Former owner of Matt Bevin's residence invested $300K in governor's company before home sold

CLARIFICATION: The Courier-Journal has correctly reported that Neil Ramsey was appointed by Gov. Matt Bevin last June to an unpaid position as member of the Kentucky Retirement Systems Board. However, according to the Kentucky Retirement Systems, legislation passed in the 2017 session established this policy - effective March 10 - of paying a modest stipend for members: $190 per meeting for board meetings and committee meetings they attend, plus $25.33 per hour for “prep time” for meetings with a maximum of three hours for board meetings, two hours for committee meetings.

A few weeks before he completed the sale of the Anchorage mansion where Gov. Matt Bevin now lives, Neil Ramsey invested in a company partly owned by the governor.

Ramsey invested $300,000 in a Louisville medical device company called Neuronetrix Solutions LLC through state government’s “Angel Investment Act” program, which gave him a big tax credit for investing in the small business, state records show.

Ramsey’s was the largest of five angel investments in Neuronetrix totaling $800,000 approved by the Kentucky Economic Development Finance Authority in January. The other four investors shown in state records, like Ramsey, were donors to Bevin’s 2015 campaign for governor. The others are Bradford P. Stengel, who invested $150,000; Charles A. Hill, $150,000; Robinson Brown III, $100,000; and David Tuell Richardson, $100,000.

Timeline:What to know about Bevin's Anchorage house

Bevin recently disclosed in an annual report filed with the Executive Branch Ethics Commission that he is on the board of Neuronetrix and owns at least 5 percent of the company. In a news report four years ago, Bevin said he was the largest shareholder in Neuronetrix, which is in Louisville.

Friday afternoon as he was leaving an event in the Capitol Rotunda, Bevin was asked if he knew Ramsey had invested in Neuronetrix before the sale of the house. The governor said, “Honestly, there’s more than probably 100 people who have invested in that company. I don’t know who they all are. … I’m not involved in any of the decision making as to who invests what. This is a company, I first invested in this company maybe eight or 10 years ago.”

When asked what percentage of the company he owns, Bevin walked into his office.

Under Kentucky’s 3-year-old angel investment program – administered by the Kentucky Economic Development Cabinet – Ramsey and the other investors received a transferable income tax credit equal to 40 percent of their investment ($120,000 for Ramsey) in the small business.

The executive director of the Executive Branch Ethics Commission declined to discuss any specific scenario but said that, in general, the state ethics code does not prohibit a company partly owned by a public servant such as the governor from participating in a program available to the general public.

Joseph Gerth:Matt Bevin's mansion: Something borrowed, something askew

But Attorney General Andy Beshear said the Neuronetrix investment heightens his concerns about Ramsey's financial dealings with Bevin and state government. “The fact that political donors like Mr. Ramsey are receiving state tax credits for investing in one of the governor’s companies only adds to my concerns that the governor’s office is being used to personally enrich Matt Bevin and his close friends,” Beshear said in a statement.

Beshear is exploring whether to investigate the matter. As a first step, Beshear last week asked the ethics commission to clarify its past opinions that he said could block him from investigating. Beshear said those opinions suggest one state elected official cannot investigate another if there is merely speculation that they may run against one another in a future election.

More:Beshear blasts Bevin house sale, may investigate

More:State began work on Bevin's Anchorage house months before purchase

Ramsey and the Governor’s Office spokeswoman declined to discuss the Neuronetrix investment. Bevin Communications Director Amanda Stamper did not return phone calls and emails. Ramsey did not return a phone call or two emails asking about the investment or talk to a reporter who tried to ask questions in person.

K.C. Fadem, a manager of Neuronetrix Solutions, declined to say how much of the company Bevin owns or make any comment. “We don’t talk to the press,” he said in a brief phone interview.

Ramsey is founder and president of RQSI, an investment management company in Louisville. He has been a major donor to Bevin political causes: He and his wife gave $4,000 to Bevin’s 2015 campaign for governor; he gave $15,000 to Bevin’s inauguration committee, and he has given $22,500 to the Kentucky Republican Party since May 2015.

Last summer Bevin appointed Ramsey to the board of the Kentucky Retirement Systems.

