CEDAR RAPIDS — An upstart company that persuaded local and state economic development officials in 2011 to award it $600,000 in incentives based on two ethanol-related devices that didn’t perform has stopped repaying a state grant it agreed to repay.
AgSugar International Inc. changed its name to Vertecra in fall 2011 even as the Iowa Economic Development Authority had given it a $250,000 outright grant based on its claims of what two biotechnology machines would do for ethanol production.
In June 2012, the economic development agency ordered Vertecra to repay the $250,000 at 5 percent interest over 30 months because of “non-compliance with (contract) covenants” and “material misrepresentation.”
The company agreed to repay the grant, but a last repayment check in November was returned to the Economic Development Authority for “non-sufficient funds.”
Agency spokeswoman Tina Hoffman on Friday said the agency has attempted to contact Vertecra without success, and the agency Tuesday secured a judgment against the company in Linn County District Court, according to Iowa Courts Online.
Hoffman said the company owes the state $208,147.
Vertecra Manufacturing LLC and Vertecra Property Holdings LLC of Cedar Rapids filed corporate papers with the Iowa Secretary of State on Oct. 18, 2011, and both were administratively dissolved by the state office Aug. 9, after the company failed to file its 2013 biennial report.
In another court action, C13 Control Installations of Iowa Inc. filed a small-claims action in Linn County District Court in March against both Vertecra entities and Walter “Skip” Emig, CEO of Vertecra.
Emig was one of two St. Louis men who led AgSugar International and then Vertecra as it won the backing of Cedar Rapids economic development officials. The local officials, in turn, lobbied on the company’s behalf to secure the state economic development incentives and a local property tax break.
The overall incentive package included worker training assistance that never was used.
In May 2012, the Cedar Rapids City Council revoked its sponsorship of AgSugar International/Vertecra and withdrew a small property tax break that had been part of the incentive package.
In late 2011, Vertecra morphed into a business that intended to focus on LED lighting rather than ethanol after a Missouri dentist’s special “black-box” invention couldn’t do for ethanol production what Vertecra officials had said they expected it to do.
AgSugar International was awarded an Iowa Economic Development Authority incentive package in July 2011, gave up on the inventor in September 2011 and signed the contract for state incentives in October 2011 under the name Vertecra. The company got its $250,000 state award in November 2011 and had spent it when the state agency learned via a news story in The Gazette in early 2012 that the dentist’s invention and another technology upon which the company secured the state incentive hadn’t performed.
Don Ross, a longtime Cedar Rapids builder and developer who became a partner in AgSugar International, has constructed a building at Wenig Road and J Avenue NE to lease to Vertecra.
Ross on Friday said Vertecra representatives use the building. Emig was in town one day this week, he said.
Ross said he would try to contact Emig on Friday for comment, but no comment was forthcoming.