To the editor:
The tragic news on Elona is not unexpected. With a quick calculation, I estimated a loss of about $13 million to Greenwood taxpayers, based on the bonds Greenwood issued, the interest rate and other costs, and I urge Mayor Mark Myers to give us a full accounting of all costs. We are still paying for forensic accountants, attorneys and of course the Elona “generic insulin” plant. The cost per household is upward of $632. Payment on bonds will continue for years.
We know that get-rich-quick offers abound. Someone is always trying to make money selling a good idea. The generic insulin plant from the start was a very bad idea for tax money. Countless red flags would have made any savvy investor run away. Greenwood city government ran toward this swindle.
Red flag 1: Other companies were already making generic insulin. Eli Lilly’s Humulin insulin lost patent protection in the year 2000. Companies looking to make money invest $100 million for insulin plants in India.
Red flag 2: No venture capitalist investing. A good idea involving good people can easily find venture capitalists willing to take the risk with a company that shows promise. Unlike Greenwood city officials, profitable venture capitalists investigate and research the proposals. Unlike Greenwood city officials, venture capitalists do regular checks on their investment and take action at the first indication of improprieties.
Red flag 3: Too many from the same household as officers. Ron Zimmerman, his wife and their son are top officers in the company. Most prudent investors want to include one of their own as a board member or officer. Greenwood is the major and almost sole investor. I must ask how much of the tax money went to Zimmerman salaries and expenses.
Red flag 4: No customers from the start. We never saw or knew of any country or company willing to buy this version of generic insulin.
Red flag 5: Broken promises. On Feb. 20, 2012, Ron Zimmerman Jr. stated they would begin producing generic insulin within six to eight months and hire 15 employees, according to city council minutes. The city failed to verify the statement and then failed to take any actions when the jobs did not materialize.
Red flag 6: Zimmerman made the “you can’t lose” promise. Zimmerman promised that should the business fail, the city would take the patents and equipment. We know that nearly all patents of failed companies are worthless. Used lab equipment has little resale value. The generic insulin plant seems fairly worthless without a product or buyer. The “can’t lose” promise would never have held weight with real investors. We now see the “can’t lose” deal costing Greenwood households a lot of money.
One can believe the Zimmerman family was honest and just “over-optimistic,” or one can believe they are con artists. Neither belief does anything for the taxpayers’ losses. I suggest Greenwood take full possession of the business immediately to reduce additional losses and safeguard the few assets that may be left. Greenwood declared in January that Zimmeman’s Elona was in default.
As of today, no action has been taken to freeze assets in order to try to recover any investment. The stall for a potential savior holds no credibility when one considers the previous false statements. If there really is a potential buyer, a deal can be negotiated directly with city officials, thus bypassing additional losses and failed Zimmerman promises.
It is time for the city of Greenwood to close this business, give the taxpayers an honest, full accounting and learn from this mistake. For the future, city government has shown that is not qualified to invest tax money in speculative businesses. We are somewhat lucky that the cost per household is only $632.