The Courier-Journal has reported that in early March a Ramsey company sold a mansion that he had restored in Anchorage to a company named Anchorage Place LLC and that Bevin and his family are now living in that mansion.

Ramsey sold the mansion and surrounding 10-acre tract to Anchorage Place for $1.6 million. That price is low compared to a value placed on the house by the Jefferson County Property Valuation Administrator.

More:Take a look inside the house where Gov. Matt Bevin and his family are living

The PVA recently placed a value of $2,134,780 on the house and other improvements sold to Anchorage Place. That, plus a value of about $440,000 for the 10 acres equals a PVA value of about $2,574,780 for the total property bought by Anchorage Place LLC.

More:House where Gov. Matt Bevin living sold at fair price, seller says

Background:Has Gov. Matt Bevin moved into a secluded Anchorage home?

Ramsey has said $1.6 million is a fair market price and that the PVA doesn’t account for the difficulty of selling a high-end house. He has also said he received valuable sewer and road access considerations in the transaction.

Records of the Kentucky Secretary of State show Neuronetrix was formed in 2003. On its website, it describes itself as “a leader in advanced neurodiagnostic technology.”

The website said the company was founded to develop ways to help doctors and researchers measure cognitive deficits associated with disorders like Alzheimer’s disease, schizophrenia, traumatic brain injury and ADHD.

“The company has developed a range of electrophysiology-based products which allow clinicians, neuroscientists, and the pharmaceutical industry to easily test patients for cognitive dysfunction,” the website says.

It’s unclear how much of a stake Bevin may have in Neuronetrix. In a financial disclosure statement he filed with the Executive Branch Ethics Commission covering his holdings as of Dec. 31, Bevin reported he is a member of the Neuronetrix board and that he owns at least 5 percent.

Four years ago, as a candidate for the U.S. Senate, he told Insider Louisville, “Here in Louisville, there’s a company called Neuronetrix. It’s on the cutting edge of changing the entire face of Alzheimer’s diagnosis. … I’m the largest shareholder in that company. I’ve funded it for years.”

In a disclosure statement he filed in 2013 when he was running for the Senate, Bevin disclosed that his assets included an investment of between $1 million and $5 million in Neuronetrix, according to a report by Political MoneyLine.

Three of the angel investors — Stengel, Hill and Richardson — did not return phone messages. But Brown said in a telephone interview that he has invested for years in Neuronetrix and decided to invest again because of the credit offered in the Angel Investment Act.

“I wasn’t going to invest again because I already had invested once in January," Brown said. "But when the angel investment was approved, I decided to put some more money in. It’s a good tax credit.”

Brown said he had been unaware of the angel investment program, but another one of the investors suggested it. “I don’t think the governor had anything to do with it. ... We rarely ever see him anymore. We’d like to but, he’s got other fish to fry,” Brown said.

As for why the company wanted to raise more capital, Brown said, “We always wanted to raise capital, because we’re not break-even yet. So it has to come from somewhere.”

Brown said the company has shown significant promise and that investors wanted to improve its outlook. “At some point, you probably go looking for venture capital,” Brown said. “… Some day we probably will. But to attract venture capital, you’ve got to show some significant success. … We wanted to have a firmer footing and a little more success before we went after the venture capitalists.”

The concept of the 3-year-old angel investment program is to encourage investment in small companies to “create additional jobs, and promote the development of new products and technologies,” according to the program’s website.

To be eligible, a company must have no more than 100 full-time employees and have more than half of its assets and employees in Kentucky. The company must have a net worth of no more than $10 million or a net income for each of the two preceding years of $3 million or less.

Also, a company “must be engaged in bioscience; environmental and energy technology; health and human development; information technology and communications; materials science and advanced manufacturing; or other new-economy, knowledge-based activity.”

Investors must not own more than 20 percent of the business and must not be employed by the business before making the investment. Investors can receive no more than $200,000 in tax credits per year.

The program appears to be highly popular. State law caps the total amount of tax credits the program can award to $3 million per year. The Kentucky Economic Development Finance Authority approved nearly all of this year's $3 million in credits in January.

Reporter Tom Loftus can be reached at 502-875-5136 or tloftus@courier-journal.com.