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VR Laboratories spends $5M without providing required documents

Company investigated over receiving $5 million from taxpayers to create jobs without providing financial details to the county.

Sep. 17, 2012   |  
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Jeff Kottkamp, former lieutenant governor and CEO of VR Laboratories.
Jeff Kottkamp, former lieutenant governor and CEO of VR Laboratories.
Jim Moore, Director of the Fort Myers Regional Partnership, Lee County Economic Development Office

FINANCIAL STATEMENTS

Here’s some of what Lee County Economic Development Office guidelines call for in applications for county economic incentive grants:

• Three years of audited or reviewed financial statements or federal corporate tax returns.
• The most recent interim financial statements for the current fiscal year.
• Detailed business plan including financial projections.

SOURCE: Lee County Office of Economic Development

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VR Laboratories Inc. has spent nearly $5 million in Lee County taxpayer money without providing detailed financial information, despite county guidelines requiring those reports.

The Bonita Springs-based company has agreed to provide 208 high-paying jobs by Dec. 31, 2016, in exchange for grant money.

Meanwhile county staff is questioning how well VR documented its statement in an Aug. 15 progress report that it has created nine jobs so far, county Commissioner Tammy Hall said.

VR, which hopes to sell a high-tech line of health drinks, has spent $4.7 million of the $5 million grant, but is stalled in efforts to start operations at its bottling plant off Alico Road.

VR is being sued by its general contractor and nine subcontractors have liens against it — and its bottling equipment supplier refuses to deliver the machinery because it hasn’t been paid in full.

An investigation by the county attorney is under way and county commissioners are raising questions about how the grant was handled and the application approved by staff.

“The commission relies pretty heavily on the staff research regarding background and basic qualifications,” Commissioner Frank Mann said. “I hope that staff did an adequate job.”

VR CEO Jeff Kottkamp, the former lieutenant governor, said his company has done nothing wrong. “We’ve given them everything required,” he said

Jim Moore, executive director of the county Economic Development Office, acknowledged that he recommended approval by the commission of VR’s grant without having access to the company’s financials.

But he wouldn’t say why. “I can’t comment on that,” he said.

According to the economic development office’s own guidelines, applicants need to provide “three years of audited or reviewed financial statements or federal corporate tax returns, plus the most recent interim financial statements for the current fiscal year.”

In its October 2010 grant application, VR provided projections of how much money it would make and how many jobs would be created, but said nothing of the company’s condition at the time, such as profits and assets.

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According to VR’s progress report, so far it has spent $4,694,548 in capital expenditures. But that’s exactly the same amount as the company’s combined draws from the county grant.

According to VR’s performance agreement with the county, it’s required to have made $7,757,295 in capital expenditures, including grant money, by Dec. 31.

But the contract contains a clause that “The company’s commitment to fund and be reimbursed by Lee County is predicated on aggregate capital investment spending levels. It is acknowledged that dollars may shift between years or between line items.”

The Aug. 15 progress report also contains a list of descriptions and salaries for the nine jobs created. At the top of the list is the CEO job: $240,000 a year.

But Hall said the company had to be prompted to provide even that much. “We’re supposed to have the names of the employees and everything” that’s needed to confirm that the employees are on VR’s payroll.

VR is required by the agreement to create 40 jobs by Dec. 31. But a clause in the agreement gives it the one-time right any time between Sept. 1, 2012, and Sept. 1, 2015, to extend by one year the schedule of job creation. Written county approval is required but the county is not allowed to “unreasonably withhold such approval.”

County Attorney Michael Hunt declined to comment on the agreement or on other aspects of VR’s grant.

Kottkamp said Monday afternoon that he talked with the county attorney staff and that “We are trying to schedule a meeting for later this week.”

VR is in good shape, he said. “We are going to remain focused on getting this moving forward.”

Connect with this reporter: @DickHogan (Twitter)

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