IOWA CITY (AP) — Iowa economic development officials are reviewing whether to continue a $2.5 million investment in a startup company pitching a groundbreaking fertilizer technology in Menlo, after learning jurors once found its chairman had misused investor money in another energy project. Court records reviewed by The Associated Press show SynGest Chairman Serge Randhava was found in 2008 by a jury in Illinois to have committed civil racketeering and fraud with associates in connection with $500,000 invested to develop a fertilizer technology. A judge vacated the verdict in 2009 when the case was settled. Randhava denied wrongdoing and said the case was one part of a messy, high-stakes business litigation. Two Iowa Power Fund Board members who voted to invest in SynGest say they were unaware of the case and would have investigated the details.
In January, Iowa economic development leaders notified Syngest that it won’t get a $2.5 million grant unless it successfully lands investors in a proposed $130 million biomass-to-ammonia plant to be located in Menlo. The company seeks to make fertilizer using corn cobs and other corn residue. Company leaders promised huge returns: hundreds of jobs in Menlo, a new revenue source for farmers selling corn cobs and cheaper, more sustainable fertilizer. Eventually, they envisioned 20 such plants in Iowa.
The California-based company had pledged to attract $3.5 million in investment in the plant by Oct. 1st, 2011 in the plant, but by Jan. 17th, 2012, had failed to do so. The company cited difficulties attracting investors amid a slow economy. In January, state officials gave SynGest 30 days to raise the money or lose the aid. SynGest soon said it had the funds, and provided proof of their deposit in a bank account. SynGest says it will soon begin engineering and design work and start asking for reimbursement from its state aid, although it hasn’t yet.
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