A federal court has turned over management of a troubled investment fund run by CEI in Brunswick to the U.S. Small Business Administration with the aim of liquidating it.
The fund, CEI Community Ventures Fund LLC, was licensed by the SBA in August 2002 to invest in small, rural businesses. However, it lost more than 70 percent of its original value, according to an SBA complaint filed on Sept. 7 with the U.S. District Court for the District of Maine. The complaint also said the SBA had lent the fund about $7.5 million, which was not repaid.
In his consent order dated Sept. 14, U.S. District Court Judge John A. Woodcock, Jr., wrote that SBA, as the receiver, “is appointed for the purpose of marshaling and liquidating all of CEI’s
assets and satisfying the claims of creditors therefrom in the order of priority as determined by this Court.”
“The legal filing relates to the liquidation of a legacy fund, CEI Community Ventures Fund, not the firm, CEI Ventures Inc., and its three current equity funds or the organization, Coastal Enterprises Inc.,” Elizabeth Rogers, a spokeswoman for CEI, wrote in an email to the Bangor Daily News.
While CEI Community Ventures and CEI Ventures both are for-profit entities of parent CEI, each company is structured separately, so CEI Community Ventures’ demise won’t affect other CEI companies, said Kerwin Tesdell, president of the Community Development Venture Capital Alliance, a New York association.
He added that the SBA likely gave CEI Community Ventures time to correct its losses, and when that didn’t happen, it finally filed the lawsuit.
SBA spokesman Terry Sutherland wrote in an email that as its next steps, it is “going to take stock of [CEI Community Ventures’] assets and eventually set up a court-approved process to identify the creditor pool. Once that is done, we can began to distribute funds as they become available in the order of priority recommended by SBA as receiver and approved by the court.”