Did C.P. invest in "buyer beware" venture?
PLASMATRONICS -- Critics: City, state invested without background checks
CROWN POINT | State and former city officials have been gambling with taxpayer dollars, critics of an ongoing economic development deal in Crown Point contend.
A Times investigation revealed Crown Point and the Indiana Economic Development Corp. promised New York-based Plasmatronics more than $1.8 million in incentives last year to move to Indiana -- without doing a background check and despite warnings about the riskiness of the venture.
Company owners acknowledge they have had challenges in the past, including financial losses, disagreements with executives and associations with a parent company that declared bankruptcy in 2005.
But they say they are ready to move forward in Crown Point with their newest product and bring 220 jobs to the region within the next three years.
Plasmatronics plans to manufacture its Plasma Drive Ignition system in the city, a product owners say will increase gas mileage and reduce air pollution on automobiles, trucks and motorcycles.
But one Crown Point Development Corp. official who abstained from voting on the city's incentive deal now says he would have voted against approving a $500,000 loan with taxpayers' money had he known about the company owners' past at the time of the vote.
"It appears, though hard to believe at the time, that they did minimal due diligence," corporation member Allan Katz said.
What they didn't know
What state and local officials admit they didn't know at the time they brokered a deal to bring Plasmatronics to Crown Point was that owners Lonnie Lenarduzzi and Linda Decker have struggled financially under various company names in the past 19 years and in several states.
U.S. Securities and Exchange Commission and bankruptcy records show portions of the owners' past.
"We spent more time focusing on the current opportunity," former president of the Crown Point Redevelopment Commission Rob Gardiner said of his decision to back an incentives deal with Plasmatronics. "We were trying to set up Crown Point as a place that nurtures along businesses that have high opportunity."
But Plasmatronics' high opportunity is a roll of the dice with the public's money, some critics assert.
Decker and Lenarduzzi's first ignition system company, Perma Tune Electronics, recorded net losses in the late 1990s, according to forms filed with the U.S. Securities and Exchange Commission.
Perma Tune had 10 to 15 employees during its 10-year stay in Texas, Wylie Economic Development Director Sam Satterwhite said. Wylie's Economic Development Corp. offered the company $20,000 to relocate from California to Texas.
Lenarduzzi and Decker apparently decided to bolster their fledging operations in 2003 by letting Perma Tune be absorbed into another company, Trans Max Technologies, in return for capital and expansion.
But the two left the new company about 18 months before Trans Max filed for bankruptcy on Sept. 8, 2005, according to Nevada U.S. Bankruptcy Court records. Decker said she and Lenarduzzi brought a case against Trans Max for breach of contract and pulled Perma Tune out of the failing company. The pair are listed as creditors in the bankruptcy case.
The couple then started remanufacturing the Perma Tune product line in 2005 in New York under the name Plasmatronics LLC.
"The thunderstorm is over, the clouds have cleared," Decker said of the direction in which the company now is heading.
Risky venture?
Financial consultant Greg Guerrettaz said he warned Crown Point officials that investing in the company would be risky. He was paid by the city to review Plasmatronics' current finances and business plan before the deal, but not its past.
"I told them there would be great rewards if it happens, but substantial risk if it doesn't happen," Guerrettaz said.
He said he destroyed the financial documents after his analysis, per an agreement between Plasmatronics and Crown Point.
The state also reviewed the company's finances, business plan and information from Crown Point -- but did not do a comprehensive background check of its own, said Mitch Frazier, spokesman for the Indiana Economic Development Corp.
He said the state plans to do a background check after Plasmatronics files its paperwork to get tax credits.
But the state doesn't stand to lose if Plasmatronics fails because the $1.23 million in tax credits and $95,000 in training grants it promised are based on the company's performance.
Crown Point's Redevelopment Commission and Development Corp. offered Plasmatronics a $500,000 loan up front and already have doled out nearly $380,000, city records show.
Decker said she provided information officials asked for before the incentives deal was offered.
