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Audit questions uses of grant, loan funds by closed Willard and Kelsey PDF Print E-mail
Written by ALEX ASPACHER Sentinel Staff Writer   
Wednesday, 24 July 2013 10:35
An audit of Willard and Kelsey raises questions about how grant and loan funds from the state were spent before the solar firm went out of businesses.
The Ohio Development Services Agency, formerly the department of development, has asked the company to submit documentation for more than $1.3 million in payments made to two other companies also owned by Willard and Kelsey President Jim Appold. Also questioned is more than $500,000 in charges the agency says were made outside the duration of a $5 million loan the company received in 2008.
Monthly payments totaling $902,909.20 to E-Z Pak Co. from January, 2008 to December, 2008, were recorded as general ledger entries without documentation, the report states. Similar payments of $424,122.94 were made to Consolidated Biscuit Co. at the end of 2008.
Also in question is a total of $510,324.10 in monthly payments to E-Z Pak from March, 2007 through December, 2007. The report states that the loan agreement only permitted expenses on or after Jan. 16, 2008.
Richard Kerger, an attorney representing Appold who is authorized to speak on behalf of the company, said the payments to Appold's other companies were reimbursement for manufacturing equipment Willard and Kelsey could not afford when it began operations. He said Willard and Kelsey will submit invoices and checks showing proper expenditures.
"We anticipate no problem," he said.
The $510,324.10 paid to E-Z Pak in 2007, Kerger said, is a legitimate expense, and the company and the state only disagree on the terms of the loan.
"(The money) was spent before the loan had been approved," he said. "It's the state's position that's not proper; ours is that it is proper."
Appold still owns E-Z Pak but has since sold his interest in Consolidated Biscuit, Kerger said. An attorney out of Columbus is representing Willard and Kelsey in the matter but could not be reached for comment.
The ODSA audit also suggests "material weakness" in the company's internal accounting system may have been responsible for missing documentation.
"Our review of the internal control system revealed conditions we believe are significant deficiencies in the design or the operation of the internal control system," the audit reads. "These conditions could adversely affect Willard and Kelsey's ability to process, record, summarize and report financial data in accordance with the terms of the grant agreements."
The Ohio Attorney General's Office, which is handling collections on the loans, is in the process of analyzing the company's assets and will review the audit, spokesman Dan Tierney said.
Willard and Kelsey closed last month and has financial obligations totaling about $15 million, including $12 million in state loans.
Until final word of the company's closing, executives maintained that a large order from India could turn things around, though it never came through.
The company's problems entered the spotlight early in 2012, when state scrutiny increased after a layoff of 40 employees. Subsequent financial woes came to the surface after the Ohio Department of Development called for a status check of the business.
Willard and Kelsey once planned to employ more than 3,500 people by 2018, and also to construct a 750,000-square-foot expansion of its manufacturing facility, located just south of Levis Commons on Ohio 25. The property is owned by Spring Grove Trading Company of Perrysburg, a separate entity Kerger said was previously established by Appold and Michael Cicak, CEO of Willard and Kelsey.
 

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