It’s been 50 years since Oklahoma Gov. David Hall was indicted on charges of racketeering and extortion for conspiring to steer state employee retirement funds to a private investment firm in exchange for a payoff.  Hall was convicted and served 19 months in federal prison, making him the only O klahoma governor (three have been indicted) to be convicted of a crime and serve time in prison.   Fifty billion dollars now reside in Oklahoma’s state pensions and public funds, with Teachers Retirement Systems of Oklahoma being the largest, at $25 billion in total pension assets. Oklahoma Public Employees Retirement Systems is well over $12 billion, while the Police and Firefighters plans have $7 billion between them.  Include other public funds, like the Commissioner of the Land Office (CLO) and the Oklahoma Tobacco Settlement Endowment Trust (TSET) having $3.5 billion and $2 billion respectively in their coffers. These state funds have attracted the attention of legislators and many local firms in recent years, which now has raised concerns about Oklahoma pensions, other public funds and a newly created Taxpayer Endowment Fund becoming victims of potentially conflicting interests. The Invest in Oklahoma Act was enacted as Senate Bill 922 and signed into law by Gov. Kevin Stitt during the 2021 legislative session.  The bill only encouraged state funds to invest 5% of their money into investments that could benefit Oklahoma’s economy and generate growth for the state. The idea was formalized into a process managed by the Department of Commerce, so an investment manager could seek “Invest in Oklahoma Act” approval and be authorized for investment by these various funds.  The passage of the bill did little to compel action by any of the state funds, as the bill’s language was seemingly centered on venture capital (VC) or private equity (PE), with Oklahoma not having a strong or competitive ecosystem for either. Oklahoma has seen a small handful of firms founded in the last several years, each trying to compete against more seasoned and larger competitors that have long-standing reputations, track records and clients that have a history of sending them money to invest.  Some concluded the bill was an effort to stimulate venture capital and private equity business in Oklahoma as much as its economy.  “Some lawmaker’s brother-in-law must have started a venture capital fund,” BRANDON MEYER, TRS BOARD MEMBER.  “Some lawmaker’s brother-in-law must have started a venture capital fund,” said a board member at a Teachers Retirement Systems board meeting after Invest in Oklahoma Act was passed.  Ultimately, a small number of funds applied and received approval for the program by the Department of Commerce.  Few investments have been made by state funds in these “approved” investments, citing concerns that a fiduciary’s obligation is to represent the interest of the pensions and public funds versus trying to stimulate growth in Oklahoma’s economy. In the 2023 legislative session, Senate Bill 2254 was introduced to require the Tobacco Settlement Endowment Trust (TSET) to invest 4% of TSET assets into Oklahoma venture funds.  The bill was promoted behind the scenes by Cortado Capital, an Oklahoma City-based venture capital firm.  Cortado was in the process of raising capital for its newest fund, targeting some $100 million of total assets. The timeline for investment in the bill coincided with Cortado’s timeline for offering the new fund.  Further complicating the bill was language that specified that qualification for investment merely required a fund manager (including Cortado) to have a business presence in Oklahoma, not specifically requiring any funds to be invested in Oklahoma. TSET’s board resisted, passing a formal resolution expressing concerns that such a legislative mandate could interfere with its fiduciary obligation.  Advocates of the bill touted how the funds would create growth in Oklahoma, jobs and be good for business. Opponents focused on how the bill lacked the language to make those assurances and how legislating investment policy was bad precedent. Ultimately, the bill never received committee approval and was not passed into law. The Investment Industry Sterring Committee was formed via executive order by Gov. Stitt in December 2023, comprised almost entirely of fund promoters and consultants, with only one representative from either the boards or staff of the state funds.  Minutes posted from the initial meeting indicated there was a discussion about changing one word in the Invest in Oklahoma Act to require investments by state funds.  By simply changing “may invest 5%” to “shall invest 5%,” all nine funds would be mandated to allocate well over $2 billion, potentially and primarily to the fund managers on the committee. Oklahoma State Treasurer Todd Russ. Internal Revenue Code strictly prohibits public pensions from investing funds for the exclusive benefit of anyone other than participants in the plan, thus making this effort likely afoul of the law, at least in the case of pension funds.  As a result, the committee lost momentum and seemingly ceased to exist, with meeting notices and committee notes no longer seen or made public. The Invest in Oklahoma Act was not changed in any way. However, some published meeting minutes indicated a new strategy had emerged in this committee’s endeavor, along with a new player who seemed willing to help” State Treasurer Todd Russ and potentially some funds overseen by his department at the state treasury. OK House Bill 2765 was passed in the final days of last year’s legislative session, after a similar bill died in the Senate Appropriations Committee earlier in the session.  HB 2765 transferred all authority under the Invest in Oklahoma Act to State Treasurer Todd Russ and also made certain funds in the state Treasury eligible for Invest in Oklahoma.  