know that it would have mattered. The Star's reporters were easily able to speak to a person who is actually in this business who says Yanagihira's plans are simply unrealistic.

The $20 million that Yanagihara plans to spend to build an assembly factory for truck-mounted media screens in Indianapolis is enough money, Isenberg said, "to buy all of the competitors in the industry."

Isenberg also said he doesn't believe Yanagihara will need anywhere near the 900 workers he plans to hire to run the factory. Isenberg's company employs a total of 20 people and uses 12 trucks that hold JumboTron-sized video screens.

"We built these things," Isenberg said, "with less than six people in 90 to 120 days."

Okay, it's time for the politicians and government officials to stop trying to BS their way out of this fiasco. Just own up to the fact that you got punked and apologize for taking up our time with false promises from a charlatan who you obviously never bothered to vet before using him as a campaign re-election prop.

UPDATE: Check out this interview of Mayor Greg Ballard and Melina Kennedy by Amos Brown concerning the Litebox announcement fiasco. Kennedy says the Mayor and Governor were punked because someone didn't do the proper due diligence. Ballard says it's no skin off the taxpayers' back if it turns out to be entirely made up because no money will be laid out by taxpayers unless ground is broken on the facility and people are employed. He says it wouldn't be the first time this is happened. When Brown asked Ballard why the company wasn't registered to do business in California and he couldn't get a response from Develop Indy on this point, this was the exchange that ensued: "Well, you sure are curious about all this, aren't you?," Ballard sarcastically snapped back at Brown. "I want to make sure these folks are coming to town and give folks the jobs," Brown shot back. "C'mon, Amos. This is an entrepreneur who wants to do the right thing," Ballard replied. "We think he has that potential to do great work in the city of Indianapolis. We're going to be there along side him as long as these jobs come to fruition."

UPDATE II: In her interview with Amos Brown, Democratic mayoral candidate Melina Kennedy stated that she does not believe Yanagihira has the land under contract where he has proposed building Litebox, Inc.'s new manufacturing facility that he says will employ more than 1,000 workers. Economic development officials have divulged nothing about such details for the proposed project. Fox 59 News this evening quoted Yanagihira as saying he plans to break ground at the more than 50-acre site near Georgetown Road and 86th Street on the city's northwest side within 60 days and renovate downtown office space for a new company headquarters at 146 E. Washington Street. He told Fox 59 News that he doesn't understand the skepticism that has surfaced following Wednesday's announcement. "I am amazed at the skepticism for my LiTEBOX," Yanagihira said. "People should be glad I am moving here and not the other states that courted me."

Breaking ground on a new factory would seem to be a practical impossibility if he doesn't have the land under contract as Kennedy claims. How does Kennedy know that detail? I've got a good hunch. Kostas Poulakidas, a fellow Greek-American, is a close Kennedy friend and supporter. Kennedy hopes that Poulakidas, a fellow big firm attorney whose practice includes economic development work for local governments, is successful in his bid to unseat Christine Scales for the City-County Council so he can become her eyes and ears on the council should she become mayor. Poulakidas' wife has worked as a business development manager for Develop Indy for at least a couple of years until recently and may have inside information about this deal, which has likely been in the works for a number of months. Since reporters don't seem to know whether Yanagihira has the land for the proposed project under contract, maybe they should ask Kennedy how she knows that detail.  

No Business Registration For Litebox, Ouch!

Were Daniels and Ballard punked by this guy? (Indianapolis Star photo)

The question of just how much vetting of Litebox was done by officials of Develop Indy and the Indiana Economic Development Corporation before putting Gov. Mitch Daniels and Mayor Greg Ballard in front of the cameras with the company's founder, Bob Yanagihara, is coming more into focus after yesterday's quickly-called press conference to announce the company was building a new manufacturing plant in Indianapolis that would create more than 1,000 jobs. Yanagihara told reporters yesterday that his company employed 69 workers in California and Minnesota. A quick search of businesses registered to do business in California and Minnesota according to their respective Secretary of State's websites shows no registration for the company. Yeah, I would say Gov. Daniels and Mayor Ballard got punked big time. The only person missing from yesterday's press conference was Ashton Kucher. Oh, and did I mention that Litebox is the registered trademark of another company?

UPDATE: Here's an ad for a 3D product where the same guy behind Litebox was seeking investors. Looks like he's full of innovative ideas.

Litebox Deal Looks Light On Details

The Indianapolis Star and all of the local TV stations ran with headline stories of the big economic development announcement today promising to bring more than 1,000 jobs to Indianapolis. "We're bringing back the drive-in movie theater, but it's going to be a digital version, and on wheels," Bob Yanagihara, founder of Litebox, Inc. told the Star. Develop Indy's CEO, Scott Miller, described it as "one of the biggest jobs announcements for the city in recent years. Gov. Mitch Daniels and Mayor Greg Ballard are scheduled to make a formal announcement in a couple of hours, along with Yanagihira. I tried in vein to find out information about this company online and came up short. The company's website has nothing more than a short video clip of the product concept and the contact information for Yanagihara. [The link to the company's website brought up an error message when I posted this story saying the bandwidth limit had been exceeded. Not real encouraging for a supposed tech-savvy company.] As the Star describes this new, untested product:

Yanagihara's unusual product calls for a towering video screen mounted on the back of a semitrailer truck. The truck can show up at any site on short notice and play first-run movies, live-streamed concerts and sports.

What's the market for this product? I can't imagine that there are enough buyers today to justify opening up a manufacturing facility to build a product that costs $3 million a piece in the worst economic times since the Great Depression. If the state and local economic development officials weren't skeptical, at least the IBJ's Cory Schouten is expressing some skepticism. Schouten writes:

A West Hollywood man with a short entrepreneurial resume came to Indiana with a big idea to build hundreds of trucks outfitted with giant video screens.