"Hush, Hush"
Former Mayor Dan Klein and the previous Redevelopment Commission's behind-the-scenes negotiation of the Plasmatronics deal impacted testing of a Plasma Drive ignition system on one of the city vehicles, according to a memo dated Jan. 14.
In the memo, Public Works Director Jay Olson told new Mayor David Uran that he can't render an opinion on the effectiveness of the Plasmatronics device because data was "too inconsistent."
The ignition system was placed on a vehicle poorly suited for testing and was done without his knowledge or input, Olson wrote.
"The previous administration was very hush hush regarding the Plasmatronics issue," he wrote in the memo.
Klein did not respond to several attempts by The Times seeking an interview.
Katz, who abstained from voting on the loan and has been a vocal critic of the lack of public disclosure, said he would have voted against the incentive deal if he had known what he knows now.
The $500,000 loan passed the city Redevelopment Commission in June.
But on July 11, the Crown Point Development Corp.'s attempt to solidify the loan in a vote behind closed doors ignited protest from city officials and The Times. The state's public access counselor ruled the corporation violated the Indiana Open Door Law by denying public access to the meeting.
The Development Corp. recast its favorable vote in public July 25.
Gardiner, who was on both the Redevelopment Commission and Development Corp., said he did not know Lenarduzzi and Decker's history but is "comfortable" with his approval of the $500,000 incentive.
"If it was a slam dunk and there was no risk to it, then there was no role for the city to play," he said.
City Councilman Bob Corbin, who is a member of the Redevelopment Commission but was not at the meeting when it approved the loan, said he would not second-guess the decisions made.
"If the economic development is successful, then the community and the corporation benefits by increased jobs and taxes," Corbin said. "I have every reason to believe that it will succeed."
The future
Decker said the re-emergence of Perma Tune "was like a phoenix" rising from the ashes of its troubled past.
Plasmatronics is run out of the couple's single-family residence on Long Island. The Perma Tune line is geared toward high-end European sports and racing cars, she said.
Decker and Lenarduzzi said they decided to branch out and create Plasmatronics Inc. -- a completely separate Indiana-based company geared toward ignition systems for fleet operations and everyday vehicles, rather than high-performance vehicles.
In April, Plasmatronics announced it would open its research and manufacturing center for the Plasma Drive Ignition system in Crown Point.
The couple said its technology is backed by testing from a laboratory certified by the Environmental Protection Agency and built according to Society of Automobile Engineers' standards.
State and local officials have said they estimate Plasmatronics will represent a $2.1 million capital investment and provide up to 220 new jobs in the next three years if all goes well.
Decker said 90 percent of the $380,000 Plasmatronics has received from the city went into infrastructure at the company's facility in Millennium Park off Summit Street.
"If people want to see where that money is, here it is," she said. "Every last bit of that taxpayer money has gone into local business in order to gear up and hire local people."
BY MARISA KWIATKOWSKI
mkwiatkowski@nwitimes.com
219.662.5333
Date posted online: Sunday, January 27, 2008
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PLASMATRONICS
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PLASMATRONICS
by rock star » Thu Feb 14, 2008 9:29 pm
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rock star - Posts: 40
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by rock star » Thu Feb 14, 2008 9:30 pm
Background
Last April, Gov. Mitch Daniels and former Mayor Dan Klein announced with great fanfare New York-based Plasmatronics' plans to open a research and manufacturing center in Crown Point. "This is a really proud day for Crown Point, Lake County and Northwest Indiana," Daniels said. "These are high-tech, high-pay research jobs built around multiple technologies with the penchant to grow." Plasmatronics is remodeling a 9,000-square-foot office in Millennium Park off Summit Street.
The beginnings of controversy
The Crown Point Development Corp. illegally denied public access to its decision-making process regarding Plasmatronics' loan twice in 2007, Indiana's public access counselor determined.
In August, the state agency ruled the corporation is a public agency and violated state law by failing to provide notice of its meeting and denying public access.
The Crown Point Development Corp.'s first attempt to move forward with a $500,000 loan to New York-based Plasmatronics came under fire from city officials and The Times after the corporation denied public access to its July 11 meeting and voted behind closed doors.