Bond Payne, X @porkchoppayne Within days of the passage of House Bill 2765, Gov. Stitt’s office put out a press release announcing a major new industrial park and power generation initiative in Chickasha. Representing the single largest private investment in the city’s history, the deal was presented as a joint venture between Citizen Capital and Lightfield Energy, a “leading” national solar developer, partner and installer in Las Vegas, Nev.  Citizen Capital is majority owned by Stitt’s former Chief of Staff Bond Payne. The $3.5 billion project is being touted as creating thousands of local jobs. Timing of this announcement was also coincidental to the passage of Oklahoma Senate Bill 480, which specified that companies can build their own power generation facility “behind the meter” of whatever regulated utility is required to serve the area, thus making the Chickasha project possible.  Other than the joint venture announcement, little is known about how the $3.5 billion project will be funded, or if state funds will be used in the project via Treasurer Russ’s newfound power under HB 2765.  Payne was accompanied by a representative from Russ’s office on a trip to Qatar not long after the Chickasha and Lightfield announcement, where they met with Qatari leadership and promoted investment opportunities in Oklahoma. A few months after the passage of HB 2765, a Request For Proposal (RFP) was issued by Russ’s office to hire a consultant to advise the treasurer and other members of a newly formed Invest in Oklahoma Committee, chaired by Stitt.  The committee met on Feb. 17 and announced the contract awarded via the RFP was going to 311 Capital, which was a newly formed firm established just four months earlier. Other RFP respondents included GCM Grosvener, a global financial firm that manages over $90 billion of alternative investments, and Memco Multilateral Endowment Management, a local firm that manages assets for the Oklahoma State University Foundation and the Utah State Treasurer’s office.  311 Capital Management’s Form ADV filed with regulators lists Citizen Capital as a related party and a direct owner of 75% or more of the firm.  Payne is listed on regulatory filings  as a control person for Citizen Capital, owning between 50-75%.  311 Capital’s address is listed at 600 North Robinson in Oklahoma City, the prominent location of Citizen Tower, OKC’s newest high-rise office tower owned by JRB Citizen LLC, which was prominently listed on Stitt’s 2024 financial disclosures. Otherwise, little is known about the firm, or its leadership.  311 Capital’s Managing Partner is Steven McDonnold, who lists no recent experience in venture capital or private equity on his LinkedIn profile, which also indicates that 311 Capital was formed solely to advise the Oklahoma treasurer’s office on matters pertaining to Invest in Oklahoma, but also indicates a timeline whereby McDonnold was hired (and 311 Capital formed) prior to the issuance of the RFP by Todd Russ’s office. 311 Capital’s fee structure under this contract is murky, based on meeting notes and the discussion. It was stated the firm’s compensation would be determined at a later date and negotiated on future transactions.  Not disclosing pertinent details of a contract of this nature would likely violate Oklahoma’s Central Purchasing Act requirements, as evidenced by yet unpassed legislation for the newly formed Taxpayer Endowment Fund which seeks to exempt the committee from Central Purchasing Act requirements. In the capacity of advising the treasurer and Invest in Oklahoma committee, 311 Capital would be acting in the capacity of a fiduciary as a registered investment advisor.  Being paid on transactions versus an advisory fee structure raises concerns of potential conflicts of interest between 311 Capital, Citizen Capital and Invest in Oklahoma funds “Show me how someone gets paid, and I’ll show you the outcome.”  Charlie Munger, Berkshire Hathaway Berkshire Hathaway’s Charlie Munger famously said, “Show me how someone gets paid, and I’ll show you the outcome.”  It’s plausible 311 Capital will be conflicted when advising Russ on deals where Citizen Capital may also be involved and potentially earning other fees. Other conflicts could include being compensated in transactions, as opposed to being paid for advice.  This is a typical critique of investment banks, as they are incentivized to transact, whether or not it’s in the client’s best interest. These points were not discussed in the Invest in Oklahoma Committee meeting, just as there was conspicuously no discussion of Bond Payne’s ownership of 311 Capital or Citizen Capital as a related  entity. Ultimately, the committee approved the contract with 311 Capital, voting 5-0 to approve the contract.  Cindy Byrd, State Auditor and Inspector of Oklahoma A surprising twist occurred Friday, April 3, when Cindy Byrd filed to run against Russ in the upcoming GOP primary for the state treasurer position.  Byrd has been state auditor and inspector since 2019 and is in her last year in that office.   Previously, Byrd had been running in a crowded race for lieutenant governor and headed for a likely runoff showdown with T.W. Shannon in August.  Shannon has recently been viewed as the front-runner, having secured an endorsement from President Donald Trump.  Her newfound opposition to Russ as treasurer will be formidable, as Byrd has previously won two statewide races by wide margins and is viewed highly be Republican peers and voters in both rural and metropolitan areas.  Whoever wins the most votes in the GOP primary for treasurer will be heavily favored to win in November, as only one other challenger has emerged in the race, Libertarian Kiefer Perry.  Byrd’s filing came within days of an apparent budget deal, which also earmarked $200 million for a newly created Taxpayer Endowment Fund, which would fall under Invest in Oklahoma Act guidelines and managed through the state treasurer’s office.  Within days of Byrd’s filing for the treasurer’s race, questions began surfacing about the Invest in Oklahoma Committee, the RFP and contract awarded to the Governor’s former Chief of Staff and Todd Russ’s involvement.  