Trouble brewing? Michigan retirement fund sued over coffee investment
By Max Reinhart, mreinhart@detroitnews.com
A Florida-based lending firm is suing a Michigan organization that administers retirement plans for government employees, claiming it deceptively convinced them to contribute tens of millions of dollars to an ill-fated coffee-growing venture in Hawaii.
In the lawsuit, filed Monday in a court in Polk County, Florida, AgAmerica alleges that between 2022 and 2024, the Municipal Employees’ Retirement System of Michigan (MERS) conspired with associated firms to get millions of dollars in loans to correct a long list of construction issues and sanitation violations at their Kona Hills coffee plantation.
AgAmerica claims it was led to believe the money would be used strictly to buy and grow coffee trees.
“… Instead of using the funds for the approved purpose of planting and developing coffee trees, they used a significant amount of the financing to redress the undisclosed … issues and violations of Hawaiian law,” the complaint states.
MERS CEO Kerrie Vanden Bosch called AgAmerica’s allegations “baseless and without merit.”
“While this specific investment experienced a loss, it was more than offset by strong gains in other private market investments,” Vanden Bosch said in an email to The News. “… We are confident that the facts will come to light through the court process. We remain dedicated to our mission and to the long-term financial security of those who serve Michigan’s communities.”
MERS manages pension funds for cities, counties and townships in Michigan.
According to AgAmerica, MERS was at the top of the corporate hierarchy managing the Kona Hills project. MERS allegedly oversaw Domain Capital Advisors, a private equity firm, which oversaw Kona Capital, which ran operations at the Kona Hills coffee plantation, located in the Holualoa area in Hawaii County, on the state’s largest island.
In 2021 and 2022, before the defendants sought funding from AgAmerica, Hawaii’s state public works and health departments visited the Kona project site, where inspectors found issues with flooding and drainage, as well as sanitation violations, including illegal cesspools and wastewater discharges onto the ground, the suit alleges.
Other issues at the site included environmental, legal, permitting, stormwater, wastewater, flooding and construction concerns, according to the complaint.
The issues needed to be corrected for the project to move forward. Fixing everything would cost about $16 million, AgAmerica claims.
When Domain came to AgAmerica to seek a loan, the company provided misleading financial projections that did not account for the extensive problems with the site, the suit claims. AgAmerica said MERS had knowledge of the violations as well.
Based on the allegedly fraudulent information provided, AgAmerica issued an almost $30 million loan.
The problems at the site in Hawaii weren’t disclosed to AgAmerica until MERS terminated Domain as the asset manager for the Kona Hills project and replaced them with Ospraie Real Assets, according to the complaint. Officials with Ospraie told the lender that the project was in dire financial straits due to the problems.
AgAmerica then approved a second tranche of more than $10 million to try and salvage its investment.
In January 2025, the lender learned there were serious problems with the coffee harvest and it would take tens of millions of additional dollars to make Kona Hills successful, according to the lawsuit. MERS and Osparie then dropped out of the project, Kona defaulted on its loans and AgAmerica foreclosed on the property.
Officials at Domain did not immediately respond to messages seeking comment. Efforts to reach other defendants weren’t immediately successful.
MERS manages more than $16 billion in plan assets, the complaint states. According to the company’s website, it administers retirement plans for more than 150,000 government employees from more than 1,000 Michigan municipalities.
Kona Hills, established in 2016, owns and operates about 1,983 acres of coffee plantations in Hawaii, having started planting coffee trees around 2018, according to the complaint.
Mark McCormick of California and Carolyn Seabolt of Georgia also are named as defendants in the suit. McCormick is identified in the lawsuit as the president and CEO of Kamco Land Co., another defendant which allegedly helped manage operations at the plantation; Seabolt is named as chief operating officer of Domain.
The lawsuit accuses MERS and the other defendants of fraudulent and negligent misrepresentation, as well as conspiracy.
AgAmerica is seeking a jury trial and judgment for an unspecified amount in damages.