Indiana Public Access Counselor Heather Willis Neal ruled against the corporation, saying it violated state Open Door Law by denying public access to the meeting.
The loan is funded by taxpayers' money from a tax increment financing district.
The corporation recast its vote in a public meeting July 25. Corporation members Eric Hammond, Rob Gardiner and Kevin Keough voted to accept a $500,000 grant from the Redevelopment Commission and issue it as a loan to Plasmatronics. Allan Katz abstained, and corporation member Gayle Van Sessen was absent for the vote.
Katz later filed a complaint with the access counselor after Hammond refused to provide a balance sheet or income statements from Plasmatronics before Katz was asked to vote. Katz also asked for documents proving Keough's appointment to the corporation.
In response to both complaints, Neal said the corporation violated the Access to Public Records Act by refusing to give Katz the information.
Timeline
1989 n Lonnie Lenarduzzi and Linda Decker start their first ignition system company, called Perma Tune, in Anaheim, Calif.
1993 n Lenarduzzi and Decker are enticed by about $20,000 in incentives to move Perma Tune to Wylie, Texas.
2001 n The couple takes Perma Tune public on the over the counter bulletin board because it has recorded net losses for several years and they want to expand Perma Tune's research and operations.
2003 n Perma Tune is absorbed into Trans Max Technologies in return for capital and expanded operations.
Lenarduzzi and Decker leave Texas for New York.
2004 n Businessman Samuel Higgins assumes control of Trans Max and shifts focus to technology he hopes will lead to cars that fly through the air.
Lenarduzzi and Decker seek to pull Perma Tune out of Trans Max.
2005
January n The American Arbitration Association rules in Decker and Lenarduzzi's favor, so they own full rights to Perma Tune intellectual property.
March 7 n Lenarduzzi and Decker incorporate Plasmatronics LLC in New York and start to remanufacture the Perma Tune product line. The couple starts planning to manufacture a new Plasma Drive Ignition system for fleet operations and everyday vehicles.
Sept. 8 n Trans Max Technologies files for Chapter 11 bankruptcy in Nevada U.S. Bankruptcy Court. Decker and Lenarduzzi are listed as creditors.
2006
Nov. 30 n Crown Point sends a letter to Decker and Lenarduzzi detailing its proposed incentives to lure them to Indiana.
2007
April 4 n Plasmatronics, Inc. incorporates in Indiana.
April 24 n Gov. Mitch Daniels and former Mayor Dan Klein announce Plasmatronics' plans to open its research and manufacturing center in Crown Point.
June 28 n Crown Point Redevelopment Commission OKs $500,000 loan using taxpayers' money from the tax increment financing district. Loan must also go through the Crown Point Development Corp., the commission's lending arm.
July 11 n Development Corp. approves the loan in closed meeting that is later ruled illegal by state Public Access Counselor Heather Willis Neal.
July 25 -- $500,000 loan approved by Crown Point Development Corp., this time in open meeting.
July 26 n Crown Point makes its first disbursement to Plasmatronics.
Sept. 7 n Trans Max terminates its bankruptcy.
Sept. 25 n Ron Morris, who owns the facility in Crown Point where Plasmatronics will have its operations, files for a building permit with a $280,000 construction value.
BY MARISA KWIATKOWSKI
nwitimes.com
Date posted online: Sunday, January 27, 2008
Last April, Gov. Mitch Daniels and former Mayor Dan Klein announced with great fanfare New York-based Plasmatronics' plans to open a research and manufacturing center in Crown Point. "This is a really proud day for Crown Point, Lake County and Northwest Indiana," Daniels said. "These are high-tech, high-pay research jobs built around multiple technologies with the penchant to grow." Plasmatronics is remodeling a 9,000-square-foot office in Millennium Park off Summit Street.
The beginnings of controversy
The Crown Point Development Corp. illegally denied public access to its decision-making process regarding Plasmatronics' loan twice in 2007, Indiana's public access counselor determined.
In August, the state agency ruled the corporation is a public agency and violated state law by failing to provide notice of its meeting and denying public access.
