Prize Catch Leaves Trail Of Debt Creditors Stuck With Bills After Canadian Firm Lured Here Founders

Sun Farm Foods Inc., a Canadian food processor that was touted three years ago as a catch for the Spokane economy, has instead left a trail of unpaid bills and broken promises.

At least two creditors, including Farmers & Merchants Bank, have $65,000 in claims or court judgments against the former Calgary-based company and its owners, George and Zdenka Sinclair. A third company that has not made a legal claim says the Sinclairs owe $24,000 in unpaid rent and utilities.

“They came in with the best intentions in the world, but there was an awful lot they said that was not true,” said Clarence Scott, a Valley businessman who provided space to Sun Farm.

The Sinclairs, a Czechoslovakian couple who rent an apartment at the Sunrise Village Apartments in Veradale, could not be reached for comment. A Farmers & Merchants attorney said he has been unable to locate the Sinclairs to serve them with a lawsuit filed May 1.

While businesses fail every day, the fall of Sun Farm has been distressing to many small-business people who put trust in business leaders who gave tacit endorsement to the company.

The Spokane Area Economic Development Council helped recruit the company in 1992, touting the manufacturer as a successful example of luring businesses across the Canadian border.

The EDC at that time said Sun Farm planned to employ 15 people, buy a building and manufacture burritos, sandwiches and other convenience foods. The agency introduced Sun Farm to several vendors and business leaders such as Associated Leasing and Momentum ‘95 President Gordon Budke, an accountant.

Budke said he met the Sinclairs briefly, but never did any work for them nor gave approval to be used as a reference. Yet when Sun Farm applied to lease a delivery van and industrial kitchen equipment from Associated Leasing, it listed Budke as its accountant.

“They came in with a great big package of financial information that was misleading,” said Associated manager Sunni Moland. “It looked like they had some backing, but it really wasn’t there.”

Sun Farm’s list of alleged customers also was impressive. These included the state Department of Corrections, URM Stores Inc. and several school districts.

Associated in April 1994 won a judgment against Sun Farm in Spokane County Superior Court for $56,555. Moland said she retrieved the delivery van, but has never been paid on the judgment.

Meri Berberet, director of marketing and research at the EDC, said the agency refers all companies it is trying to recruit to local bankers, accountants and Realtors. The EDC relies on these financial experts to weed out companies that are financially unstable.

But the system doesn’t always work. Three months after Associated Leasing won its judgment against Sun Farm, Farmers & Merchants lent the food processor $8,400, according to records at the county courthouse.

Farmers & Merchants sued Sun Farm and the Sinclairs earlier this month, claiming that the entire loan was still due. Collateral used to secure the loan included commercial meat slicers and walk-in freezers.

Scott, owner of Cuci’s Pizza, said most of the equipment that Sun Farm claimed to own never materialized. He said Sun Farm had agreed to share its equipment with Cuci’s in exchange for use of manufacturing space at the frozen pizza plant, 9212 E. Montgomery.

As far as he knows, Scott said, Sun Farm never produced any food and he was stuck with an estimated $24,000 bill for Sun Farm’s rent and utilities.