Oklahoma Watch’s Paul Monies first reported on these recent developments and the RFP on April 9. Stitt’s office released a statement that same day to announce he had revised his financial disclosures with the state ethics commission to indicate he had divested his interest in JRB Citizen LLC.  In response to Oklahoma Watch’s inquiry, Russ indicated he was disappointed there weren’t more interested parties that responded to the RFP, and that fees were a major consideration in the selection, as funds were not appropriated for a consultant. In other instances involving state funds, advisers such as 311 Capital are paid from the underlying funds versus dollars appropriated by the legislature. It’s certain this is new territory for the treasurer’s office, which normally invests only in safe and liquid investments, as opposed to more complex, risky and long-term investments with little or no liquidity. In response to The Oklahoman re-publishing Monies and Oklahoma Watch’s story, Stitt wrote a scathing response, defending his action of voting in favor of awarding the contract to his previous chief of staff. He said by virtue of his previously undisclosed divestiture, that no business relationship existed and that no funds from the now near than $60 billion of Invest in Oklahoma eligible assets had been deployed.  Both he and Payne were critical of Oklahoma Watch’s reporting, with Payne publishing a lengthy post on X, implying his newly formed firm had been selected through a competitive process and that 311 Capital was up to the task at hand. Public trust matters, and reporters and editors need to be held accountable too. Here is the statement I provided to @OklahomaWatch at their request, none of which was included in the story. https://t.co/L7eR5RhZ9D pic.twitter.com/GDFs16D5YE— Bond Payne (@porkchoppayne) April 12, 2026 This statement implies 311 Capital will be paid a performance incentive fee for at least a portion of the firm’s compensation. Otherwise known as “carried interest,” this would further complicate the still murky and unresolved compensation structure for a firm that should be acting as a fiduciary with respect to the underlying funds.  Compensating a fiduciary via carried interest is exceedingly complex, as there are numerous potential conflicts.  For 311 Capital, this would be a potential boon, as potential carried interest fees typically dwarf more traditional consulting fees. This method of compensation also receives favorable tax treatment under existing tax laws, thus carrying interest is taxed at capital gains rates, making it a preferred method of compensation for hedge fund, private equity and venture capital firms. The only thing becoming clear in terms of 311 Capital’s compensation under the contract is that it could potentially be significant and at odds with the interests of our state.  Citizen Capital’s business model requires access to capital in order to fund merchant banking transactions for clients.  For Citizen, also a new company with no history or relevant experience, this seems like a windfall opportunity to potentially direct funds from treasury toward transactions that need funding.  The fee for a transaction like Lightfield Energy in Chickasha could be tens of millions of dollars, depending on how much capital is sourced through Citizen versus banks and other investor groups.  Absent sovereign wealth money and not having a cadre of institutional clientele lining up to invest in Citizen transactions, the formation of 311 Capital, and its newfound relationship with Invest in Oklahoma, seems to potentially be Citizen Capital’s entre to funding deals.  As Oklahoma found over a half century ago, there is ample room for conflicts of interest and even foul play in our pensions and public funds.  Also, economic development initiatives often fail to achieve the desired result. Oklahoma aptly learned this lesson just 20 years ago when a number of tax credit structures aimed at economic growth and development generated little real economic benefit for Oklahoma. The primary beneficiaries of these deals were fund promoters and the recipients of hundreds of millions of tax credits issued by the Oklahoma Tax Commission. These funds turned out to be filled mostly with underlying investments being described as “planned failures.”  Fund investors were still rewarded by virtue of the tax savings, with many funds offering two dollars of tax credits for each dollar invested, giving the investors a 100% tax free return on their money, simply by investing in the funds. While Invest in Oklahoma has potential benefits for Oklahoma’s economic growth and  job creation, it will need to be managed prudently and with high levels of oversight to achieve desired results. In the coming weeks, lawmakers will debate the $200 million Taxpayer Endowment Fund (created in the budget) being eligible for Invest in Oklahoma, the governor’s and state treasurer’s ties with Bond Payne and 311 Capital, and the contract award resulting from the recent RFP process.  Ethics Commission rules will be examined closely, to determine if Stitt violated his obligations by virtue of voting in favor of awarding a lucrative contract to a known business associate and former chief of staff. By not adhering to Central Purchasing Act and its administrative rules, it’s possible the contract with 311 Capital is not valid, at least until the Invest in Oklahoma Committee receives a waiver under yet unpassed legislation. Attorney General Gentner Drummond will also be likely to review this and will have several options if a remedy is deemed necessary. Oklahoma voters will also want information about this as they ponder Treasurer Russ’s re-election and widely popular Cindy Byrd’s challenge for State Treasurer in the GOP primary. Drew Williamson is a Partner with Red Center Media-Oklahoma Gazette and served as Trustee of Teachers Retirement System-Oklahoma from 2019-2023. Invest in Oklahoma Act: Public Funds and Private ProfitsThe post Invest in Oklahoma Act: Public Funds and Private Profits appeared first on Oklahoma Gazette. ...read more read less