The Crown Point Development Corp.'s first attempt to move forward with a $500,000 loan to New York-based Plasmatronics came under fire from city officials and The Times after the corporation denied public access to its July 11 meeting and voted behind closed doors.
Indiana Public Access Counselor Heather Willis Neal ruled against the corporation, saying it violated state Open Door Law by denying public access to the meeting.
The loan is funded by taxpayers' money from a tax increment financing district.
The corporation recast its vote in a public meeting July 25. Corporation members Eric Hammond, Rob Gardiner and Kevin Keough voted to accept a $500,000 grant from the Redevelopment Commission and issue it as a loan to Plasmatronics. Allan Katz abstained, and corporation member Gayle Van Sessen was absent for the vote.
Katz later filed a complaint with the access counselor after Hammond refused to provide a balance sheet or income statements from Plasmatronics before Katz was asked to vote. Katz also asked for documents proving Keough's appointment to the corporation.
In response to both complaints, Neal said the corporation violated the Access to Public Records Act by refusing to give Katz the information.
Timeline
1989 n Lonnie Lenarduzzi and Linda Decker start their first ignition system company, called Perma Tune, in Anaheim, Calif.
1993 n Lenarduzzi and Decker are enticed by about $20,000 in incentives to move Perma Tune to Wylie, Texas.
2001 n The couple takes Perma Tune public on the over the counter bulletin board because it has recorded net losses for several years and they want to expand Perma Tune's research and operations.
2003 n Perma Tune is absorbed into Trans Max Technologies in return for capital and expanded operations.
Lenarduzzi and Decker leave Texas for New York.
2004 n Businessman Samuel Higgins assumes control of Trans Max and shifts focus to technology he hopes will lead to cars that fly through the air.
Lenarduzzi and Decker seek to pull Perma Tune out of Trans Max.
2005
January n The American Arbitration Association rules in Decker and Lenarduzzi's favor, so they own full rights to Perma Tune intellectual property.
March 7 n Lenarduzzi and Decker incorporate Plasmatronics LLC in New York and start to remanufacture the Perma Tune product line. The couple starts planning to manufacture a new Plasma Drive Ignition system for fleet operations and everyday vehicles.
Sept. 8 n Trans Max Technologies files for Chapter 11 bankruptcy in Nevada U.S. Bankruptcy Court. Decker and Lenarduzzi are listed as creditors.
2006
Nov. 30 n Crown Point sends a letter to Decker and Lenarduzzi detailing its proposed incentives to lure them to Indiana.
2007
April 4 n Plasmatronics, Inc. incorporates in Indiana.
April 24 n Gov. Mitch Daniels and former Mayor Dan Klein announce Plasmatronics' plans to open its research and manufacturing center in Crown Point.
June 28 n Crown Point Redevelopment Commission OKs $500,000 loan using taxpayers' money from the tax increment financing district. Loan must also go through the Crown Point Development Corp., the commission's lending arm.
July 11 n Development Corp. approves the loan in closed meeting that is later ruled illegal by state Public Access Counselor Heather Willis Neal.
July 25 -- $500,000 loan approved by Crown Point Development Corp., this time in open meeting.
July 26 n Crown Point makes its first disbursement to Plasmatronics.
Sept. 7 n Trans Max terminates its bankruptcy.
Sept. 25 n Ron Morris, who owns the facility in Crown Point where Plasmatronics will have its operations, files for a building permit with a $280,000 construction value.
BY MARISA KWIATKOWSKI
nwitimes.com
Date posted online: Sunday, January 27, 2008
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rock star - Posts: 40
- Joined: Fri May 04, 2007 12:47 am
Re: PLASMATRONICS
by rock star » Wed Apr 16, 2008 8:13 pm
Plasmatronics wants out of C.P. loan
CROWN POINT | Plasmatronics, the manufacturers of an ignition system intended to increase gas mileage and reduce air pollution, told Crown Point officials this weekend it wants to terminate a $500,000 loan between the city and the company.
The Crown Point Redevelopment Commission is scheduled to meet in an executive session at 5:30 p.m. Thursday to discuss the city's next step.
