Wender: No conflict of interest for venture capital fund manager
CHARLESTON, W.Va. -- A former manager at West Virginia's venture capital fund on Thursday defended the agency's decision to invest in an Eastern Panhandle company now being investigated by the state Securities Commission.
Matthew Wender, former investment manager at the West Virginia Jobs Investment Trust Board, disputed allegations that his former boss, Andy Zulauf, had an "incestuous business relationship" with Todd Cope, the chief financial officer of STaSIS Engineering Inc.
The West Virginia Securities Commission, a division of Auditor Glen Gainer's office, started investigating STaSIS in June, after a former employee, Joel Schurtz, filed a complaint. The Jobs Investment Trust has invested $1.25 million in STaSIS and owns 10 percent of the company's stock.
"Mr. Schurtz's comments about the relationship between Andy and Todd Cope are absolutely untrue and over the top," said Wender, who serves as president of the Fayette County Commission. "It was an abusive term and so, so inaccurate."
Zulauf and Cope acknowledge they have known each other for years. They also live in the same Putnam County subdivision.
In his complaint to the Securities Commission, Schurtz noted that Zulauf serves on STaSIS' six-member board of directors. Schurtz also alleged that Zulauf "endorsed" STaSIS, a privately held company that designs and sells high-performance components for luxury sports cars.
"Andy Zulauf ... has a close, personal and long-time relationship with the CFO of STaSIS, Todd Cope," Schurtz wrote in his complaint. "Andy and Todd have an incestuous business relationship and have been using STaSIS as a shell company to sell shares to nearly 100 investors."
Wender recalled Tuesday that Zulauf and Cope started talking about STaSIS in 2009. Cope, a West Virginia native, had been commuting from Putnam County to Sonoma, Calif., STaSIS' headquarters at the time.
"It's my understanding the conversation took place on a soccer field," Wender said Thursday. "Todd was talking about wanting to move the company to the East Coast."
Not long after, Wender said he researched STaSIS and met with Cope and STaSIS CEO Paul Lambert. Wender later negotiated the "term sheet," which spelled out a series of conditions STaSIS would have to agree to before the state would invest in the company.
"The most important condition, of course, was they had to relocate to West Virginia," Wender said.
He said Zulauf wasn't directly involved in negotiations with STaSIS.
"I wrote the investment summary, I negotiated the term sheet, and I made the presentation to the JIT board," Wender recalled. "Andy was aware of the discussions, but he wasn't front and center in getting this put together."
Zulauf has called Schurtz's allegations a "baseless personal attack." Zulauf said his role in the West Virginia Jobs Investment Trust's decision to invest in STaSIS was "legal, ethical and professional."
Also Thursday, Wender took issue with Schurtz's allegation that STaSIS was a "shell company" -- one without significant assets or operations.
"That's baseless," he said. "STaSIS is not a front for anything, except the corporation that it is."
Wender said Zulauf has served as an "astute board member" at STaSIS for the past three years - despite Zulauf's friendship with Cope.
"He has approached this from a very independent standpoint," Wender said.
In 2011, Schurtz sold his company, EuroJet Development Inc. of Mead, Wash., to STaSIS for $50,000 in cash and $400,000 in STaSIS stock. STaSIS also agreed to hire Schurtz as part of the deal.
Schurtz quit his job with STaSIS in October. The company subsequently filed a federal lawsuit against Schurtz, alleging he stole "confidential business information."
Schurtz denied the allegations, and countered that Cope and Lambert misappropriated $10 million in "shareholder and [West Virginia] taxpayer investments," according to his complaint with the Securities Commission.
In addition to the state Jobs Investment Trust's $1.25 million investment with STaSIS, the state Economic Development Authority and Infrastructure & Jobs Development Council have loaned STaSIS investors $2.5 million. The investors used the loan money to build STaSIS' headquarters building in Jefferson County.
Schurtz recently established a website, www.balancedtruth.com, where he sharply criticizes the company and posts public documents about STaSIS and company executives.
"Sometimes it's good to buy the company, but not the founder," Wender said of STaSIS' decision to purchase EuroJet and put Schurtz on the payroll. "They have made mistakes. They've gotten themselves in deals they probably wish they could backtrack on."
Even so, the auto parts company holds much promise, Wender said.
"It was a very good investment [for the state]," he said. "I think the company will ultimately be very successful. They've had some growing pains, for sure, but so have most companies at this stage."
Earlier this week, STaSIS executives called Schurtz a "disgruntled" employee who has started a "smear campaign" against the company.
Schurtz responded that STaSIS officials want to "shut me up" to cover up their misdeeds.
The state Investment Jobs Trust Board invests state tax dollars in small companies seeking to expand.
Reach Eric Eyre at email@example.com or 304-348-4869.