The product is unproven, and so is Bob Yanagihara, the ambitious 50-year-old who dreamed it up.

But Yanagihara said the key word when he met with state and city economic development officials: jobs.

He's scheduled to stand alongside Indiana Gov. Mitch Daniels and Indianapolis Mayor Greg Ballard Wednesday afternoon to announce his plans to build a $21 million manufacturing plant on the northeast side and create more than 1,000 jobs.

His company, Litebox Inc., stands to collect training grants and property-tax abatement worth a total of $11 million if it creates the promised jobs, local economic development officials said. The deal doesn't pose much risk to local governments since the company won't receive tax breaks or grants unless it lives up to its promises.

Yanagihara had pegged the incentive deal's value at $40 million in an interview with IBJ Tuesday evening, but on Wednesday said he had Indiana's offer confused with one from another state . . .

Yanagihara told Schouten the company would eventually employ at least 10,000 employees in all 50 states. How could he know that today with an unproven, untested product that costs this much money to buy? Schouten says the deal originated with DevelopIndy. "It's an ambitious plan. We all recognize that," Todd said. "We have to trust the information we're being given, as we do with all clients." Just chew on this claim Yanagihara makes to Schouten:

Yanagihara told IBJ his company expects to create 1,200 to1,400 jobs locally, paying salaries between $30,000 and $150,000.

He said the new factory near 86th Street and Georgetown Road would churn out eight mobile entertainment trucks per month, with 300 people working on them at a time in three shifts. More than 300 additional employees would work at a "media production office" at 146 E. Washington St., a building Yanagihara said he plans to renovate. Litebox has not yet hired a contractor to build its factory, Todd said. It plans to own, not lease, the space.

The company has not yet built any of the mobile entertainment semitrailers, which will feature 47-foot-tall, high-definition screens. The finished products would sell for about $3 million apiece and feature Panasonic LED screens and Bose sound equipment. Programming would be beamed to the devices by satellite.

"There's demand for these all over the world," Yanagihara said.

Who says there's a demand for this product all over the world? Never forget the old saying that if it sounds too good to be true, it probably is. Now, check out what Yanagihara's past business experience consists of according to Schouten:

Yanagihara said his prior business experience includes selling medical devices and floor tile. (He owns a tile shop called Creative Environments in Los Angeles). His most recent entrepreneurial effort was a website called promotemysong.com that is no longer online. (He said his team is revamping the site's design for a relaunch).

Twitter photo of Yanagihara (Durham wannabe?)

Yeah, I'm real comforted knowing that.  I'm a little bit more than concerned that our state and local officials may have set themselves up for a major public embarrassment if they have not fully vetted this guy, his company and his concept. Public taxpayer dollars are on the line here. If this deal doesn't live up to its promises, we might see a lot of people pointing fingers at each other trying to avoid the blame. State economic development officials won't tell Schouten what vetting they did on this proposed development prior to making its commitment of public financial assistance. My guess is there wasn't much vetting at all.

Check out Yanaghira's Twitter account here. Nothing posted on it since June 28 when he mentioned he was having pizza in Manhattan Beach, California. There's only one, one-word mention of Litebox back on April 20. Wouldn't you expect him to have had something to say about today's big announcement in Indianapolis today on his Twitter account? Also, check out this YouTube clip promoting the product. Not overly inspiring stuff.



UPDATE: It looks like the Star is having second thoughts about this project after the feedback generated from reporting by this blog and the IBJ. Jeff Swiatek offers these clues that this deal is not what it first appeared to state and local officials, who grew antsy and escorted the founder of Litebox away from reporters when he started crumbling under questioning:

The man behind the largest job-creating business expansion to be announced in Indianapolis this year was a bit vague on some key details Wednesday as he stood in a weedy field where the announcement was made . . .

A city development official led Yanagihara off after the public event, cutting short media questions about his planned $20 million factory near 84th Street and Georgetown Road on the Northwestside . . .

Questioned after the announcement, which drew Gov. Mitch Daniels, Mayor Greg Ballard and about 50 news media representatives and others, Yanagihara at first said his financial backers are "well-heeled" individuals whom he wouldn't name. Then he changed his mind, saying, "Actually it's just me."

A city official standing next to Yanagihara then interrupted, saying, "No, it's not just you."

So in the course of the press conference the head of this company goes from saying he has unnamed "well-heeled" financial backers to saying he is financing the start-up on his own. Hmmm. That city official who interrupted Yanagihara is Mike Gant, an employee of Develop Indy. A spokeswoman for the agency seemed confused why Gant identified himself to reporters as working for Yanagihara:

The official, Mike Gant, senior project director for the city's economic development arm, Develop Indy, also wouldn't go into detail about the project's financing. Gant also declined to give his name to reporters, telling them he worked for Yanagihara.

Melissa Todd, spokeswoman for Develop Indy, said she didn't know why Gant identified himself to the media as working for Yanagihara and not saying he was a Develop Indy official.

"Develop Indy will look into this incident. We clearly weren't trying to misrepresent anything to the public or media."

Today's economic development announcement fiasco for Litebox has all the hallmarks of one of those pivotal events late in a closely fought campaign that will be remembered as the turning point in favor of one candidate or the other. Given the current direction this story is taking, election day couldn't come soon enough for Mayor Greg Ballard. I've never seen a story that appeared to be such a big boost for one candidate in the closing days of a campaign turn as quickly as this story has in just a matter of a few short hours against that same candidate. I suspect the Democrats see blood in the water and are now going to go in for the kill, if the media doesn't do that job for them first.

Were Daniels and Ballard just punked by this guy? (Star photo)