According to city records, the city has paid $380,000 of a $500,000 loan to the company. The loan is funded by taxpayers' money from a tax increment financing district. When it announced it would be manufacturing the product in Crown Point, Plasmatronics promised 220 jobs in the community in exchange for the loan and other state incentives.
"As mayor and a steward of taxpayer dollars, we will look to recover our money," Mayor David Uran said Monday.
Plasmatronics' attorney Barry Pruett sent a four-page letter to the city outlining the reasons the company wants out. Specifically, the letter accuses the city of unilaterally changing the terms of the agreement, breaching an implied covenant of good faith and holding meetings that violated Indiana's Open Door Law.
It also accuses Uran of interfering with the contract when he urged the Crown Point Redevelopment Commission to put the company's product through more testing.
Plasmatronics, through its chief scientist Lonnie Lenarduzzi, declined to comment on the matter Monday when contacted by The Times. However, the letter states that Plasmatronics has stopped work at its intended Crown Point facility, located on Arrowhead Court off of Millennium Drive.
"Plasmatronics did not want to invest more money into a building which they will not be occupying," the letter states.
Uran said Monday he saw a copy of the letter Saturday. At the Redevelopment Commission's meeting Monday night, Uran called the letter "creative" and said the company was "airing its dirty laundry." He also said he was disappointed the city was represented in an unfavorable light.
Uran said the city has not denied Plasmatronics any further requests for funding and tried to cooperate with the company and help with positive public relations. At Monday's meeting he asked the Redevelopment Commission to come up with a game plan to move forward.
"It's very disappointing they didn't hold up their end of the bargain," Uran said. "We did."
Commissioner Bob Corbin recommended the commission discuss its next steps in an executive session.
City Attorney David Nicholls said he was disturbed that Pruett directly contacted Nicholls' clients instead of going through him, saying it was an ethical issue he would be looking into. He said Plasmatronics President and CEO Linda Decker and Lonnie Lenarduzzi signed personal guarantees for the $500,000 loan. The guarantees mean if the corporation is no longer in existence, the two pledged their personal assets to cover the loan.
Nicholls said he sent Pruett an e-mail Saturday inviting him and the Plasmatronics owners to Monday's meeting.
Pruett responded with his own e-mail Saturday, in which he wrote he didn't receive sufficient notice that the commission would be discussing Plasmatronics, especially because Pruett's firm is located in California and Plasmatronics is located in New York. He requested to participate in the meeting via teleconference or to move the discussion to next month's meeting so a representative from the company could attend.
In January, a Times investigation revealed former Crown Point officials and the Indiana Economic Development Corp. promised Plasmatronics more than $1.8 million in incentives last year to move to Indiana despite warnings from a city financial consultant about the riskiness of the venture.
Copyright © 2008 nwi.com
CROWN POINT | Plasmatronics, the manufacturers of an ignition system intended to increase gas mileage and reduce air pollution, told Crown Point officials this weekend it wants to terminate a $500,000 loan between the city and the company.
The Crown Point Redevelopment Commission is scheduled to meet in an executive session at 5:30 p.m. Thursday to discuss the city's next step.
According to city records, the city has paid $380,000 of a $500,000 loan to the company. The loan is funded by taxpayers' money from a tax increment financing district. When it announced it would be manufacturing the product in Crown Point, Plasmatronics promised 220 jobs in the community in exchange for the loan and other state incentives.
"As mayor and a steward of taxpayer dollars, we will look to recover our money," Mayor David Uran said Monday.
Plasmatronics' attorney Barry Pruett sent a four-page letter to the city outlining the reasons the company wants out. Specifically, the letter accuses the city of unilaterally changing the terms of the agreement, breaching an implied covenant of good faith and holding meetings that violated Indiana's Open Door Law.
It also accuses Uran of interfering with the contract when he urged the Crown Point Redevelopment Commission to put the company's product through more testing.
Plasmatronics, through its chief scientist Lonnie Lenarduzzi, declined to comment on the matter Monday when contacted by The Times. However, the letter states that Plasmatronics has stopped work at its intended Crown Point facility, located on Arrowhead Court off of Millennium Drive.
