On Monday, Judge Jon Van Allsburg appointed Thomas E. Woods of Cummins Woods, a Lansing-based law practice, as the receiver for Kandu. A receiver is a person appointed to run a company for a short time to ensure as much of its debt is paid back to creditors as possible.
The action comes as the Ottawa County Sheriff’s Department has turned the findings of its investigation over to the prosecutor’s office for review.
Kandu, a nonprofit that trained and employed developmentally disabled adults at its manufacturing facility in Holland Township, shut down Sept. 30. Board members and CEO Tom Vreeman cited a reduction in Medicaid reimbursements from Community Mental Health of Ottawa County as the impetus for the organization’s financial troubles.
But CMH disputed Vreeman’s claims that Kandu’s funding had been cut by more than $1 million in the past year — and administrators requested the Sheriff’s Department investigate Kandu’s finances. That investigation wrapped up last week.
Capt. Mark Bennett said investigators were completing some paperwork on the investigative report, which he expected to turn over to prosecutors by the end of the week. He said any decision on criminal charges would be left up to County Prosecutor Ronald Frantz.
The three-month investigation included interviews with past and present Kandu employees, former business associates of Kandu, and numerous financial reports and bank records, Bennett said.
U.S. Bank notified the holders of about $4.2 million in bonds issued by Holland Charter Township’s Economic Development Corp. in early December that it was requesting a receiver be appointed due to Kandu’s lack of communication over plans to liquidate assets.
Kandu has defaulted on its loans to the bank and still owes its bondholders money. Kandu’s manufacturing facility at 4190 Sunnyside Drive is the collateral on the loans.
The predicted success of a 2012 contract to produce 1.2 million Israeli bandages for the U.S. military was used by Kandu to promise returns to investors on $4.2 million of municipal bonds issued by Holland Township, and to garner a loan from the Community Foundation of the Holland/Zeeland Area.