"Plasmatronics did not want to invest more money into a building which they will not be occupying," the letter states.
Uran said Monday he saw a copy of the letter Saturday. At the Redevelopment Commission's meeting Monday night, Uran called the letter "creative" and said the company was "airing its dirty laundry." He also said he was disappointed the city was represented in an unfavorable light.
Uran said the city has not denied Plasmatronics any further requests for funding and tried to cooperate with the company and help with positive public relations. At Monday's meeting he asked the Redevelopment Commission to come up with a game plan to move forward.
"It's very disappointing they didn't hold up their end of the bargain," Uran said. "We did."
Commissioner Bob Corbin recommended the commission discuss its next steps in an executive session.
City Attorney David Nicholls said he was disturbed that Pruett directly contacted Nicholls' clients instead of going through him, saying it was an ethical issue he would be looking into. He said Plasmatronics President and CEO Linda Decker and Lonnie Lenarduzzi signed personal guarantees for the $500,000 loan. The guarantees mean if the corporation is no longer in existence, the two pledged their personal assets to cover the loan.
Nicholls said he sent Pruett an e-mail Saturday inviting him and the Plasmatronics owners to Monday's meeting.
Pruett responded with his own e-mail Saturday, in which he wrote he didn't receive sufficient notice that the commission would be discussing Plasmatronics, especially because Pruett's firm is located in California and Plasmatronics is located in New York. He requested to participate in the meeting via teleconference or to move the discussion to next month's meeting so a representative from the company could attend.
In January, a Times investigation revealed former Crown Point officials and the Indiana Economic Development Corp. promised Plasmatronics more than $1.8 million in incentives last year to move to Indiana despite warnings from a city financial consultant about the riskiness of the venture.
Copyright © 2008 nwi.com
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rock star - Posts: 40
- Joined: Fri May 04, 2007 12:47 am
Re: PLASMATRONICS
by rock star » Fri Apr 18, 2008 7:06 pm
Commission votes to pursue repayment of Plamatronics loan
BY KATHLEEN QUILLIGAN
219.662.5331 | Friday, April 18, 2008
CROWN POINT | Crown Point will pursue all available avenues -- including a lawsuit -- to recover $380,000 from New York-based Plasmatronics after the company terminated its relationship with the city, the city's Redevelopment Commission voted Friday.
"We feel disappointed. We feel betrayed. And we're awfully angry," said Mayor David Uran.
Plasmatronics manufactures an ignition system intended to increase gas mileage and reduce air pollution. Company owners informed Crown Point officials April 12 they wanted to terminate a $500,000 loan between the city and the company.
According to city records, the city has paid $380,000 loan to the company to date. The loan is funded by taxpayers' money from a tax increment financing district.
When it announced it would be manufacturing the product in Crown Point, Plasmatronics promised 220 jobs in the community in exchange for the loan and other state incentives.
Plasmatronics chief scientist Lonnie Lenarduzzi declined comment Friday regarding the commission's decision.
Copyright © 2008 nwi.com
BY KATHLEEN QUILLIGAN
219.662.5331 | Friday, April 18, 2008
CROWN POINT | Crown Point will pursue all available avenues -- including a lawsuit -- to recover $380,000 from New York-based Plasmatronics after the company terminated its relationship with the city, the city's Redevelopment Commission voted Friday.
"We feel disappointed. We feel betrayed. And we're awfully angry," said Mayor David Uran.
Plasmatronics manufactures an ignition system intended to increase gas mileage and reduce air pollution. Company owners informed Crown Point officials April 12 they wanted to terminate a $500,000 loan between the city and the company.
According to city records, the city has paid $380,000 loan to the company to date. The loan is funded by taxpayers' money from a tax increment financing district.
When it announced it would be manufacturing the product in Crown Point, Plasmatronics promised 220 jobs in the community in exchange for the loan and other state incentives.
Plasmatronics chief scientist Lonnie Lenarduzzi declined comment Friday regarding the commission's decision.
Copyright © 2008 nwi.com
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rock star - Posts: 40
- Joined: Fri May 04, 2007 12:47 am
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